Legal Environment of Business
Final Exam Questions
Course Introduction
This course provides an overview of the legal principles and regulatory environment that shape and influence business operations. Students will explore foundational topics such as contracts, torts, product liability, intellectual property, and agency, as well as the structure and function of the court system. Emphasis is placed on understanding how laws and regulations affect managerial decision-making, corporate governance, and the ethical considerations faced by businesses in a dynamic global environment. Through case studies and real-world examples, students gain practical insights into compliance, risk management, and the legal challenges commonly encountered by organizations in various industries.
Recommended Textbook Essentials of Business Law 5th Edition by Jeffrey F. Beatty
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Chapter 1: Introduction to Law
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Q1) Identify and discuss the primary sources of contemporary U.S.law.
Answer: The primary sources of U.S.law include:
1.United States Constitution (the supreme law of the land)and state constitutions,which establish state governments
2.Statutes,which are drafted by the legislatures
3.Common law,which is the body of cases decided by judges,as they follow earlier cases,known as precedent
4.Administrative law,the rules and decisions made by federal and state administrative agencies.
Q2) The doctrine of precedent requires:
A)that the victim testify.
B)that the defendant testify.
C)a 12-member jury of the defendant's peers.
D)judges to base rulings on previous cases.
Answer: D
Q3) Congress can create a statute only on topics that are suggested by the President.
A)True
B)False
Answer: False
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Page 3
Chapter 2: Business Ethics and Social Responsibility
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Q1) Acme Widgets donates $1.00 from each sale of its Super Widget to the World Food Bank.This action illustrates:
A)corporate social responsibility.
B)outsourcing.
C)unethical corporate conduct.
D)none of these answers.
Answer: A
Q2) Ethics is the study of how people should act.
A)True
B)False
Answer: True
Q3) Zeno,Inc.is considering relocating its manufacturing facility from Illinois to Mexico City.The stakeholders in this decision might include:
A)Zeno's shareholders.
B)customers.
C)the Illinois community in which Zeno operates.
D)All of these.
Answer: D
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Chapter 3: Dispute Resolution
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Q1) Briefly describe the process of jury selection.
Answer: The process of jury selection is called voir dire.The court's goal is to select an impartial jury.Through a series of questions,attorneys for each side attempt to get the most favorable jury for their position.As potential jurors are questioned,either side may exclude a juror for cause (some reason to think the person may not be impartial)or via a limited number peremptory challenges,in which no reason must be stated for excluding a juror.
Q2) A prospective juror was excused from serving after being questioned by the plaintiff's attorney.No reason was given for the rejection.This would be accomplished by the use of a peremptory challenge.
A)True
B)False
Answer: True
Q3) An appeals court can rule that a trial court's ultimate ruling was correct even if the trial court made some minor errors during the trial.
A)True
B)False
Answer: True
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Chapter 4: Common Law, Statutory Law, and Administrative Law
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Q1) Tina wishes to learn what records the IRS has about her.Under the Freedom of Information Act (FOIA),
A)Tina can only obtain copies of declassified information.
B)Tina is entitled to all information the IRS has about her.
C)Tina can only obtain information about the IRS,not records concerning herself.
D)Tina cannot obtain any information since the IRS is exempt from the FOIA.
Q2) Administrative agency rules consist of:
A)executive and independent rules.
B)legislative and interpretive rules.
C)informal and "notice and comment" rules.
D)promulgated and unpromulgated rules.
Q3) While at the park,Tasha saw a small child fall into the lake.Tasha did not know the child.Under the common law of most states,Tasha has a legal duty to take reasonable steps to assist the child if Tasha is able to help and such help will not jeopardize Tasha's well-being.
A)True
B)False
Q4) Administrative agencies exist at the federal,state,and local levels.
A)True
B)False
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Chapter 5: Constitutional Law
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Q1) If Oregon passed a statute that prohibited liquor stores from engaging in any kind of advertising,that statute would be:
A)valid as an exercise of police power.
B)valid,as alcohol is illegal for minors.
C)invalid as a violation of the Commerce Clause.
D)invalid as an unreasonable restriction of free speech.
Q2) The primary source of federal power to regulate business is the:
A)Supremacy Clause.
B)Commerce Clause.
C)Contract Clause.
D)Privilege and Immunities Clause.
Q3) Discuss the Miller test to determine if a creative work is obscene.
Q4) The "takings clause" prevents the government from taking private property for any reason.
A)True
B)False
Q5) Identify the basic job of a President of the United States,the source of executive power,and three key powers associated with the position of President.
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Chapter 6: Torts and Product Liability
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Q1) Dewayne sold a space heater to Vivian,telling her it would heat a 200-square-foot area,even though he knew it would effectively heat only about one third of that space.Dewayne is liable for the intentional tort of fraud.
A)True
B)False
Q2) While hunting,Roger enters Adele's property without permission and is injured by falling into a ditch that was obscured by the underbrush.Under the common law,Adele is liable for Roger's injuries.
A)True
B)False
Q3) Public officials and public figures receive less protection from defamation than ordinary people.
A)True
B)False
Q4) Most states recognize some form of comparative negligence.
A)True
B)False
Q5) List and discuss the elements necessary to establish negligence.
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Chapter 7: Crime
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Q1) Miguel reprogrammed a cellular telephone so that it intercepted electronic funds transfers and rerouted them to Miguel's bank account.What crime has he committed?
A)Insurance fraud,since the bank's insurance will have to cover the misdirected funds.
B)Wire fraud.
C)Mail fraud.
D)Embezzlement
Q2) Barden Corporation was convicted of violating federal RICO laws.Accordingly:
A)the government may file criminal charges against both the company and the individuals associated with the criminal acts.
B)the government may file a civil lawsuit against the company to obtain injunctions and other relief.
C)individuals may file civil lawsuits against the company for violating the RICO statute to recover losses sustained by the criminal act.
D)All the above are correct.
Q3) List and discuss the protections afforded criminal defendants by the Bill of Rights.
Q4) Compare and contrast money laundering and embezzlement.Give an example of each.
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Chapter 8: International Law
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Q1) Zebra Toy Company,located in Chicago,sells $500,000 worth of toys to a London,England,a wholesaler.This contract could be governed by:
A)Illinois's Uniform Commercial Code.
B)English law.
C)the CISG.
D)All the above are correct.
Q2) Axle Corporation imports goods into the United States.Who is required to pay the duty on the imported goods?
A)The importer,Axle Corporation.
B)The World Trade Organization.
C)Each party pays one-half the duty.
D)The exporter of the goods.
Q3) When considering both imports and exports,the country trading the most goods with the United States is:
A)Canada.
B)China.
C)Japan.
D)Mexico.
Q4) Explain the origin and purpose of the World Trade Organization.
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Chapter 9: Introduction to Contracts
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Q1) Contracts for the sale of fabric,automobiles,computers,furniture,and paper clips would all be governed by Article 2 of the Uniform Commercial Code.
A)True
B)False
Q2) John enters into a contract to paint Chad's house.When Chad decides on a color,John will buy the paint and paint the house for the price of $2,500.This contract is governed by:
A)the common law of contracts governs because this is a mixed contract (one for services and goods).
B)the common law of contracts governs because the predominant factor of the contract is for the sale of services and not goods.
C)the Uniform Commercial Code governs because a sale of goods is involved.
D)both the common law and the Uniform Commercial Code will govern this contract.
Q3) The common law governs contracts for:
A)services.
B)real estate.
C)employment.
D)All of the above.
Q4) Discuss the requirements of promissory estoppel.
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Chapter 10: Agreement
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Q1) Vivian goes to an auction and sees a rare antique lamp that is an identical match to one she already has.At the proper time she bids on the lamp and is the highest bidder.Even though she is the highest bidder,the auctioneer refuses to accept her bid and withdraws the lamp from the auction.Can the auctioneer do that?
A)Unless otherwise stated,the auctioneer had the right to withdraw the item before the fall of the hammer.
B)Generally,the auctioneer must sell to the highest bidder.Vivian will get the lamp.
C)Generally,the auctioneer is the offeror and the bidders are the offerees so there is a contract and Vivian will get the lamp.
D)Most auctions are without reserve and therefore the auctioneer cannot withdraw the lamp.
Q2) According to the UCC,one or more open terms will not cause a sales contract to fail for indefiniteness as long as the parties intended to make a contract and there is a reasonably certain basis for the court to determine the open terms.
A)True
B)False
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Chapter 11: Consideration
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Q1) Frank's Furniture Company promised in a written agreement to purchase as much walnut wood "as it desires" from Forestry Products,Inc.If Frank's purchased walnut wood from another source and Forestry Products sued,what is the likely result?
Q2) Raul agrees to paint Mike's house for $1,000.Before finishing,Raul states it is too hot to finish,and Mike offers to pay $1,200 if Raul finishes.Mike's statement that he will pay $1,200 is unenforceable.
A)True
B)False
Q3) What phrase explains how a requirements contract can be valid?
A)"will buy 100 percent of output"
B)"willing to accept the entire quantity"
C)"no consideration needed"
D)"in good faith"
Q4) 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.
Q5) What two exceptions did the UCC create for accord and satisfaction check cases?
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Chapter 12: Legality
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Q1) When Randy accepted a job with Buren Construction,Randy signed the following agreement,"Upon termination of my employment with Buren Construction,I agree never to work for another employer as an electrician." If Randy resigns from Buren Construction,this agreement would be upheld under the theory of freedom of contract.
A)True
B)False
Q2) Eintz Corp.hired Jose to bribe a foreign government official into awarding a $3 million contract to Eintz.Eintz gave Jose $10,000 in cash to make the bribe payment and $2000 for Jose's efforts.Instead of paying the bribe,Jose pocketed all of the money.If Eintz sues Jose,Eintz will:
A)be able to recover the $12,000.
B)be able to recover the $3 million lost on the contract.
C)be able to recover the $2,000 but not the $10,000.
D)not be able to recover the $12,000.
Q3) If a court finds as a matter of law that a clause of a contract was unconscionable at the time the contract was made,the court must refuse to enforce the contract.
A)True
B)False
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Chapter 13: Capacity and Consent
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Q1) Which of the following is least likely to be regarded as a necessary?
A)Rent.
B)Food.
C)Medical expenses.
D)Educational expenses.
Q2) Reed,a 15-year-old,has run out of money while on a trip away from home.Martha gives him food,a place to sleep,and his bus fare home,in exchange for Reed's promise to pay $200 after he got home.Is Reed's promise enforceable?
Q3) All states allow the remedy of rescinding a contract for the sale of goods while still allowing the remedy of suing for damages.
A)True
B)False
Q4) Contract rescission can sometimes be based upon a unilateral mistake.
A)True
B)False
Q5) The age of majority to contract in all states is 21.
A)True
B)False
Q6) Discuss the concept of a "material fact" in fraud situations.
Page 15
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Chapter 14: Written Contracts
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Q1) Martin,Human Resources Director for Spring Co. ,sent Lynn the following signed letter:"This letter confirms our offer to you.We will pay for your moving expenses,up to $1,500.Your starting date will be February 1,and you will become eligible for health care benefits as of May 1.You will receive a starting salary of $36,500 annually,with reviews and eligibility for increases at six months,12 months,and annually thereafter.Vacation will be for two weeks a year after one year." Spring fired Lynn eight months after she started to work,and Lynn sued arguing the letter constituted a memorandum of an oral contract for employment for five years.Is the letter sufficient to satisfy the statute of frauds?
A)Yes,to satisfy the statute of frauds,a memorandum is sufficient if it evidences an oral contract between the parties and is signed by the defendant.
B)Yes,the memorandum is signed by the defendant and states with reasonable certainty the subject matter and essential terms of the agreement.
C)No,to satisfy the statute of frauds,the memorandum must contain all essential terms of the contract.
D)No,the letter was not formal enough to satisfy the statute of frauds.
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Chapter 15: Third parties
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Q1) Andrew Durham was injured in a job-related accident that resulted in a workers' compensation settlement agreement with the employer's insurance carrier,Traveler's Indemnity Company.The settlement agreement required Traveler's to pay Durham $2500 per month for the rest of his life.To finance its obligation,Traveler's purchased an annuity in its name.The settlement agreement required Traveler's approval or consent prior to an assignment of the annuity payments.Durham later decided to open a business and went to a credit union for a $214,000 loan.The credit union loaned the money,taking a security interest in Durham's monthly annuity payments.Traveler's consent was never secured.Was this a valid assignment?
Q2) Most,but not all,contract rights are assignable.
A)True
B)False
Q3) An assignment is effective but not necessarily enforceable from the moment it is made,regardless of whether the assignor notifies the obligor.
A)True
B)False
Q4) Discuss the potential liability differences between a delegation and a novation.
Q5) Briefly discuss the enforceability of contracts by third parties.
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Chapter 16: Performance and Discharge
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Q1) Assume that Jessie and Lester have formed a contract whereby Jessie agrees to deliver 10,000 dozen "Grade A Large Eggs" to be shipped in recycled paper cartons.A shortage of paper makes paper cartons much more expensive,so Jessie uses styrofoam cartons and ships the eggs.Lester is entitled to cancel the contract based on this deviation of terms in the contract.
A)True
B)False
Q2) In negotiating the purchase of a vehicle,the sales representative told Karla,"I guarantee that you will be personally satisfied with this car." The guarantee was written on the contract when Karla purchased the car.If a controversy arises over Karla's satisfaction,the court will apply a subjective standard,which means Karla's judgment must be reasonable.
A)True
B)False
Q3) The UCC recognizes commercial impracticability as a ground for discharge of a contract.
A)True
B)False
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18
Chapter 17: Remedies
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Q1) Under the UCC,the buyer is entitled to consequential damages if the seller could have reasonably foreseen them.
A)True
B)False
Q2) Discuss the purpose of an injunction and how the two types of injunctions covered in the textbook are used.
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) Specific performance is available when the subject matter of the contract is unique. A)True B)False
Q5) Identify and describe the four principal contract interests a court may seek to protect.
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Chapter 18: practical Contracts
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Q1) Which of the following is NOT a standard provision frequently found in contracts?
A)choice of forum.
B)choice of law.
C)choice of compensation..
D)arbitration.
Q2) One reason you may not need a written contract is:
A)you are dealing with a party you do not know well,so you need to remain flexible.
B)you are buying land from a member of your family.
C)the terms of the agreement are simple and the value of the transaction is small. D)you have negotiated enough that you both know what the other person intends.
Q3) You should hire a lawyer to review any legal papers you have to sign,including such papers as lease agreements or car purchases.
A)True
B)False
Q4) Define and compare the terms "vagueness" and "ambiguity."
Q5) Outline the parts of a typical contract.
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Chapter 19: Introduction to Sales
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Q1) Betty's BBQ orally contracts with Denny's Design House for 10,000 matchbooks at the price of 10 cents per matchbook.The matchbooks are to be embossed with a logo to be designed by Denny's Design promoting Betty's BBQ.Price,payment terms,delivery terms are agreed upon between the parties.Denny's Design creates the logo,gets Betty's BBQ's approval of the design and begins applying the logo on the matchbook covers.Denny's Design has almost finished the order when Betty's BBQ calls to say it has decided to make the eatery a smoke-free restaurant and cancels the order.Denny's Design sues,but Betty's BBQ states that the agreement is unenforceable under the statute of frauds.Who wins?
A)Denny's Design House wins.This situation falls under an exception to the statute of frauds.
B)Denny's Design House wins.This is a service contract for design of a logo.Therefore,the UCC,including the statute of frauds provisions of Article 2,does not apply.
C)Betty's BBQ wins.This is a contract for $1000.The statute of frauds requires all sales contracts in excess of $500 be in writing.
D)Betty's BBQ wins.The statute of frauds only applies to merchants.Betty's BBQ is not a merchant in this instance because it intended to give the matchbooks away and not sell them.
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Page 21
Chapter 20: Ownership and Warranties
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Q1) A merchant seller who would like to exclude the warranty of merchantability can do so by doing which of the following?
A)The merchant can sell the goods "As Is."
B)The merchant can sell the goods "With All Faults."
C)The merchant can write conspicuously that the warranty of MERCHANTABILITY is excluded.
D)All of the above.
Q2) 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) A common problem in cases of express warranty is being able to separate statements that create express warranties from statements that do not.Discuss what type of statements create an express warranty and four indications that a statement is likely to create an express warranty.
Q4) Discuss the concept of insurable interests.
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Page 22
Chapter 21: Performance and Remedies
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Q1) When a party to a contract notifies the other party that it will not perform the contract as agreed,this conduct is referred to as:
A)specific performance.
B)cover.
C)repudiation.
D)assurance.
Q2) Identify seven possible remedies for a buyer when the seller breaches a contract.
Q3) Identify six possible remedies for a seller when the buyer breaches a contract.
Q4) A baseball team ordered 500 wooden baseball bats from Bats,Inc. ,for delivery on June 1.On May 15,the ball team received 500 aluminum bats instead of the wooden ones.As of May 16,Bats,Inc.:
A)may cure before June 1.
B)has breached the contract and is liable for damages.
C)has breached the contract only if the baseball team rejects the goods.
D)may cure if done within a reasonable time,even if it is after June 1.
Q5) Define these terms:usage of trade;course of dealing;and course of performance.
Q6) Discuss the UCC rules on the limitation of damages in a contract.
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Page 23
Chapter 22: Negotiable Instruments
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Q1) Verne has possession of a draft that has been validly negotiated to him.His payment process necessarily includes:
A)presentment of the draft,dishonor,and notice of dishonor.
B)exhibiting the instrument,showing reasonable identification,and surrendering the draft if it is paid in full.
C)exhibiting the draft,providing a thumbprint signature,and giving a receipt.
D)suspending the underlying debt,applying the shelter rule,and making a demand for payment.
Q2) To be negotiated,bearer paper must simply be delivered to the recipient.
A)True
B)False
Q3) In good faith,Clinton gave Jane $500 for a negotiable promissory note made out to Jane for $550.She needed some money before the due date on the note,and Clinton had no notice of outstanding claims or other defects of the note.Clinton:
A)has more rights than Jane.
B)has the same rights as Jane.
C)has only conditional rights because they depend on Jane's rights.
D)cannot transfer the note to anyone else.
Q4) List the warranties a transferor of a negotiable instrument makes.
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Chapter 23: Secured Transactions
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Q1) Donna defaulted on her loan owed to Second State Savings and Loan.The loan was secured with Donna's car.Donna used the car for personal and family reasons.Which statement is correct?
A)Second State may take Donna's car without a court order if this can be done without a breach of the peace.
B)Second State may take Donna's car without a court order even if it means a breach of the peace.
C)Second State may not take Donna's car because it is a consumer good.
D)Second State may not take Donna's car because perfection was automatic.
Q2) Fowler Bros.has applied to Gibralter Bank for a $50,000 loan for its business expansion.If Fowler Bros.plans to use its account at Gibralter Bank as collateral,discuss what the bank needs to do for a security interest to attach.
Q3) Wombart Manufacturing sells a machine on credit to Cryslie Printing Co.Wombart insists on a security interest in the machine to:
A)give itself a legal interest in the machine.
B)give itself a legal interest in all of Cryslie's property.
C)establish a priority claim in the machine ahead of other creditors of Cryslie.
D)Both a and c
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Chapter 24: Bankruptcy
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Q1) Individual debtors are allowed to keep some assets in a Chapter 7 bankruptcy.
A)True
B)False
Q2) Alimony and child support obligations are considered priority claims.
A)True
B)False
Q3) Artistic Framing,a business with $120,000 of unsecured debt,needs to file for bankruptcy,but wants to continue in business.Discuss what chapter of the Bankruptcy Code should be used,and discuss the effect of the 2005 amendment to the Code on the proceedings.
Q4) Chapter 7 bankruptcy petitions may only be filed voluntarily..
A)True
B)False
Q5) In a Chapter 13 bankruptcy,creditors cannot force a debtor into bankruptcy;nor can they vote to confirm or reject a plan of reorganization.
A)True
B)False
Q6) Chapters 11 and 13 are liquidation chapters.
A)True
B)False
Page 26
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Chapter 25: Agency
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Q1) Which of the following is not required of an agency relationship?
A)Consideration.
B)Fiduciary relationship.
C)Consent of the parties to act as agent or principal.
D)Control of principal over agent's conduct.
Q2) HBR Accounting hired Denise,a CPA,to prepare tax returns.Which statement is correct?
A)Denise is a gratuitous agent and has a duty not to commit gross negligence.
B)Denise is an agent and has a duty not to commit ordinary negligence.
C)Denise,as a CPA,is an agent with special skills.She is held to a higher duty than ordinary negligence.
D)Denise,as a CPA,is an agent with special skills.She is held to a lower standard than ordinary negligence.
Q3) If Denise is hired to work as a cashier,she has the implied authority to do acts reasonably necessary to carry out her job.
A)True
B)False
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Chapter 26: Employment and Labor Law
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Q1) The duty of fair representation created by the NLRA and the LMRDA requires that:
A)a union represent all members impartially and in good faith.
B)a union must pursue any member's grievance against the employer.
C)an employer,in communications with employees during a union organizing effort,must fairly represent the effects it believes a union will have on the company.
D)the NLRB certify only proposed bargaining units that it thinks the union can properly represent.
Q2) If employees wish to organize a union,the employer is prohibited from distributing written notices to employees stating it is opposed to union activity within the company.
A)True
B)False
Q3) Rick and Allan want to start a union in the small factory where they work.Outline the basic procedures they will need to follow to get a union recognized as the exclusive bargaining unit for the company employees.
Q4) Discuss the requirements of the Family and Medical Leave Act.
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Chapter 27: Employment and Discrimination
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Q1) In order to be considered sexual harassment,the questionable behavior must be directed at a co-worker of the opposite gender.
A)True
B)False
Q2) Which of the following is NOT considered a major life activity for the purpose of determining if a person has a disability?
A)eating
B)reading
C)sexual activity
D)sleeping
Q3) Sullivan Consumer Products Co.asks its employees to apply four tests in determining whether their behavior violates Title VII with respect to sexual harassment.Which of the following is one of the four tests?
A)Would your friends be impressed with your behavior?
B)Do you think your behavior is humorous?
C)Would your behavior help you to get a promotion?
D)Would you like your behavior reported in your local newspaper?
Q4) Discuss the two categories of sexual harassment.
Q5) What is the process for filing a suit under Title VII of the Civil Rights Act?
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Chapter 28: Starting a Business
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Q1) James was a partner in a large firm.He died unexpectedly.His son,Frank,wanted to take over for his father in the partnership and was well qualified to do the work his father had done.Which statement best describes Frank's rights in the partnership if he inherits the interest?
A)Frank has a right to take over for his father in the partnership.
B)Frank is entitled to the value in the partnership,but not to become a full partner.
C)Frank has no rights to his father's partnership interest.
D)Frank may become a partner only if his father's will specified such action.
Q2) Harold and Zack have pooled their money together to buy real estate but have filed no formal papers to form a business.Harold,a lawyer,handles all the legal matters and Zack,a real estate broker,finds buyers for the property they have subdivided.Harold and Zack are engaged in a:
A)partnership.
B)close corporation.
C)joint venture.
D)business trust.
Q3) Trudy wishes to buy a national franchise.What information is the seller legally required to provide before she buys the franchise?
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Chapter 29: Corporations
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Q1) A corporation's obligation to provide shareholders with financial information:
A)depends on whether the company is publicly or privately held.
B)depends on the requirements of the Model Business Corporation Act,which is widely followed in regard to the shareholders' right to information.
C)is extensive and is carefully regulated by the SEC if the company is privately held.
D)All the above.
Q2) Who establishes executive compensation?
A)The board of directors.
B)The shareholders.
C)The officers themselves.
D)An independent CPA firm.
Q3) In a derivative lawsuit,the named plaintiff:
A)is the corporation on whose behalf the lawsuit is filed.
B)is the particular class of shareholders primarily injured by the wrong.
C)consists of all the corporation's shareholders.
D)is the board of directors for the corporation.
Q4) Directors have the authority to manage the corporate business.
A)True
B)False
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Chapter 30: Government Regulations:Securities and Antitrust
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Q1) The Sherman Act was designed to prevent extreme concentrations of economic power.
A)True
B)False
Q2) Discuss when monopoly power is not a violation of Section 2 of the Sherman Act.
Q3) A defense to a civil action brought under Section 10(b)and Rule 10b-5 of the 1934 Act would be:
A)that the statute of frauds was not observed.
B)that the seller of the securities was not in privity of contract with the plaintiffs.
C)that the sellers did not intentionally or recklessly make a false representation.
D)All of the above.
Q4) Under the Robinson-Patman Act was it is legal to charge a different price for a product if...
A)the items are the same
B)the cost of doing business is less with one buyer over another
C)Competition is lessened.
D)All the above.
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Chapter 31: Consumer Protection
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Q1) Under FTC rules,a customer can cancel a door-to-door sales contract within:
A)three business days of the sale.
B)five business days of the sale.
C)one calendar week from the date the sale was made.
D)a "reasonable time" after the sale was made.
Q2) If the FTC determines a business has violated the law,it will normally try to get the business to voluntarily stop the activity.
A)True
B)False
Q3) The Equal Credit Opportunity Act makes it illegal for a lender to discriminate against a potential borrower because of race,national origin,religion,or sex,but it is permissible to treat a borrower differently if he or she is on welfare.
A)True
B)False
Q4) Explain the difference between a debit and a credit card and discuss the potential liability for a lost or stolen card.
Q5) What are the three tests or elements used by the FTC to determine whether a particular act is an unfair trade practice?
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Chapter 32: Cyberlaw
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Q1) The European Union's e-Privacy Directive requires websites to provide an "opt-out" option for sites that use tracking tools.
A)True
B)False
Q2) When you surf the Internet,information,much of which is anonymous,is collected about you.
A)True
B)False
Q3) Discuss common abuses that occur with auctions on the Internet and how these abuses are being addressed.
Q4) The federal government has preempted the field of online privacy,so states may not pass their own online privacy statutes.
A)True
B)False
Q5) Jorgeson Co. ,on its website,promised the company would not give PII to third parties without the customer's consent,but then gave out such information.This practice violates Section 5 of the FTC Act.
A)True
B)False
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Chapter 33: Intellectual Property
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Q1) Which of the following started out as a trademark name?
A)Zipper.
B)Linoleum.
C)Nylon.
D)All the above.
Q2) A color cannot be trademarked since it cannot be kept from use by other businesses.
A)True
B)False
Q3) Martina developed a new type of apple tree which could be reproduced through grafting.She cannot protect her rights in this tree by obtaining a plant patent since the tree cannot be reproduced by planting its seeds.
A)True
B)False
Q4) Which of the following words could be registered as a trademark?
A)Crunchy peanut butter.
B)Low-fat peanut butter.
C)Green peas.
D)yStar peanuts.
Q5) Briefly define a patent,copyright,and trademark and distinguish among them.
Page 35
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Chapter 34: Real and Personal Property
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Q1) Bruce tells his son,"You can have my 1990 truck,but if your grades fall,I'm taking it back." Bruce:
A)has made no gift.
B)has made a "revocable gift," which is effective as a gift as long as the stated condition is met.
C)intended to transfer ownership.
D)has made a constructive gift.
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) A tenancy with no fixed duration is a:
A)tenancy from month to month.
B)tenancy at will.
C)periodic tenancy.
D)tenancy for years.
Q4) Discuss a bailor's liability for defects in the bailed property.
Q5) Discuss the tenant's and the landlord's basic duties under a landlord-tenant relationship.
Page 36
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