Principles of Business Law
Question Bank
Course Introduction
Principles of Business Law introduces students to the foundational concepts and frameworks that govern legal interactions within the business environment. The course covers essential topics such as contract law, agency, employment law, company law, and consumer protection. Emphasizing real-world applications, it examines the rights and responsibilities of businesses, individuals, and entities in various commercial contexts. Through case studies and legal analysis, students gain a practical understanding of dispute resolution, regulatory compliance, and ethical considerations necessary for informed decision-making in business operations.
Recommended Textbook
The Legal Environment Today 7th Edition by Roger LeRoy Miller
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27 Chapters
1810 Verified Questions
1810 Flashcards
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Page 2
Chapter 1: Business and Its Legal Environment
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Sample Questions
Q1) Constitutional law includes only the U.S.Constitution.
A)True
B)False
Answer: False
Q2) Sam is a judge hearing the case of Local Co.v.National Corp.Applying the relevant rule of law to the facts of the case requires Sam to find previously decided cases that,in relation to the case under consideration,are
A)as different as possible.
B)as similar as possible.
C)at odds.
D)exactly identical.
Answer: B
Q3) A reference to "28 U.S.C.Section 1332" means that a federal court's decision can be found on page 28 of section 1332 of the United States Cases.
A)True
B)False
Answer: False
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Chapter 1: A: Online Developments:
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Sample Questions
Q1) According to Marbury v.Madison,the United States Supreme Court did not have the power,as part of its original jurisdiction,to issue writs of A)attachment.
B)certiorari.
C)execution.
D)mandamus.
Answer: D
Q2) According to the United States Supreme Court in Miranda v.Arizona,an individual must be apprised of certain of his or her rights whenever the individual is A)arraigned in a court.
B)imprisoned in a jail.
C)sentenced for a crime.
D)taken into custody.
Answer: D
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Chapter 2: Ethics and Business Decision Making
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Sample Questions
Q1) Lyle,vice-president of sales for Mi-T Electric,Inc.,adheres to Judeo-Christian religious ethical standards.With respect to their application,these standards are A)absolute.
B)analytical.
C)discretionary.
D)utilitarian.
Answer: A
Q2) Solid Tool Company's decision makers view a particular risk in the use of Solid's product as open and obvious.Continuing to market the product without telling consumers of the risk could be justified from a perspective of A)duty-based ethics.
B)Kantian ethics.
C)rights-based ethics.
D)utilitarian ethics.
Answer: D
Q3) The legality of an action is always clear.
A)True
B)False
Answer: False
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Page 5
Chapter 3: Courts and Alternative Dispute Resolution
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Sample Questions
Q1) Moby,a resident of New Jersey,has an accident with Ogden,a resident of New York,while driving through that state.Ogden files a suit against Moby in New York.Regarding Moby,New York has
A)federal question jurisdiction.
B)in personam jurisdiction.
C)in rem jurisdiction.
D)no jurisdiction.
Q2) Discount Mart,Inc.,files a suit in a state court against Elements Computer Corporation,alleging that Elements breached a contract to sell 500 notebook computers to Discount.During the course of the suit,Discount files a motion for judgment on the pleadings,Elements files a motion for a directed verdict,and both parties file motions for summary judgment.When and for what purpose are each of these motions made
Q3) An answer can admit to the allegations made in a complaint.
A)True
B)False
Q4) A justiciable controversy is a case in which the court's decision-the "justice" that will be served-will be controversial.
A)True
B)False
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Chapter 4: Constitutional Authority to Regulate Business
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Sample Questions
Q1) Federico,the president of Gems Retail Corporation,claims that certain actions by the federal government and the state of New Mexico infringe on rights guaranteed by the Bill of Rights.Most of these rights limit
A)neither New Mexico nor the federal government.
B)the federal government only.
C)New Mexico and the federal government.
D)New Mexico only.
Q2) A law that distinguishes between or among individuals violates the equal protection clause.
A)True
B)False
Q3) The Constitution sets out the authority and the limits of the branches of the government.The term checks and balances means that
A)Congress writes checks and the president balances the budget.
B)each branch of government has some power to limit the actions of the other branches.
C)each branch of government may exercise the authority of the other branches.
D)the president "checks" the courts,which "balance" the laws.
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Chapter 5: Torts,cyber Torts,and Strict Liabiity
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Sample Questions
Q1) False imprisonment occurs when a person restrains another intentionally and without justification.
A)True
B)False
Q2) An assumption of risk defense does not require that a risk be voluntarily assumed.
A)True
B)False
Q3) Under the doctrine of comparative negligence,both the plaintiff's and the defendant's negligence are taken into consideration.
A)True
B)False
Q4) Caleb is driving a car in which Dotty is a passenger when an accident occurs.Caleb and Dotty are emotionally rattled,but neither is physically hurt.Caleb is not liable to Dotty on a negligence theory because
A)both parties were emotionally rattled.
B)Caleb did not apparently intend to cause an accident.
C)Dotty must have been comparatively negligent.
D)Dotty was not injured.
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8
Chapter 6: Criminal Law and Cyber Crime
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Sample Questions
Q1) It is not a crime to defraud the public through the use of ads on television.
A)True
B)False
Q2) Taylor digitally copies business software without the authorization of the owners and sells the copies to others via the Internet.Under federal law,this is
A)a crime only if the copies are not the same as,or close to,the original.
B)a crime only if Taylor and the buyers are in different jurisdictions.
C)not a crime.
D)a crime.
Q3) Susan is the president of United Food Corporation,a wholesale grocery company.An inspection by Tim,a government agent,uncovers unsanitary conditions caused by Val,a United employee,in the United warehouse.Will,a United vice president,assures Tim that the situation will be corrected,but nothing is done,which a later inspection reveals.Susan knows nothing about any of this.Can United be convicted of a crime in these circumstances Can Susan be held personally liable
Q4) Identity theft occurs when a wrongdoer steals another's form of identification.
A)True
B)False
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Page 9
Chapter 7: International Law in a Global Economy
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Sample Questions
Q1) The government of Japan sets a limit on the amount of rice that can be imported from the United States.This is
A)a dumping duty.
B)an antidumping duty.
C)a quota.
D)a tariff.
Q2) Antidumping duties are the responsibilities of international environmental polluters.
A)True
B)False
Q3) Sam,or any U.S.citizen,can bring a civil suit in a U.S.court against a foreign entity for
A)a tort allegedly committed in the United States only.
B)a tort allegedly committed in the United States or overseas.
C)a tort allegedly committed overseas only.
D)no purpose.
Q4) The Foreign Sovereign Immunities Act spells out the particulars of what constitutes a commercial activity.
A)True
B)False
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Chapter 8: Intellectual Property and Internet Law
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Sample Questions
Q1) Phil invents "PhutureNow," new Web site design software,and applies for a patent.If Phil is granted a patent,his invention will be protected
A)for ten years.
B)for twenty years.
C)for the life of the inventor plus seventy years.
D)forever.
Q2) A trade name cannot be registered with the federal government if it is also a trademark.
A)True
B)False
Q3) A patent applicant must demonstrate that the invention,discovery,or design is commercially practicable to receive a patent.
A)True
B)False
Q4) Trademark dilution requires proof that consumers are likely to be confused by the unauthorized use of the mark.
A)True
B)False
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11
Chapter 8: A: Online Developments:
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Sample Questions
Q1) The Anti-Counterfeiting Trade Agreement established an international governing body to be
A)subject to the World Intellectual Property Organization.
B)under the auspices of the World Trade Organization.
C)part of the Internet Corporation for Assigned Names and Numbers.
D)separate and distinct from existing organizations.
Q2) Fleet Feet,an online travel company,buys blocks of rooms from Grande Hotel,a hotel in Hyper City,at a wholesale rate.Fleet Feet reslls the rooms to consumers at a retail rate.One recent effort by cities to collect taxes from e-commerce has focused on
A)hotels that sell blocks of rooms at wholesale rates.
B)non-resident consumers who reserve rooms in in-state hotels.
C)online travel companies.
D)the dire financial straits of the cities during the latest recession.
Q3) The Anti-Counterfeiting Trade Agreement applies to
A)pirated copyrighted works distributed via the Internet.
B)personal financial information on its owner's laptop.
C)legally downloaded recordings on a user's iPod.
D)a business firm's trade secrets cached on the firm's server.
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Chapter 9: Formation in Traditional and E-Contracts
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Sample Questions
Q1) A void contract is enforceable if it is in writing.
A)True
B)False
Q2) Offers may not be revoked before they are accepted.
A)True
B)False
Q3) Contract law shows what excuses our society accepts for breaking certain types of promises.
A)True
B)False
Q4) Demi promises to buy a house from Caleb,who promises to vacate the property on June 1.If these promises are in writing,they are most likely
A)enforceable.
B)unenforceable.
C)void.
D)voidable.
Q5) Inadequate consideration may reflect a lack of bargained-for exchange. A)True
B)False
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Chapter 10: Contract Performance,breach,and Remedies
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Sample Questions
Q1) Consequential damages are awarded for damage caused by special circumstances beyond a contract.
A)True
B)False
Q2) Rig Heli-Pads,Inc.,enters into a contract to employ Scott as an on-site project manager for two years.If Rig breaches the contract,Scott has a duty to
A)do nothing.
B)reduce the damages that Scott might otherwise suffer.
C)rescind the contract with Rig.
D)sue Rig to deter others from similar acts.
Q3) GroundSwell Pools,Inc.,agrees to build a swimming pool for Francis,but fails to complete the job.Francis hires EquiAqua,Inc.,to finish the project.Francis may recover from GroundSwell
A)the contract price less costs of materials and labor.
B)the contract price.
C)the costs needed to complete construction.
D)profits plus the costs incurred up to the time of the breach.
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Page 14
Chapter 11: Sales,leases,and Product Liability
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Sample Questions
Q1) Under the UCC,a sales or lease contract will fail for indefiniteness if one or more terms are left open.
A)True
B)False
Q2) Sellers or lessors are liable only for products that are reasonably dangerous. A)True
B)False
Q3) Cheesy Pizza Company contracts to sell 1,000 cases of frozen pizzas to Roller Rinx,Inc.,but refuses to deliver.Due to a spice shortage,Roller Rinx cannot obtain pizza elsewhere.Roller Rinx's right to recover the goods from Cheesy is the right of A)cover.
B)cure.
C)replevin.
D)specific performance.
Q4) All oral contracts are enforceable under the UCC. A)True B)False
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Chapter 12: Creditor-Debtor Relations and Bankruptcy
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Sample Questions
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) Delia refuses to pay Ewing $500 in cash on their contract to repair certain theater sets,which Ewing still possesses.Ewing's lien on the sets will terminate
A)if Ewing continues to maintain possession.
B)if Ewing does not file a written notice of lien within thirty days.
C)if Ewing voluntarily surrenders possession.
D)within thirty days.
Q3) A debtor's vehicle is never exempt from satisfaction of a judgment debt.
A)True
B)False
Q4) On the entry of an order for relief in a reorganization case,the creditors generally take over the operation of the debtor's business.
A)True
B)False
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Chapter 13: Mortgages Foreclosures After the Recession
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Sample Questions
Q1) Federal mortgage disclosure requirements apply to the written materials that a lender provides and to any oral representations.
A)True
B)False
Q2) Rita borrows $30,000 from South State Credit Union.South State accepts Rita's equity in her home as collateral,which can be seized if the loan is not repaid on time.This is
A)a home equity loan.
B)a hybrid mortgage.
C)a reverse mortgage.
D)a violation of the law.
Q3) Upton borrows $150,000 from Valley Credit Union to buy a home,which secures the loan.Three years into the term,Upton stops making payments on it.Valley Credit repossesses and auctions off the property to Wesley.The sale proceeds are not enough to cover the unpaid amount of the loan.In most states,Valley Credit can ask a court for A)a deficiency judgment.
B)a reverse mortgage.
C)a short sale.
D)nothing.
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Chapter 14: Small Business Organizations
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Sample Questions
Q1) Limited liability companies (LLCs)are governed by state LLC statutes.
A)True
B)False
Q2) The simplest form of business is a sole proprietorship.
A)True
B)False
Q3) On a partner's dissociation,his or her duty of loyalty to the partnership ends.
A)True
B)False
Q4) A sole proprietorship lacks continuity on the death of the proprietor.
A)True
B)False
Q5) A sole proprietor owns the entire business but does not receive all of the profit.
A)True
B)False
Q6) The Uniform Partnership Act governs the operation of partnerships.
A)True
B)False
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Chapter 14: A: Landmark in the Legal Environment:
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Sample Questions
Q1) Forms of business organizations that limit the liability of their owners are available to businesspersons around the world.Among the features that such firms have in common,in most nations
A)articles of organization must be filed to form the enterprise.
B)one of the owners must be a foreign entity.
C)the organization can have an unlimited number of owners.
D)the owners are not required to choose persons to manage the business.
Q2) Women's groups contend that sexual harassment is viewed with "quiet tolerance" in corporations based in
A)Asia.
B)Europe.
C)North America.
D)South America.
Q3) Wood Works,LLC,is a limited liability company.Unless indicated otherwise on Wood Works's federal tax form,the firm will be taxed as
A)a corporation.
B)a partnership.
C)a sole proprietorship.
D)none of the above.
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Chapter 15: Corporations
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Q1) Reba is a director of Quantum Mechanix Corporation.Reba's rights,as a director,do not include a right to A)indemnification.
B)inspection.
C)participation.
D)self-dealing.
Q2) A director or officer is not liable to the corporation for a bad business decision. A)True B)False
Q3) Gladys is a shareholder of Frozen Yogurt,Inc.As a shareholder,Gladys must approve A)amending the bylaws.
B)declaring a corporate dividend.
C)hiring a chief executive officer. D)issuing additional shares.
Q4) A corporation can retain its profits or pass them on to the shareholders as dividends. A)True B)False
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Chapter 16: Agency
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Sample Questions
Q1) If a principal does not ratify an authorized contract,the principal is not bound.
A)True
B)False
Q2) Bob,a salesperson at a Carpets Galore store,tells Dita,a customer,"Buy your carpet here,and I'll install it for half of what the store would charge." Dita buys the carpet,which Bob installs for half the store's price.Bob keeps the money.Bob has breached
A)no duty.
B)the duty of loyalty.
C)the duty of notification.
D)the duty of obedience.
Q3) 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.
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Page 21
Chapter 17: Employment,immigration,and Labor Law
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Sample Questions
Q1) Ethan is seventeen years old.Under the Fair Labor Standards Act,Ethan cannot work
A)during school hours.
B)in a hazardous occupation.
C)more than eighteen hours per week.
D)without a special permit.
Q2) Emma,Frick,Glenda,and Huey are employees of different-sized employers in different industries.A minimum wage must be paid to employees in
A)all industries.
B)covered industries only.
C)no industries.
D)small-business industries only.
Q3) Employers who provide pension plans for retired workers must comply with certain standards in managing the plans.
A)True
B)False
Q4) No employee has a reasonable expectation of privacy in the workplace.
A)True
B)False
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Chapter 18: Employment Discrimination
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Q1) To bring an action against an employer based on intentional discrimination,a person must show that he or she is a member of a protected class.
A)True
B)False
Q2) To establish a prima facie case of discrimination under Title VII,a plaintiff must show that discriminatory intent motivated an employer's decision.
A)True
B)False
Q3) It is not unlawful for an employer to retaliate against an employee who has opposed a discriminatory employment practice.
A)True
B)False
Q4) To establish a prima facie case of discrimination under the Americans with Disabilities Act of 1990,a plaintiff must show that discriminatory intent motivated an employer's decision.
A)True
B)False
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Chapter 19: Powers and Functions of Administrative Agencies
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Q1) Administrative agencies can conduct warrantless searches in some situations. A)True
B)False
Q2) In most instances,an agency is not required to obtain a search warrant before a physical search for evidence is conducted.
A)True
B)False
Q3) Federal agencies must consider ways to reduce the economic impact of new regulations on small businesses.
A)True
B)False
Q4) Labor Recruiters,Inc.,has been ordered to appear at a hearing before an administrative law judge of the National Labor Relations Board.A significant difference between a trial and an administrative hearing is that
A)attorneys are not allowed to attend administrative hearings.
B)clients are not allowed to communicate with their attorneys dur?ing adminis?trative hearings.
C)hearsay can be introduced as evidence in an administrative hearing.
D)the burden of proof is on the charged party to prove innocence.
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Chapter 20: Consumer Protection
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Q1) Food labels are not required to provide standard nutrition facts.
A)True
B)False
Q2) Counteradvertising requires a company to advertise the products of its competitor to counter its own false claims.
A)True
B)False
Q3) State laws often provide more sweeping and significant protections for the consumer than federal laws.
A)True
B)False
Q4) Major credit reporting agencies must provide consumers with free copies of their own credit reports every twelve months.
A)True
B)False
Q5) Buyers of goods sold door to door can cancel their contracts within three business days.
A)True
B)False
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Chapter 21: Protecting the Environment
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Q1) Industry Processes Corporation generates solid waste considered hazardous.Industry labels and packages properly all waste to be transported to a disposal site.Under the Resource Conservation and Recovery Act,this is most likely A)not a violation.
B)a violation because Industry generates solid waste.
C)a violation because the waste is transported off-site.
D)a violation because the waste is considered hazardous.
Q2) States may restrict emissions from motor vehicles.
A)True
B)False
Q3) Ultra Kleen,Inc.,operates a chain of laundry establishments throughout the United States.The government entity that is most likely to be involved in regulating the chain's environmental impact is A)Congress.
B)federal and state regulatory agencies.
C)local chambers of commerce.
D)local police departments.
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Chapter 22: Real Property and Land-Use Control
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Q1) Patsy possesses twenty-four acres of remote,rugged land.Patsy has the right to use the property,including extracting silver from an existing mine,for life.Patsy also has the right to lease the land for a period not to exceed her life.Patsy's ownership interest is A)a fee simple absolute.
B)a leasehold estate.
C)a life estate.
D)the power of eminent domain.
Q2) A quitclaim deed warrants more than any other deed.
A)True
B)False
Q3) When a landlord sells leased premises to a third party,any existing leases terminate.
A)True
B)False
Q4) Zoning laws encourage sustainable and organized development.
A)True
B)False
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Chapter 23: Antitrust Law and Promoting Competition
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Q1) Spa Selectiva Company makes and sells beauty salon supplies.By selling its product at prices substantially below the normal cost of production,Spa Selectiva hopes to drive its competitors from the market.This is A)market power.
B)predatory pricing.
C)price discrimination.
D)price-fixing.
Q2) A price-fixing agreement that is reasonable does not violate antitrust law.
A)True
B)False
Q3) A suit is filed against Maxi Corporation,alleging that the firm committed the offense of monopolization.To determine whether Maxi has monopoly power requires looking at A)only Maxi's size.
B)only the relevant geographical market.
C)only the relevant product market.
D)the relevant geographical market and the relevant product market.
Q4) Persons in foreign nations cannot be subject to U.S.antitrust law.
A)True
B)False
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Chapter 24: Investor Protection and Corporate Governance
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Q1) Against a charge of a violation of the Securities Act of 1933,only an issuer of stock can assert the due diligence defense.
A)True
B)False
Q2) A free-writing prospectus may be used before the Securities and Exchange Commission completes its review of a related registration statement.
A)True
B)False
Q3) Lexy,a salesperson for My-T-Fine Corporation,learns that My-T-Fine will increase the dividend it pays to shareholders.Lexy buys 10,000 shares of My-T-Fine stock.When the price increases,Lexy sells the shares for a profit.Lexy would not be liable for insider trading if the information about the dividend was
A)material when she sold the stock.
B)public after she bought the stock.
C)public before she bought the stock.
D)speculative when she bought the stock.
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