Legal Environment of Business Final Exam
Course Introduction
The Legal Environment of Business explores the fundamental legal principles and frameworks that govern commercial activities in the United States and globally. The course examines the structure and role of the courts, sources of law, and key areas such as contracts, torts, intellectual property, employment law, and government regulation. Emphasis is placed on how businesses operate within the boundaries of legal and ethical constraints, and how laws impact managerial decision-making, risk management, and the overall business environment. Students will gain practical insights and analytical skills to navigate legal challenges and ensure compliance while achieving organizational objectives.
Recommended Textbook Essentials of Business Law 4th Edition by Jeffrey
F. Beatty
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Chapter 1: Introduction to Law
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Q1) The treaty known as the North American Free Trade Agreement could only become law in the United States after being ratified by the U.S.Senate.
A)True
B)False
Answer: True
Q2) President Nixon issued wage-price controls in an effort to stabilize the economy.This use of executive power was:
A)an illegal usurption of legislative powers which belong to the Congress.
B)a valid use of power, known as an executive order.
C)a valid use of power creating a treaty.
D)an illegal usurption of the regulatory powers of administrative agencies.
Answer: B
Q3) The doctrine that requires a judge to decide a case based on previous rulings has its roots in:
A)the English common law.
B)English equitable remedies.
C)the US Constitution.
D)the civil law tradition.
Answer: A
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Page 3
Chapter 2: Business Ethics and Social Responsibility
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Q1) Stakeholders include:
A)Members of the community.
B)Customers.
C)Managers.
D)All of the above.
Answer: D
Q2) Which of the following is NOT a question in the ethics checklist?
A)How much profit will an alternative earn for my company?
B)Who are the stakeholders?
C)Is more than one alternative right?
D)What are the facts?
Answer: A
Q3) There is strong evidence that ethical behavior pays off financially for businesses.
A)True
B)False
Answer: False
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Chapter 3: Dispute Resolution
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Q1) Which of the following is not an example of a trial court of limited jurisdiction?
A)A probate court.
B)A juvenile court.
C)A small claims court.
D)A general civil division court.
Answer: D
Q2) Summary judgment is appropriate when essential facts are disputed.
A)True
B)False
Answer: False
Q3) Discovery is a critical stage of both litigation and arbitration.
A)True
B)False
Answer: False
Q4) In a civil case,the plaintiff must prove the case beyond a reasonable doubt.
A)True
B)False
Answer: False
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Page 5
Chapter 4: Common Law, statutory Law, and Administrative Law
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Q1) Under US law,a bystander has no duty to assist someone in peril unless she created the danger.
A)True
B)False
Q2) The last protected trait added by Congressman Smith of Virginia to the bill which became Title VII of the Civil Rights Act of 1964 was: A)sex.
B)sexual orientation.
C)national origin.
D)race.
Q3) Even if a statute's words have ordinary,everyday significance,the court will look at the legislative history of the law and public policy in order to interpret the statute.
A)True
B)False
Q4) The doctrine of stare decisis,though vital to the creation of the common law when this country was settled,is not important to our modern,complex society.
A)True B)False
Page 6
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Chapter 5: Constitutional Law
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Q1) The Fifth Amendment to the Constitution provides Robert,an employee of Mattax Paper Co.,due process protection from being fired without a hearing by a neutral fact finder.
A)True
B)False
Q2) Congress passed the federal OSHA establishing job safety standards.Illinois passed its own statute,seeking to protect the general public and workers from hazardous wastes.The Illinois statute did not violate the Commerce Clause because it imposed no restriction on interstate commerce.Local workers were obligated to obey both the federal and the state regulations.
A)True
B)False
Q3) The issue of the constitutional protections afforded flag burning was addressed in:
A)Texas v.Johnson.
B)United States v.Lopez.
C)Marbury v.Madison.
D)Palmore v.Sidoti.
Q4) Discuss the Miller test to determine if a creative work is obscene.
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Chapter 6: Torts
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Q1) MaryLou,Inc.entered into a one-year,$1 million contract with Katy,a TV celebrity,to promote MaryLou's beauty products.Alberto Bergamino Co.,a competitor of MaryLou,was interested in having Katy promote its products and knew of her contract with MaryLou.Bergamino offered Katy a three-year,$5 million contract.She left MaryLou and signed with Bergamino.Which statement is correct?
A)MaryLou is liable for tortuous interference with a contract.
B)Katy is liable for tortuous interference with a contract.
C)Alberto Bergamino is liable for tortuous interference with a contract.
D)Both Alberto Bergamino and Katy are liable for tortuous interference with a prospective advantage
Q2) A business will incur strict liability for damages resulting from:
A)using harmful chemicals.
B)operating explosives.
C)bringing dangerous substances onto property.
D)a defective product manufactured or sold by the business.
E)All of the above.
Q3) Erika's arm is broken when Alice knocks her down during an argument.If Erika sues Alice for battery,what damages will Erika be likely to receive?
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Chapter 7: Crime
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Q1) List and discuss the protections afforded criminal defendants by the Bill of Rights.
Q2) Every criminal defendant has a right to a jury trial.
A)True
B)False
Q3) Which of the following statements about the exclusionary rule is correct::
A)Illegally obtained evidence is not permitted to be used at a criminal trial.
B)It is based on the Fourth Amendment.
C)Good faith is an exception to the rule.
D)All of the above.
Q4) The Miranda warning insures that the criminal suspects understand their constitutional rights relating to:
A)search and seizure.
B)self incrimination.
C)double jeopardy.
D)arrest and indictment.
Q5) A crime is a violation of statutory law.
A)True
B)False
Q6) Compare and contrast money laundering and embezzlement.Give an example of each.
Page 9
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Chapter 8: International Law
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Q1) The Austrian government has opened a tourist information center in New York City.If a dispute arises over the lease of the storefront,may the landlord sue the Austrian government in the United States courts?
A)Yes, because the Austrian government was engaged in a commercial activity.
B)No, because of the Foreign Sovereign Immunities Act which forbids U.S.courts from hearing any cases involving foreign governments.
C)Yes, if the Austrian government signed a written waiver giving up its immunity.
D)Yes, as the Austrian government is a signatory on the CISG.
Q2) MicroWare is a U.S.company based in Utah.It is negotiating to sell $4 million worth of computer goods to a French company,Baranger.MicroWare's attorney suggests that payment be by a letter of credit.What is a letter of credit and why does MicroWare's attorney recommend payment by letter of credit?
Q3) The European Union is the world's most powerful regional association with 27 member nations as of 2010.
A)True
B)False
Q4) Explain the origin and purpose of the World Trade Organization.
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Page 10
Chapter 9: Introduction to Contracts
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Q1) Courts may award damages called "quantum meruit":
A)which means "as much as he deserved."
B)which is money the court believes the plaintiff morally ought to have.
C)even though there was no valid contract entitling the plaintiff to it.
D)All of the above.
Q2) Zena enters into a contract with Steeley Company to purchase a washer and dryer.She doesn't understand the financing terms,but signs the agreement anyway because she needs the appliances.The financing terms are very unfavorable to Zena,and she is unable to make all of her payments when they are due.Steeley sues.The court would:
A)be exercising judicial restraint if it requires Zena to pay as she promised, even if the agreement was unfair and unwise.
B)have to rewrite the contract to be fair to both parties.
C)have to declare the contract void since it contained terms unfavorable to the weaker party to the transaction.
D)use the theory of promissory estoppel to remedy any unfavorable terms in the contract.
Q3) List and briefly describe the basic elements of a contract.
Q4) Discuss the requirements of promissory estoppel.
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Chapter 10: Agreement
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Q1) April put an advertisement in the newspaper advertising the sale of her computer for $500.Simultaneously,six people responded to the ad by mail with formal written acceptances.April is bound on six contracts to sell her computer for $500.
A)True
B)False
Q2) The intent of the offeror to extend an offer to the offeree is generally determined by reference to:
A)the beliefs of the offeror.
B)the subjective intention of the offeror.
C)the assumptions of the offeror.
D)the words and conduct of the offeror.
Q3) Arthur offers to sell his fishing boat to Mark.Before they conclude their negotiations,Arthur dies.Which of the following is true?
A)Arthur's heirs must sell the boat to Mark.
B)The offer terminates automatically upon Arthur's death.
C)The offer remains valid for a reasonable time after Arthur's death.
D)There is a contract if Mark accepts before learning of Arthur's death.
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Chapter 11: Consideration
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Q1) Under the Uniform Commercial Code,an agreement modifying a contract:
A)always requires consideration.
B)may not require consideration.
C)requires consideration only when it is not written.
D)requires consideration only when one of the parties is a minor.
Q2) An agreement to pay a lesser amount to settle an unliquidated debt is:
A)enforceable, as there is consideration.
B)unenforceable, as there is no consideration.
C)enforceable in only some states.
D)unenforceable as a violation of public policy.
Q3) Hilda owes Lex $3,000,which is an undisputed amount.If she offers him her car in full settlement of the debt and he accepts,the agreement is binding and he can no longer claim she owes him anything on the original debt.
A)True
B)False
Q4) Society enforces all promises in the interests of simple morality.
A)True
B)False
Q5) Discuss the concept of consideration.
Q6) What two exceptions did the UCC create for accord and satisfaction check cases?
Page 13
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Chapter 12: Legality
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Q1) Which of the following relationships will ordinarily not create an insurable interest?
A)Husband and wife.
B)Doctor and patient.
C)Debtor and creditor.
D)Chief executive officer and corporation.
Q2) If a contract is made with a person required by law to hold a license,and the purpose of the license is protection of the public,the contract made by an unlicensed person will generally be unenforceable.
A)True
B)False
Q3) Marcy and Elliot are both sophisticated merchants who deal in diamonds.Marcy contracted to purchase a diamond for $20,000.The day after the purchase,Marcy took the diamond to a jeweler's show but the highest offer for the diamond was only $10,000.Is Marcy's contract for purchase of the diamond for $20,000 unconscionable?
Q4) Discuss the pros and cons of gambling and whether there might be any reason for a court or legislature to treat gambling on credit any differently from gambling itself.
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Page 14
Chapter 13: Capacity and Consent
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Q1) Which of the following is most likely to constitute fraud?
A)A false prediction that a painting's value will rise.
B)A false statement that a used car is "the best deal in town."
C)A false statement that a $30,000 car attracts members of the opposite sex.
D)Silence as to a toxic waste problem on real property that the buyer would not reasonably find.
Q2) Vernon suffers from a mental impairment due to a brain injury from a motorcycle accident.He contracts with Glena to purchase her dining room furniture.A month later,he tries to void the contract.If he is unable to return the furniture,a court will not rescind the agreement unless Vernon can show that Glena acted in bad faith.
A)True
B)False
Q3) After her 18th birthday Lora may,by words or action,ratify a contract she made during the previous year.
A)True
B)False
Q4) Adrianna wants to purchase a ten-acre tract of land.Under what circumstances would the seller be required to divulge information Adrianna does not possess?
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Page 15
Chapter 14: Written Contracts
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Q1) Which of the following types of contracts cannot be either contradicted or supplemented by evidence of prior agreements or expressions?
A)Totally integrated contracts.
B)Incomplete contracts.
C)Ambiguous contracts.
D)All of the above.
Q2) Renita,a merchant,has received a signed,written confirmation from Merchants,Inc.referring to goods she had not ordered.Renita should:
A)ignore the confirmation.
B)call the seller and object to the confirmation as soon as she gets back from her two-week vacation.
C)object to the confirmation in writing within 10 days.
D)return the goods within two weeks of their delivery with a note attached saying she will not pay for the goods.
Q3) Any contract involving a sale of goods of $500 or more must be in writing to be enforceable.
A)True
B)False
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16
Chapter 15: Third Parties
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Q1) An assignment is effective from the moment it is made,provided the assignor notifies the obligor.
A)True
B)False
Q2) Brandon owes money to Jim.If Jim assigns to Rita his rights to Brandon's money,Jim is:
A)the obligor.
B)the assignee.
C)the assignor.
D)the beneficiary.
Q3) A party may make either an assignment or a delegation,but cannot make both an assignment and a delegation simultaneously.
A)True
B)False
Q4) Joan purchases a recreational vehicle on credit from RV World.RV World keeps a security interest in the vehicle.RV World then assigns the security interest to West First Bank.Explain what having a security interest means.Under the UCC,what defenses can Joan assert against West First Bank?
Q5) Briefly discuss the enforceability of contracts by third parties.
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Chapter 16: Performance and Discharge
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Q1) The distinction between a condition precedent and a condition subsequent:
A)is important because it determines whether the condition has to occur before or after the contract is made.
B)determines who has the burden of proof.
C)is important as it determines whether the conditions are concurrent.
D)is important because it determines whether the condition must be express or whether it can be implied.
Q2) Buddy was hired to play drums for a rock group scheduled to tour the Midwest.Part way through the tour,Buddy was tragically killed in a plane crash.The tour had to be discontinued until a new drummer could be found.The band lost money on the tour.Is Buddy's estate or agent responsible for the loss to the band?
Q3) Al contracted to sell his house to Bev.Subsequently,they both changed their minds and agreed to cancel the contract.The contract between Al and Bev is discharged by:
A)full performance.
B)rescission.
C)accord and satisfaction.
D)novation.
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Page 18
Chapter 17: Remedies
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Q1) Most courts hold that a seller of goods is not entitled to consequential damages.
A)True
B)False
Q2) The case Toscano v.Greene Music is an example of when reliance damages may be awarded..
A)True
B)False
Q3) Under the UCC,if a seller of goods breaches the contract,the buyer:
A)must "cover."
B)may receive only the current market value of the goods.
C)may "cover" and then receive the difference between the original contract price and the "cover" price.
D)will be awarded the difference between the original contract price and the market value of the goods if the buyer chooses to "cover."
Q4) Nominal damages are awarded in contract cases in which a damage amount was named in the contract.
A)True
B)False
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Chapter 18: Introduction to Sales
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Q1) Sean of Sean's Shrimp House was enjoying a cup of cappuccino while visiting with Ollie at Ollie's Ocean Front Bar & Grill.During the course of their conversation,Sean agreed to supply 100 pounds of shrimp per month for the next year to Ollie's restaurant at the price of $2.50 per pound.When Sean got back to his office,he sent a written confirmation of the agreement to Ollie.Six weeks after receiving the confirmation Ollie wrote back,stating that he had not agreed to the price of $2.50 per pound.Is Ollie bound to the confirmation?
Q2) Jones contracts to buy a computer from Martin for $1500.The contract calls for Martin to service the computer quarterly for the first year and to tutor Jones on how to use the software.Is this contract covered by the UCC or common law?
Q3) Discuss open price under the UCC.
Q4) The UCC does not apply to contracts for the sale of goods if the value of the goods is less than $500.
A)True
B)False
Q5) Discuss the UCC good faith requirement.Does it apply differently depending on whether the parties are merchants or not?
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Page 20
Chapter 19: Ownership and Risk
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Q1) Which of the following statements about identification is correct?
A)It permits the buyer to obtain insurance on the goods.
B)For unborn animals, it takes place when they are conceived.
C)It must occur before title can pass.
D)All of the above.
Q2) Assume that Dick steals Jane's camcorder and sells it to Sid.Jane can recover the camcorder from Sid:
A)under any circumstances.
B)only if Sid knew that the camcorder was stolen from Jane.
C)only if Sid did not know that the camcorder was stolen from Jane.
D)only if Sid paid less than the fair market value for the camcorder.
Q3) Mike sold his car to Beth,who was to pick the car up at Mike's house by 12:00 noon on September 1.Mike was at his house waiting for Beth but she was late.In fact,when Beth arrived she discovered Mike's home and the car destroyed by a fire that started at 1:00 p.m.The risk of loss falls on:
A)Mike because Beth had not taken possession of the car.
B)Beth because Mike was ready, willing, and able to tender the car at 12:00 noon.
C)Beth because under the UCC, the buyer bears the risk of loss.
D)Mike, as he had possession of the car.
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Page 21
Chapter 20: Warranties and Product Liability
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Q1) Which of the following statements could create an express warranty?
A)"This is the best car available in town."
B)"This motorcycle will double in value in the next ten years."
C)"These tires have 10,000 miles on them."
D)"This antique is quite a bargain."
Q2) Alice's Aspirin Inc.,produces and packages aspirin for sale to retail stores.Bob buys a bottle of Alice's aspirin at Dahl's Food Stores.Two days later Bob's friend,Hank,takes two aspirin while at Bob's house.Within minutes,Hank is very ill and is rushed to the hospital,where it is found that a defect in the aspirin caused the reaction.Which of the following is correct?
A)Hank can sue both Alice's Aspirin Inc.and Dahl's under tort theories because he is an injured party due to the defective product.
B)Hank cannot sue anyone because he assumed the risk of taking the aspirin.
C)Hank cannot sue anyone because he is not in privity with Dahl's or Alice's.
D)Hank can sue but will not be able to recover consequential damages for his medical expenses.
Q3) The Magnuson-Moss Warranty Act requires sellers to give written warranties.
A)True
B)False
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Page 22
Chapter 21: Performance and Remedies
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Q1) Which of the following statements about the UCC "perfect tender" rule is correct?
A)The buyer has the obligation to accept the goods if the nonconformity is not substantial but is entitled to compensation.
B)The buyer can reject the entire shipment if any portion of the goods are nonconforming.
C)The buyer must reject nonconforming goods.
D)If the buyer rejects the goods, he must reject the whole shipment, even though some of the goods are conforming.
Q2) Neon orders one thousand 25-foot nylon ropes from Hang'em High Co.Upon inspection of the delivery,Neon learns that Hang'em sent five hundred 25-foot ropes and five hundred 20-foot ropes.Neon may:
A)demand that Hang'em send 500 additional 25-foot ropes.
B)accept the 500 conforming ropes and reject the 500 nonconforming ropes.
C)seek an installment contract.
D)declare an anticipatory repudiation.
Q3) Identify seven possible remedies for a buyer when the seller breaches a contract.
Q4) Discuss the UCC rules on the limitation of damages in a contract.
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Chapter 22: Creating a Negotiable Instrument
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Q1) A & D,Inc.wrote a negotiable note payable to Vicy,Inc.A & D left the amount of the note blank because it was uncertain as to amount of the applicable tax.Vicy completed the note for $3,000 more than A & D actually owed for the products it purchased.The note was negotiated to a holder in due course.A & D will not have to honor the note as this constituted fraud in the execution.
A)True
B)False
Q2) It was payday.Navidida decided to run some errands and then deposit her check in the bank over her lunch hour.So that she wouldn't have to spend too long at the bank,Navidida indorsed the back of the paycheck as follows,"Navidida Jones," before leaving work.While window shopping,Navidida lost the check.Roger finds Navidida's paycheck.
(A)Will Roger be able to cash Navidida's check?
(B)How could have Navidida indorsed the check so that she would not have to be concerned about losing the check?
Q3) To be negotiated,bearer paper must simply be delivered.
A)True
B)False
Q4) Explain the shelter rule.
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Chapter 23: Liability for Negotiable Instruments
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Q1) A person who adds her signature to an instrument for the purpose of being liable on it is an accommodation party.
A)True
B)False
Q2) To pay for a minor repair,May writes a check for $50 to David,who indorses the check in blank and gives it to his sister,Glenda,for her birthday.She indorses the check in blank and gives it to her trash collector to pay her quarterly bill.Which of the following is correct?
A)David made transfer warranties to Glenda and to her trash collector.
B)David did not make transfer warranties to Glenda because Glenda gave no consideration for the transfer of the check to her.
C)Neither David nor Glenda made any transfer warranties because they indorsed the check with blank indorsements, making the check bearer paper.
D)The trash collector must wait until the check is dishonored before making a transfer warranty claim against Glenda.
Q3) List the warranties a transferor of a negotiable instrument makes.
Q4) Discuss the difference between the impostor rule and the fictitious payee rule.
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25
Chapter 24: Liability for Negotiable Instruments: Banks and Their Customers
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Q1) When Kathy went to pick up her car at Al's Repair Shop,she questioned the mechanic's bill which claimed he did more work on the car than what she had authorized.The mechanic asserted that Kathy had authorized him to do whatever it took to completely fix the problem.Kathy wrote the check to Al's for $538 because she knew the shop would not release the car to her without getting paid for the work.When she left the garage,she drove immediately to her bank and put a stop payment order on the check.By accident,even with the stop payment order in place,the bank paid the check two days later when it was presented for payment.The bank must recredit Kathy's account but can recover from either Kathy or Al's,whichever party was wrong in the contract dispute over the car.
A)True
B)False
Q2) Beth holds a check from Bob,whose account is with USA Bank.To receive payment,Beth must personally present the check to USA Bank.
A)True
B)False
Q3) Article 4 of the UCC governs bank deposits and collections.
A)True
B)False
Page 26
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Chapter 25: Secured Transactions
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Q1) Spicy & Hot,Inc.is interested in expanding its Mexican food restaurant into a Mexican food catering business.Spicy & Hot,Inc.buys a new van for deliveries from Van World.Spicy & Hot,Inc.is a buyer in the ordinary course of business when purchasing the van.
A)True B)False
Q2) In the case Citizens Bank of Americus v.Federal Financial Services,Inc.the court ruled that:
A)Federal Financial had a perfected security interest which took priority.
B)Citizens Bank's security interest took priority as Federal Financial's interest had not been perfected.
C)Federal Financial's interest was a valid PMSI and took priority.
D)PMSIs may never take priority over earlier perfected interests.
Q3) A buyer in ordinary course of business takes the goods free of a security interest unless the security interest is perfected.
A)True B)False
Q4) Explain the difference between attachment and perfection.
Q5) Discuss the concept of software under Article 9.
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Chapter 26: Bankruptcy
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Q1) Ramona has received a discharge in bankruptcy,but wants to reaffirm a debt to her sister.To be valid,the reaffirmation:
A)will be scrutinized by the court to make sure her sister has not unfairly pressured Ramona.
B)will be automatically disallowed because allowing Ramona to promise to pay a discharged debt would be contrary to the goals of the bankruptcy proceedings.
C)will be automatically allowed if Ramona voluntarily chooses to make it.
D)must clearly disclose that Ramona has the right to rescind at any time since the debt was already discharged.
Q2) Which of the following is a primary goal of bankruptcy:
A)to preserve as much of the debtor's property as possible.
B)to divide the debtor's assets fairly between the debtor and the creditors.
C)to divide the debtor's assets fairly among the creditors.
D)All of the above.
Q3) Alimony and child support obligations are considered priority claims.
A)True
B)False
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Chapter 27: Agency
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Q1) An agent must obey any and all instructions of the principal.
A)True
B)False
Q2) The duties that the principal owes to his agent include which of the following?
A)Duty to reimburse.
B)Duty to provide information.
C)Duty of care.
D)All of the above.
Q3) Chad,the production manager at Vikings Creations,was told by his supervisor to hire Jay,a 15-year-old,to operate an industrial machine.Hiring the 15-year-old violates the child labor laws.Chad:
A)should hire Jay.Chad has a duty to obey Viking's instructions.
B)should hire Jay.Chad has a duty of care to ensure that the government does not discover that Jay is 15 years old.
C)should not hire Jay.Chad has a duty of care, and he would not be caring for Jay by hiring him.
D)should not hire Jay.Chad has a duty to obey Viking's instructions only if they are legal and ethical.
Q4) Discuss the principal's remedies when the agent breaches a duty.
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Chapter 28: Employment Law
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Q1) Laura intends to file a Title VII lawsuit against her employer.Which of the following is true?
A)Laura is required to first submit her claim to the Equal Employment Opportunity Commission.
B)Laura must first submit her claim to a state civil rights commission before she may proceed with her lawsuit.
C)If the EEOC determines Laura has no case against her employer, she may not file a lawsuit.
D)Laura may initiate a lawsuit or file with the EEOC as she so elects.
Q2) Mark was refused employment at a Christian Bookstore because he was not a "born-again Christian." If Mark brings a Title VII action against the bookstore,its best defense would be:
A)they did not discriminate against a protected category.
B)Title VII doesn't apply to private businesses.
C)being a "born-again Christian" is a bona fide occupational qualification.
D)they could not reasonably accommodate Mark.
Q3) What are three general defenses an employer can raise if sued for violating Title VII of the Civil Rights Act?
Q4) Discuss the requirements of the Family and Medical Leave Act.
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Chapter 29: Starting a Business: Llcs and Other Options
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Q1) John,his parents,and three brothers own all the stock of their family farm corporation.This corporation,which is taxed as a corporation,is probably:
A)an S corporation.
B)a C corporation.
C)a close corporation.
D)an LLC.
Q2) The case of Apcar v.Gaus illustrates that it is essential to comply with all the technicalities of a limited liability partnership statute.
A)True
B)False
Q3) The most common form of business ownership is the sole proprietorship. A)True
B)False
Q4) Limited liability is a major advantage of a partnership as compared to a corporation.
A)True
B)False
Q5) What are the advantages of electing Subchapter S status? What are the requirements?
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Chapter 30: Corporations
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Q1) Shareholder proposals on the company proxy statement:
A)must be stated in the form of a request or recommendation according to SEC rules.
B)may only be implemented by the company if they receive support from at least a simple majority of the shareholders.
C)are, in about half of the cases, withdrawn before a vote because the company decides to implement the proposal.
D)may address only corporate-governance issues, such as cumulative voting or executive compensation, but may not address the shareholder's political agenda, such as saving the environment.
Q2) Terminating a corporation is a three-step process: dissolution,winding up,and termination.
A)True
B)False
Q3) A business corporation can only be incorporated under state law.
A)True
B)False
Q4) Discuss how the Sarbanes-Oxley Act affects Haletronne Co.,a publicly traded corporation.
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Chapter 31: Securities Regulation
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Q1) Premier Enterprises sold Watson unregistered stock which was not exempt.The 1933 Act imposes liability on Premier,and Watson's sole remedy is damages.
A)True
B)False
Q2) The Foreign Corrupt Practices Act makes it a crime:
A)for U.S.companies to sell unregistered stock in other countries.
B)for non-U.S.companies to sell unregistered securities in the U.S.
C)to "bribe" foreign governments or officials.
D)to conspire to defraud stock purchasers in other countries.
Q3) Under Rule 504,a restricted security:
A)can be sold at any time.
B)cannot be sold within nine months of its offering.
C)cannot be resold, either publicly or privately, for one year.
D)cannot be sold until the SEC issues a release letter allowing it to be sold.
Q4) Define a direct public offering.What are its advantages?
Q5) Typically,exemptions from registration under the 1933 Act are based on either the type of security or the type of transaction.
A)True
B)False
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Chapter 32: Property
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Q1) Jody loaned her neighbor,Phil,her snow blower.Phil set it near his driveway,and later accidentally ran over and destroyed it.In a suit to recover damages,Jody as plaintiff has the burden of proving that Phil was negligent and caused the destruction of her snow blower.
A)True
B)False
Q2) Personal property means all property other than:
A)soil, plants, and trees removed from the land.
B)minerals and crops removed from the land.
C)land and all things permanently attached to the land.
D)intangible property.
Q3) Jack leases an apartment from Sam.The term of the lease was six months,beginning January 1 and ending on June 31.On July 1,Jack was still in the apartment against Sam's wishes.As of July 1,Jack's tenancy is a:
A)periodic tenancy.
B)tenancy at sufferance.
C)tenancy at will.
D)tenancy for years.
Q4) Identify and explain the different types of tenancy.
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Chapter 33: Cyberlaw
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Q1) To be in compliance with the safe harbor principles of the Department of Commerce agreement with the EU,a company must do all but which of the following?
A)Tell consumers how it intends to use their data and how they can limit its use.
B)Provide an opt-out provision for disclosure of all consumer data.
C)Provide adequate security for the data.
D)Establish a dispute-resolution procedure.
Q2) Which of the following is NOT true under the Electronic Communications Privacy Act?
A)An intended recipient of an e-mail has the right to disclose it to third persons.
B)ISPs are prohibited from disclosing the content of electronic messages to anyone other than the addressee, even if the disclosure is necessary for the performance of the ISP's service.
C)An employer has the right to monitor workers' e-mail if the monitoring occurs in the ordinary course of business or the employer provides the e-mail system.
D)To access e-mail messages that have been stored for 180 days or less, the government must first obtain a search warrant.
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35
Chapter 34: Intellectual Property
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Q1) McDonald's famous golden arches and other marks used by the company illustrate a:
A)suggestive mark.
B)service mark.
C)certification mark.
D)collective mark.
Q2) In order for a copyright holder to collect money damages from a person who used copyrighted material,it must be proven that:
A)the infringement was intentional.
B)the copyright holder sustained more than $500 in actual damages.
C)the copyrighted material contained the copyright symbol, name of the copyright holder, and the year of copyright.
D)None of the above.
Q3) The Good Housekeeping Seal of Approval is an example of a: A)trademark.
B)service mark.
C)collective mark.
D)certification mark.
Q4) Describe what copyright infringement means.
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