Legal Environment of Business Exam Preparation Guide
Course Introduction
The Legal Environment of Business explores the fundamental principles and frameworks that govern the interaction between business organizations and the law. This course examines the sources and functions of law, including the U.S. Constitution, statutory and case law, and regulatory agencies. Students learn about key topics such as contracts, torts, property, employment law, and the legal aspects of business ethics and corporate social responsibility. Through case studies and practical examples, the course emphasizes the impact of legal considerations on managerial decision-making and equips students with the knowledge to navigate legal challenges in todays dynamic business environment.
Recommended Textbook Fundamentals of Business Law Summarized Cases 9th Edition by Roger LeRoy Miller
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Chapter 1: The Legal and Constitutional Environment of Business
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Q1) The law establishes rights,duties,and privileges that are consistent with the values of society.
A)True
B)False
Answer: True
Q2) Adult Shoppe in Beach City sells a variety of publications,including child pornography.Beach City enacts an ordinance prohibiting the sale of such materials.This ordinance is most likely
A)an invalid restriction of individuals' privacy.
B)an unconstitutional restriction of speech.
C)a violation of adults' rights to enjoy certain privileges.
D)constitutional under the First Amendment.
Answer: D
Q3) In a suit against Sandy,Taylor obtains a remedy.In the U.S.legal system,this remedy will most likely be
A)an injunction.
B)damages.
C)rescission.
D)specific performance.
Answer: B
Page 3
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Chapter 2: Traditional and Online Dispute Resolution
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Q1) Ula wants to initiate a suit against Valley Farms by filing a complaint.The complaint should include
A)an explanation to refute any defense the defendant might assert.
B)a motion for summary judgment.
C)a motion to dismiss.
D)a statement of the facts necessary to show Ula is entitled to relief.
Answer: D
Q2) Refer to Fact Pattern 2-1.If Java and Kaffe have a long-standing business relationship that they would like to continue,a preferred method of settling their dispute may be mediation because
A)the case will be heard by a mini-jury.
B)the dispute will eventually go to trial.
C)the process is not adversarial.
D)the resolution of the dispute will be decided an expert.
Answer: C
Q3) Any judgment is enforceable.
A)True
B)False
Answer: False
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Chapter 3: Ethics and Business Decision Making
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Sample Questions
Q1) To be ethical is to "do the right thing" but it does not otherwise "pay."
A)True
B)False Answer: False
Q2) Ethics is concerned with the fairness or justness of an action.
A)True
B)False Answer: True
Q3) John is sales manager for Kleen 'N Brite Products,Inc.Compared to John's personal activities,his business activities most likely involve
A)more complex ethical issues.
B)no ethical issues.
C)simpler ethical issues.
D)the same ethical issues.
Answer: A
Q4) Acting in good faith gives a business firm a better chance of defending its actions in court.
A)True
B)False Answer: True
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Chapter 4: Torts and Cyber Torts
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Sample Questions
Q1) Proximate cause exists when the connection between an act and an injury is strong enough to justify imposing liability.
A)True
B)False
Q2) The extreme risk of an activity is a primary basis for imposing strict liability.
A)True
B)False
Q3) Liu enters Mountain Triathlon,an athletic competition in which Liu has never competed.Regarding the risk of injury,Liu assumes the risks
A)attributable to the Triathlon in any way.
B)different from the risks normally associated with the Triathlon.
C)greater than the risks normally associated with the Triathlon.
D)normally associated with the Triathlon.
Q4) If no harm results from an allegedly negligent act,there is no liability.
A)True
B)False
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Chapter 5: Intellectual Property and Internet Law
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Q1) It is possible to copyright an idea.
A)True
B)False
Q2) Kay and Leo copy and exchange MP3 music files over the Internet without anyone's permission.With respect to songs owned by Natural Recording Company,this is
A)copyright infringement.
B)fair use.
C)licensing.
D)protected expression.
Q3) A party who unintentionally uses the trademark of another is not liable for trademark infringement.
A)True
B)False
Q4) Because the Internet is vast,the unauthorized use of another's mark in a domain name is generally permissible.
A)True
B)False
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Chapter 6: Criminal Law and Cyber Crime
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Q1) At a criminal trial,the burden of proof is on an accused person to prove his or her innocence.
A)True
B)False
Q2) A crime can be committed only against persons.
A)True
B)False
Q3) Via the Internet,Rocky sabotages the computer system of Quik Chik'n Company,a food manufacturer,with the purpose of altering the levels of ingredients of the company's products so that consumers of the food become ill.Rocky is
A)a cyberterrorist.
B)a botnet.
C)a virus.
D)a worm.
Q4) The only defense to criminal liability that justifies the use of force is self-defense.
A)True
B)False
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Chapter 7: Nature and Classification
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Q1) Employment Sources,Inc. ,enters into a contract with Fred.If Fred is a minor,this contract is most likely
A)enforceable.
B)unenforceable.
C)void.
D)voidable.
Q2) Digital Architecture,Inc. ,enters into a contract to design robotic software for Chassis Assembly Corporation.The requirements of this,and any other,contract include
A)something of value received or promised to convince a person to make deal.
B)persons whose characteristics qualify them as implied parties.
C)negotiation and compromise.
D)a paragraph that describes the contracting parties' intent.
Q3) Contract disputes rarely arise on a promise of future performance.
A)True
B)False
Q4) One of the requirements of a valid contract is a fair price.
A)True
B)False
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Chapter 8: Agreement in Traditional and E-Contracts
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Q1) Michelle gives out a business card with an e-mail address on it.According to the comments that accompany the UETA,it may be reasonable to infer that Michelle has consented to
A)transact business electronically.
B)submit to the jurisdiction of any selected forum.
C)accept and respond to any correspondence sent to that address. D)nothing.
Q2) An offer must be practical to be effective.
A)True
B)False
Q3) An expression of opinion-"your customers will like this"-is an offer.
A)True
B)False
Q4) Bret enters into a contract with Collegiate University over the Internet to take an online course titled "Internet Law." This is an e-contract because A)the contract was entered into over the Internet.
B)the contract was formed between a student and a university.
C)the contract will be performed online.
D)the subject matter of the contract is "Internet Law."
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Chapter 9: Consideration,capacity,and Legality
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Q1) Chris promises Dina $40,000 if she graduates from Eagle College.Dina enrolls in Eagle,attends full-time for four years,and graduates.When Dina asks Chris for $40,000,Chris says,"I don't remember promising you $40,000.But if there was a promise,it's not enforceable,because we didn't bargain for it.And even if there was a promise that would otherwise be enforceable,I revoke it now." Can Dina enforce Chris's "promise"? Why or why not?
Q2) The doctrine of promissory estoppel requires a clear and definite promise.
A)True
B)False
Q3) Through fraudulent means,Fred induces Gail to sign a contract to build resort cabins on land that Fred does not own.Gail performs,but Fred does not pay.When Gail learns the truth,she may
A)do nothing with respect to the contract.
B)recover for the performance or its value.
C)recover for the performance only.
D)recover the value of the performance only.
Q4) A promise to do something that one has a prior legal duty to do is not consideration. A)True
B)False
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Chapter 10: Defenses to Contract Enforceability
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Sample Questions
Q1) To rescind a contract for fraud,a plaintiff must prove an injury.
A)True
B)False
Q2) Refer to Fact Pattern 10-4.Lucas later disputes some of the provisions of the deal with Kelly.If the dispute results in litigation,a court will most likely exclude evidence that A)buttresses the written terms.
B)contradicts the written terms.
C)duplicates the written terms.
D)reinforces the written terms.
Q3) A contract entered into under duress is voidable.
A)True
B)False
Q4) Waterfront Hotels Corporation in Boston offers a job to Carol,who lives in Denver.Carol orally agrees to work for Waterfront for two years.She moves her family to Boston and begins work.Three months later,she is fired for no stated cause.She files a suit against the employer for reinstatement or pay.Waterfront pleads the lack of a written contract.In whose favor is the court likely to rule,and why?
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Chapter 11:
Third Party Rights and Discharge
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Q1) Esther and Faisal agree that Esther will fix Faisal's car in exchange for his paying a preexisting debt owed by Esther to Gladys.Gladys is
A)an assignee.
B)an intended beneficiary.
C)an incidental beneficiary.
D)a delegatee.
Q2) Tom and Sydney enter into a contract for the sale of Tom's house for which Sydney agrees to pay $350,000.Sydney wants to transfer her right to the ownership of the house to Rena,her niece.This transfer generally
A)cannot be prohibited.
B)cannot be allowed.
C)can be prevented.
D)can be circumvented.
Q3) A condition subsequent terminates a party's promise to perform.
A)True
B)False
Q4) Any breach of contract discharges the breaching party.
A)True
B)False
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Chapter 12: Breach and Remedies
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Q1) Grady enters into a contract to buy 440 acres from Hollis to expand Grady's ranch.If Hollis breaches the contract,Grady's normal remedy would be A)damages.
B)quasi contract.
C)reformation.
D)specific performance.
Q2) Kris contracts to work exclusively for Little Manufacturing Company during May for $5,000.On April 30,Little cancels the contract.Kris finds another job during May but earns only $3,000.Kris files a suit against Little.As compensatory damages,Kris can recover
A)$3,000.
B)$2,000.
C)$1,000.
D)$0.
Q3) In a contract for a sale of goods,the usual measure of compensatory damages is the difference between the contract price and the market price.
A)True
B)False
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Chapter 13: The Formation of Sales and Lease Contracts
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Q1) Metro Daily and New City Newsstand enter into a contract under which Metro agrees to deliver a certain quantity of newspapers to New City each day.The contract does not include a price term.In a suit between the parties over the price,a court will
A)determine a reasonable price.
B)impose the lowest market price.
C)refuse to enforce the agreement.
D)return the parties to the positions they held before the contract.
Q2) Kip,a representative for Lite-Weight Shipping Company,delivers a bill of lading to Meg,the owner of Capacity Storage Warehouse.A bill of lading is
A)an invoice for payment for loading and carting.
B)an order to ship goods by carrier to a certain destination.
C)a receipt for goods signed by a carrier.
D)a receipt issued by a warehouser for goods in a warehouse.
Q3) Under a destination contract,if a lessor is a merchant,the risk of loss passes to a lessee when the lessee takes physical possession of the goods.
A)True
B)False
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Chapter 14: Performance Breach of Sales Lease Contracts
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Q1) If a lessor's tender of delivery fails to conform to a contract in any way,the lessee can reject the goods.
A)True
B)False
Q2) In contracts involving a carrier,a seller can complete performance only through a destination contract.
A)True
B)False
Q3) Genuine Seed Company and Hillside Farmers Cooperative enter into a contract for a sale of hybrid seeds.Under the perfect tender rule,Genuine Seed must ship or tender seeds to Hillside that
A)approximately conform to all of the details of the contract.
B)entirely conform to the contract except in one or two details.
C)exactly conform to the contract in every detail.
D)substantially conform to the contract in most details.
Q4) A seller can terminate a contract on the basis of commercial impracticability if increases in the seller's costs threaten to undercut its profits.
A)True
B)False
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Chapter 15: Warranties and Product Liability
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Q1) Only the manufacturer of a defective product can be strictly liable for an injury or damage caused by the product.
A)True
B)False
Q2) Any product may be made entirely safe for all consumption.
A)True
B)False
Q3) GR8 Skates Company makes and sells a pair of skates to Hugh.GR8 fails to exercise "due care" to make the skates safe,and Hugh is injured as a result.GR8 is most likely liable for
A)assumption of risk.
B)knowledgeable use.
C)negligence.
D)product misuse.
Q4) Strict liability applies to the suppliers of component parts.
A)True
B)False
Q5) Advertisements can include express warranties.
A)True
B)False
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Chapter 16: Negotiability,transferability,and Liability
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Q1) The completion of an originally incomplete instrument in an unauthorized manner is a defense against payment on the instrument to an HDC.
A)True
B)False
Q2) When an instrument has a forged indorsement,the loss usually falls on the first party to take the instrument.
A)True B)False
Q3) On May 1,Dooley signs a check that is payable to the order of Extra Credit Corporation and that is dated July 1.This check is A)negotiable.
B)nonnegotiable,because it is payable to Extra Credit Corporation.
C)nonnegotiable,because it is postdated.
D)nonnegotiable,because it is signed by Dooley.
Q4) Transfer warranties attempt to impose liability on the wrongdoer or the party who dealt most immediately with the wrongdoer.
A)True
B)False
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Chapter 17: Checks and Banking in the Digital Age
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Q1) A drawer is not liable to the holder of a check if the check is not honored.
A)True
B)False
Q2) First Community Bank agrees to accept a check by setting aside sufficient funds to cover the amount.This check is considered
A)cashed.
B)certified.
C)deposited.
D)provisionally credited.
Q3) A bank is subject to a civil suit if its customer writes a bad check.
A)True
B)False
Q4) If a customer's debit card is lost or stolen and used withoiut permission,the customer shall be required to pay no more than $50.
A)True
B)False
Q5) Generally,a bank has no obligation to pay a customer's overdrafts.
A)True
B)False
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Chapter 18: Security Interests in Personal Property
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Q1) Computer World (CW),after repossessing a multimedia system from Dave,a consumer,decides to keep the system instead of reselling it.CW sends written notice to Dave.CW can now keep the system
A)only after attempting an unsuccessful public sale of the system.
B)only after notifying any other appropriate secured party.
C)unless Dave objects.
D)under any circumstances.
Q2) Under certain conditions,a purchase-money security interest will take priority over a previous creditor's interest in after-acquired property.
A)True
B)False
Q3) Khalil holds a security interest in inventory owned by Luc.Khalil assigns his interest in the inventory to Mal.Mal becomes the secured party of record
A)automatically.
B)if Khalil advises Luc of the assignment.
C)if Mal advises Luc of the assignment.
D)if Mal files a uniform amendment form.
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Chapter 19: Creditors Rights and Bankruptcy
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Q1) Subrogation refers to the right of a co-surety to recover from the other co-sureties the amount paid above his or her proportionate share of a debt.
A)True
B)False
Q2) Refer to Fact Pattern 19-2.Mary will receive A)0.
B)$30,000.
C)$50,000.
D)$60,000.
Q3) The basic duty of a trustee is to collect and reduce to cash the property in the bankruptcy estate that is not exempt.
A)True
B)False
Q4) A guarantor can be required to pay an obligation only after the principal debtor defaults.
A)True
B)False
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Chapter 20: Mortgages Foreclosures After the Recession
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Q1) Laurel borrows $150,000 from Marketplace Mortgage Loans to buy a home.The financing documents require Laurel to maintain the property,obtain homeowners' insurance,and pay all property taxes and other assessments through the lender.With respect to these terms,a court is most likely to
A)enforce them.
B)refuse to enforce them.
C)rescind them.
D)rewrite them.
Q2) There are additional disclosure requirements for a high-cost mortgage loan.
A)True
B)False
Q3) A lender can make a higher-priced mortgage loan based on the value of the consumer's home without verifying the consumer's other credit obligations.
A)True
B)False
Q4) The annual percentage rate is the actual cost of a loan on a yearly basis.
A)True
B)False
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Chapter 21: Agency Relationships
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Q1) A principal owes an agent a duty of accounting.
A)True
B)False
Q2) Kady,an agent for Lebron,enters into a contract on Lebron's behalf with Madge that must be in writing to be enforceable under the Statute of Frauds.Kady's authority to enter into this contract is not in writing.Under the equal dignity rule,this contract is
A)enforceable.
B)void.
C)voidable at Lebron's option.
D)voidable at Madge's option.
Q3) Clu serves in a representative capacity for Digger.Elmo is injured through Clu's negligence.Digger may be liable to Elmo if Clu's conduct occurred
A)due to a propensity Digger was not and could not have been aware of.
B)during normal working hours.
C)in the course and scope of Clu's employment.
D)outside the parties' employment relationship.
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Chapter 21: Management Perspective:
Independent-Contractor Negligence
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Q1) The Warehouse Workers Union represents Valley Transfer Company's employees in collective bargaining negotiations over a new contract.In a memo to the employees,Valley's president Uri accuses the union of delaying tactics.Later,Troy,a Valley employee,tells Stella,his supervisor,that Uri is "a m * * * * * f * * * * r." Stella fires Troy for violating a company rule against "threats." Troy files a suit against Valley.Under the holding in Media General Operations,Inc.v.National Labor Relations Board,the court will most likely conclude that the National Labor Relations Act
A)did not protect Troy from discharge.
B)does not apply to the use of profanity.
C)protected Troy from discharge.
D)requires Troy's immediate arrest.
Q2) Jewel Property Company hires Klint,an independent contractor,to wash the windows of Jewel's commercial building.Jewel's tenant Lucy is injured when Klint closes a window on her hand.In determining whether Jewel is liable for Lucy's injury,the most important factor is
A)Jewel's employment of Klint.
B)Jewel's investigation of Klint's background and experience.
C)the condition of the premises,especially the window.
D)the degree of control that Jewel maintained over Klint's actions.
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Chapter 22: Employment, immigration, and Labor Law
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Q1) Svetlana,a fifty-five-year-old member of a racial minority with a disability,believes that she is a victim of employment discrimination.Potentially the most widespread form of discrimination is based on A)age.
B)disability.
C)gender.
D)race.
Q2) Detail Designs Company,an architectural firm,wants to hire Eduardo,a noncitizen.A temporary work visa is most likely to be set aside for a noncitizen who is
A)a "person of ethnic similarity to the employer's workforce."
B)a "person of extraordinary ability."
C)a "person of ordinary ability and ambition."
D)a "person with an extraordinary work ethic."
Q3) Employer who willfully violates safety regulations can be prosecuted under state laws.
A)True
B)False
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Chapter 23: Sole Proprietorships, partnerships, Limited Liability Co
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Q1) Each partner is an agent of the partnership in carrying out the usual business of the firm.
A)True
B)False
Q2) QuizBooks LLC is a limited liability company.Like any other LLC,unless QuizBooks chooses otherwise,the firm will be taxed as
A)a corporation.
B)a natural person.
C)a partnership.
D)a sole proprietorship.
Q3) Felipe is a member of Great States Transport LLC.Felipe's relationship to Great States ends,but the firm continues to do business.This is A)dissociation.
B)dissolution.
C)winding up.
D)wrongful.
Q4) A partner always has the power and the right to dissociate from the partnership. A)True
B)False
26
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Chapter 24: Corporate Formation, financing, and Termination
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Q1) A corporate takeover is the process of acquiring control over a corporation by the purchase of a substantial number of the voting shares of its stock.
A)True
B)False
Q2) To pierce the corporate veil means to ignore the corporate structure,exposing the shareholders to personal liability.
A)True
B)False
Q3) The state can bring an action to dissolve a corporation that has failed to pay its annual taxes.
A)True
B)False
Q4) A corporation whose shares are held by relatively few persons is a partnership.
A)True
B)False
Q5) A corporation is liable for the torts committed by its officers within the course and scope of their employment.
A)True
B)False
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Chapter 25: Corporate Directors, officers, Shareholders
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Q1) Some states permit a corporate board to have fewer than three directors.
A)True
B)False
Q2) Whit is a director of Vids Corporation.With respect to policymaking decisions necessary to the management of corporate affairs,Whit and the other Vids directors have responsibility for A)all of the decisions.
B)only the decisions referred to them by the shareholders.
C)only the decisions referred to them by the officers.
D)none of the decisions.
Q3) Shares issued for more than their fair market value are known as watered stock. A)True
B)False
Q4) A director cannot be elected by the other members of the board.
A)True B)False
Q5) A corporation cannot refuse a shareholder's request to inspect corporate records. A)True B)False
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Chapter 26: Investor Protection, insider Trading, Corp Gov
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Q1) Squeaky Clean Corporation wants to make an offering of securities to the public.This offering is not exempt from registration under the Securities Act of 1933.Before Squeaky sells its securities,it must provide investors with
A)a forward-looking financial forecast.
B)an investment contract.
C)a prospectus.
D)samples of its products.
Q2) Refer to Fact Pattern 26-2.Regarding Sid's profits on the purchase and sale of Tech stock,under Section 16(b)of the Securities Exchange Act of 1934 Tech may recapture
A)all of Sid's profits.
B)half of Sid's profits.
C)10 percent of Sid's profits.
D)none of Sid's profits.
Q3) Willful violations of the Securities Act of 1933 may be subject to criminal prosecution.
A)True
B)False
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Chapter 27: Personal Property and Bailments
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Q1) Kade and Lila each press certain quantities of olive oil to sell to Mediterranean Products,Inc. ,and agree to share storage costs until Mediterranean can take delivery.The oil is commingled so that Kade's cannot be distinguished from Lila's.This is A)accession.
B)confusion.
C)conversion.
D)dominion.
Q2) Rhett works at Scarlett's Sandwich Café.After work,in the parking lot,Rhett finds a diamond ring lost by Thalia.Title to the ring is possessed by A)Rhett.
B)Scarlett's.
C)Thalia.
D)the state.
Q3) Property voluntarily discarded by its owner with no intention of reclaiming it is lost property.
A)True
B)False
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Chapter 28: Real Property and Landlord-Tenant Law
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Sample Questions
Q1) Tyro has the right to drive across Ula's land,which is next to Tyro's property,to reach an access road.Tyro's right is
A)an easement appurtenant.
B)an easement in gross.
C)a profit appurtenant.
D)a profit in gross.
Q2) Cow Country Corporation (CCC)sells half of its land to the Double R Ranch.On the land is a reservoir.In the deed,CCC retains the right to remove a limited amount of water per day from the reservoir.This right is
A)a leasehold estate.
B)a license.
C)an easement.
D)a profit.
Q3) Under the covenant of quiet enjoyment,a landlord promises that a tenant will not be disturbed in the possession of the premises.
A)True
B)False
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Chapter 29: Insurance, wills, and Trusts
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Q1) Gigi,a twenty-year-old,wants to execute a will before she undertakes a mountain-climbing trip on a peak in the Himalaya Mountains.In most states,the legal age for executing a will is
A)sixteen years of age.
B)eighteen years of age.
C)twenty-one years of age.
D)twenty-five years of age.
Q2) Amelia executes a separate written instrument to amend her prior will.This separate document is
A)a codicil.
B)a holographic will.
C)a living will.
D)a nuncupative will.
Q3) Bret obtains a fire insurance policy on his rental house with Continental Insurance Company.Like all insurance,this policy is an arrangement for
A)avoiding the assumption of responsibility.
B)predicting a potential loss based on unknown factors.
C)shifting the imposition of liability.
D)transferring and allocating risk.
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Page 32
Chapter 30: Liability of Accountants Other Professionals
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Q1) Pace is an attorney,whose clients include Quikfeet Running Shoes Company.Unless Quikfeet has violated securities law,the contents of Pace's file on Quikfeet may be disclosed to someone other than Quikfeet
A)only to a third party who is a foreseeable user of the information.
B)only under a court order (with or without Quikfeet's consent).
C)only with Quikfeet's consent.
D)under any circumstances.
Q2) Generally,an accountant must exercise the degree of care that an ordinarily prudent accountant would exercise.
A)True
B)False
Q3) Accountants and other professionals may not be held liable for negligence in the performance of their service.
A)True
B)False
Q4) In most courts,auditors cannot be held liable to third parties for negligence in the performance of their duties.
A)True
B)False
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Chapter 31: International Law in a Global Economy
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Q1) Congress cannot impose any restrictions on exports except taxes.
A)True
B)False
Q2) Quality Energy Company,a U.S.firm,and Royal Petro,a Dutch firm,enter into a contract that includes an arbitration clause.This clause must provide that the arbitrator will be A)any specified third party.
B)the American Arbitration Association.
C)the Dutch Arbitration Organization.
D)the International Chamber of Commerce.
Q3) International law attempts to reconcile the authority of each nation over its own affairs with its desire to benefit from trade and harmonious relations.
A)True
B)False
Q4) Under the act of state doctrine,a firm whose assets a foreign government has expropriated may not recover compensatory damages in a U.S.court.
A)True
B)False
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34
Chapter 32: Adapting the Law to the Online Environment:
The Supreme Court Upholds a Law That Prohibits Pandering
Virtual Child Pornography
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Q1) Congress intends to enact a law to criminalize the distribution of illegal child pornography on the Internet.Most likely to be held constitutional is a statute that prohibits
A)offers to provide,and requests to obtain,child pornography.
B)the possession of virtual child pornography.
C)the possession of real and virtual child pornography.
D)a substantial amount of protected speech-especially pornography.
Q2) Arizona enacts a statute that directly conflicts with a federal law.Under the supremacy clause of the U.S.Consitution,
A)Arizona's statute is rendered invalid.
B)the federal law is rendered invalid.
C)Arizona's statute and the federal law are both rendered invalid.
D)Arizona's statute and the federal law apply concurrently.
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Chapter 33: Adapting the Law to the Online Environment:
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Q1) Nina,a high school teacher,requires Milo and her other students to submit their assignments to a plagiarism service to be compared to the contents of an online database of scholarly works.The assignments are also archived in the database.A federal court is most likely to find that this A)infringes the studnets' copyright interests.
B)qualifies as "fair use" and does not infringe the students' copyrights.
C)falls under the definition of "loss" in the Computer Fraud and Abuse Act. D)fits within the "damages" clause of the Virginia Computer Crimes Act.
Q2) O.K.Valve Company applies for a patent for a valve.Meanwhile,O.K.licenses its products,including the valve,to Petro Pumps,Inc. ,which uses the valve to make oil pumps.Under the terms of the license,Petro agrees to pay royalties on O.K.'s "patented" products.When a patent is granted on the valve,O.K.asks Petro to pay royalties on the sales of its pumps.Petro wants to challenge the validity of O.K.'s patent.According to the majority in MedImmune,Inc. ,v.Genentech,Inc.case,a patent licensee can challenge the validity of a licensed patent
A)only after breaching the license agreement.
B)only before breaching the license agreement.
C)without breaching the license agreement.
D)under no circumstances.
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Chapter 35: Management Perspective: E-Mailed
Credit-Card Receipts
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Q1) Gabe asks his cousin Francie to sacrifice her career,move her home and family,and provide services,at a lower salary than usual,to Gabe's new Farm-to-Fork Produce Company.Gabe tells Francie that she will jointly own and run the firm.Francie agrees.Later,after the firm gains the benefit of Francie's services,Gabe forces Francie out.According to the dissent in the Braddock case,these facts sufficiently allege the elements of a claim for
A)damages based on quasi contract.
B)recovery in fraud.
C)relief from a unilateral mistake.
D)none of the choices.
Q2) The truncation (shortening)requirement of the Fair and Accurate Credit Transactions Act of 2003 applies only to receipts that are "electronically printed." Eagle Motorcycle Rents accepts reservations on-site and online.On-site customers are given tangible paper receipts.Online customers are sent an online confirmation.The truncation requirement applies to
A)Eagle's online confirmations only.
B)Eagle's tangible paper receipts only.
C)Eagle's online confirmations and tangible receipts.
D)none of Eagle's confirmations or receipts.
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Chapter 34: Case Study With Dissenting Opinion: Prestridge
V Bank of Jena
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Q1) More than thirty days after Rhett receives his account statement from Silverado Bank,he notifies the bank that Thalia forged Rhett's name on some of the checks that the bank has cashed.The majority in Prestridge v.Bank of Jena would most likely hold Silverado liable for A)all checks.
B)checks that were cashed less than thirty days after the statement. C)checks that were cashed more than thirty days after the statement. D)no checks.
Q2) In the facts of the previous question,suppose that Thalia had had access to Rhett's checks through his carelessness.The majority in the Prestridge case would then most likely hold Silverado liable for A)all checks.
B)checks that were cashed less than thirty days after the statement. C)checks that were cashed more than thirty days after the statement. D)no checks.
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Chapter 36: Adapting the Law to the Online Environment: The Thorny Issue
of Taxing Internet Sales
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Q1) According to the majority in Casserlie v.Shell Oil Co. ,a commercially reasonable and nondiscriminatory price is
A)evidence of a seller's good faith.
B)parol evidence.
C)unconscionable.
D)a requirement for an inquiry into the seller's motives.
Q2) New York enacts a statute that requires a label on a video game to warn parents when "the range of options available to a player include dismembering or sexually assaulting the image of a human being." On appeal from a challenge by gamemakers,the state asks a federal court to enforce the statute.Based on the decisions of other federal courts in cases involving similar statutes,the court in this case is most likely to
A)refuse to extend restrictions on sex-based content to violence in video games.
B)expand the label's warning to include other forms of violence.
C)impose market-share liability on makers of violent video games.
D)replace the voluntary rating system currently in use.
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The Debt That Never Goes Awayits Discharged in
but Still on the Debtors Credit Report
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Q1) Unicameral Production,Inc. ,files for bankruptcy.Vance,Unicameral's bankruptcy trustee,wants to recover a transfer that Unicameral made to Wisconsin State University (WSU)less than ninety days earlier.WSU asserts its sovereign immunity.Under the majority's holding in Central Virginia Community College v.Katz,the party most likely to prevail in this situation is
A)both Vance and WSU.
B)neither Vance nor WSU.
C)Vance.
D)WSU.
Q2) Orly's debts are discharged in a liquidation bankruptcy.Pester & Recover,Inc. ,buys the discharged debt obligations.With respect to these debts,Pester
A)can do nothing.
B)can pressure Orly into paying them.
C)must give Orly additional help to rebuild her life after the discharge.
D)must report the debts to credit reporting agencies as "discharged."
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Page 40
Chapter 38: Adapting the Law to the Online Environment:
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Q1) Ren is a shareholder of Star Corporation.Ren wants to amend Star's bylaws to require it to publish the names of shareholder-nominated candidates for positions on the board of directors.Under the Securities and Exchange Commission's "notice and access" e-proxy rules,Ren can solicit proxies from other Star shareholders on this proposal by posting proxy materials on a publicly accessible Web site and sending a paper notice to A)any Star shareholder Ren selects.
B)each Star shareholder.
C)Star Corporation.
D)the Securities and Exchange Commission.
Q2) Sayer is an employee of Thorny Foliage Eradication,Inc.Sayer tweets messages about Thorny Foliage to employees and outside interested parties,including investors and others.According to the Securities and Exchange Commission,Sayer's messages are subject to
A)federal securities laws.
B)international communications regulations.
C)state blog and tweet rules.
D)no law.
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Chapter 39: Case Study With Dissenting Opinion: Kovarik V
Kovarik
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Q1) In the facts in the previous question,if the CDs are seen as the property of Heidi and Irene,the sisters are most likely
A)joint tenants.
B)tenants at sufferance.
C)tenants by the entirety.
D)tenants in common.
Q2) In the facts in the previous question,according to the dissent in the Kavarik case,with respect to Glen and Heidi's marital estate,the CDs are
A)not included because Heidi's parents did not intend to give them to her.
B)not included because Irene cashed them without sharing the proceeds.
C)included because Glen and Heidi were married when the CDs were acquired.
D)included because Heidi's parents gave up control when the CDs were placed in the names of Heidi and Irene.
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Chapter 40: Unit Case Study With Dissenting Opinion: Dole
Food Co V Patrickson
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Q1) Amigos,Ltd. ,and Bueno,S.A. ,are Chilean firms.Amigos owns a majority of the shares of Bueno.The government of Chile owns a few shares of Amigos.Under the decision in Dole Food Co.v.Patrickson,parties who are immune from suit in U.S.courts under the Foreign Sovereign Immunities Act,as instrumentalities of foreign states,would include A)Amigos and Bueno.
B)neither Amigos nor Bueno.
C)only Amigos.
D)only Bueno.
Q2) In the facts of the previous question,according to the reasoning of the dissent in Dole Food Co.v.Patrickson,parties who would be potentially subject to suit in U.S.courts would include
A)Amigos and Bueno.
B)neither Amigos nor Bueno.
C)only Amigos.
D)only Bueno.
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