Regulatory Environment of Business Exam Review
Course Introduction
This course examines the framework of laws, regulations, and government agencies that influence and govern business operations both domestically and internationally. Students will explore the rationale behind regulation, the roles and powers of regulatory bodies, and the processes through which laws affecting businesses are created and enforced. Key topics include antitrust law, securities regulation, consumer protection, environmental regulations, ethical considerations, and the impact of regulatory compliance on managerial decision-making. The course also addresses emerging issues such as data privacy and global regulatory trends, preparing students to navigate and strategically respond to the complexities of the regulatory environment in today's business landscape.
Recommended Textbook Business Law and the Legal Environment Standard Edition 8th Edition by Jeffrey
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Page 2
F. Beatty
Chapter 1: Introduction to Law
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Q1) In 1994,the Arizona Supreme Court decided the case of Hernandez v.Arizona Board of Regents and found a duty of care to avoid furnishing alcohol to underage consumers.If in 2008 a Flagstaff,Arizona,plaintiff brings a lawsuit against an Arizona university's fraternity for providing alcohol to members under the legal drinking age,the Hernandez v.Arizona Board of Regents case will serve as precedent.
A)True
B)False
Answer: True
Q2) Which of the following played a role in the creation of the U.S.government by solving the problem of federalism?
A)The Visigoths
B)The Iroquois Native Americans
C)Confucius
D)Alexis de Tocqueville
Answer: B
Q3) Common law is a body of cases decided by legislatures.
A)True
B)False
Answer: False
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Page 3
Chapter 2: Ethics and Corporate Social Responsibility
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Q1) What is ethics?
A)Always telling the truth
B)The study of how people should behave
C)Following the law
D)The rules by which you live your life
Answer: B
Q2) What word is best associated with deontological ethics?
A)happiness
B)outcome
C)obligation
D)benefit
Answer: C
Q3) Which of the following statements best exemplifies how society as a whole benefits from ethical behavior?
A)Consumers are willing to pay more for a product they believe to be ethically produced.
B)People feel better when they behave ethically.
C)Unethical behavior can be very costly.
D)Ethical behavior builds trust which is important in all of our relationships.
Answer: D
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Page 4
Chapter 3: International Law
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Q1) The principle that the courts of one nation lack the power to hear suits against foreign governments is called
A)judicial illegitimacy.
B)national jurisdiction.
C)judicial independence.
D)sovereign immunity.
Answer: D
Q2) The primary goal of the North American Free Trade Agreement (NAFTA)was to
A)allow Canada,the United States,and Mexico to compete as a common economic entity against other countries in the world.
B)allow for the free and unrestricted movement of people from one country to another to improve the labor market of Canada,the United States,and Mexico.
C)eliminate almost all trade barriers between Canada,the United States,and Mexico.
D)establish a common set of tariffs and trade restrictions for external countries.
Answer: C
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Chapter 4: Common Law, Statutory Law, and Administrative Law
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Q1) The Administrative Procedure Act imposes controls on agencies by requiring basic fairness in areas not regulated by the enabling legislation.This method of reining in powerful agencies is a form of
A)informational control.
B)political control.
C)judicial review.
D)statutory control.
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 (gender).
B)sexual orientation.
C)national origin.
D)race.
Q3) Common law,like statutory law,is prospective.
A)True
B)False
Q4) The majority of work done by legislative bodies is performed in committees. A)True
B)False
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Chapter 5: Constitutional Law
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Q1) Obscene speech is protected by the First Amendment.
A)True
B)False
Q2) Discuss the Miller test to determine if a creative work is obscene.
Q3) Assume that the state of Ohio passed a hazardous waste statute,seeking to protect the general public and workers.The state statute did not violate the Commerce Clause because it imposed no restriction on interstate commerce.Both the state statute and the federal Occupational Safety and Health Act established job safety standards and specified worker training and employer licensing,but the requirements differed.Discuss which statute(s)Ohio corporations had to obey,and identify the source of the answer.
Q4) The first ten amendments to the Constitution are known as the A)Preamble.
B)Bill of Rights.
C)Supremacy Clause.
D)Articles of Confederation.
Q5) Judicial review is the power of the federal courts to declare a statute or governmental action unconstitutional and void.
A)True
B)False
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Chapter 6: Dispute Resolution
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Q1) Summary judgment is appropriate when there are no essential facts in dispute.
A)True
B)False
Q2) Denzil was one of 50,000 people defrauded of $40 in an advertising scam.His best course of action to recover his money is to
A)mediate the claim with the advertiser.
B)bring an individual lawsuit against the advertiser in a state appellate court.
C)bring an individual lawsuit in a U.S.District Court.
D)become part of a class action lawsuit,which might include plaintiffs who are unaware of the lawsuit or are even unaware they were harmed.
Q3) A summons is a paper ordering a defendant to appear in court at a certain time.
A)True
B)False
Q4) After being served with a summons and a copy of the complaint,a defendant usually files a pleading known as an answer,briefly replying to each allegation in the complaint.
A)True
B)False
Q5) Briefly describe the process of jury selection.
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Chapter 7: Crime
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Q1) Explain the difference between civil law and criminal law.
Q2) Which of the following makes it illegal for U.S.companies and citizens to bribe foreign officials to influence a governmental decision?
A)OSHA
B)RICO
C)CFAA
D)FCPA
Q3) Mary was suspicious of her neighbor,whom she thought was involved in selling illegal drugs.One day Mary arrived at her apartment and saw a large paper sack tied up with string in front of her neighbor's door.She took the bundle into her apartment,opened it,and discovered it was full of cocaine.She called the police and the neighbor was arrested.The neighbor's lawyer claimed the evidence had been illegally obtained since no probable cause existed to justify opening up the paper bundle.Is the lawyer's argument correct?
Q4) Internet auctions are the number one source of consumer complaints about online fraud.
A)True
B)False
Q5) What is the exclusionary rule and what are the three exceptions to the rule?
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Chapter 8: Intentional Torts and Business Torts
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Q1) Public officials can win a defamation case only by proving the defendant's actual malice.
A)True
B)False
Q2) The ruling in the landmark case of New York Times v.Sullivan was that a public official can win a defamation case
A)without proving the defendant acted with reckless disregard of the truth.
B)only by proving the defendant's actual malice.
C)without proving the defendant knew his or her statement was false.
D)only by proving the defendant has a history of reckless behavior.
Q3) Which of the following statements about torts is correct?
A)A tortious act is always a criminal act.
B)A criminal act is always a tortious act.
C)A tortious act may also be a criminal act.
D)A tortious act is the same as a contract dispute.
Q4) A witness testifying in a court or legislature may never be sued for defamation.
A)True
B)False
Q5) Discuss the four elements that must be proven in order to win a defamation case.
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Chapter 9: Negligence, Strict Liability, and Product Liability
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Q1) One morning,Miles accidentally dropped a thumbtack on the chair of the office manager where he worked.The office manager sat on the tack and,two days later,was hospitalized with an infection caused by the tack.Which of the following is correct?
A)Miles's actions were negligent.
B)No tort has been committed.
C)Miles committed an intentional tort.
D)Miles is strictly liable.
Q2) List and discuss the elements necessary to establish negligence.
Q3) Mavrex,Inc.received an application from Larry,and since his written qualifications seemed to meet a pressing current need,they hired him without checking his references or prior records.Actually,Larry had been in prison for murder several years earlier.Tom,a long-time Mavrex employee,angered Larry when Tom tried to tell Larry how to do his job.Larry attacked and injured Tom.If Tom sues Mavrex,what would his cause of action be,and what elements would Tom need to prove to win his case?
Q4) A landowner's highest duty is owed to licensees.
A)True
B)False
Q5) Discuss the concepts of contributory negligence and comparative negligence.
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Chapter 10: Privacy and Internet Law
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Q1) Under the ECPA,any intended recipient has the right to disclose the content of an email.
A)True
B)False
Q2) After Jan's boyfriend broke up with her,she posted sexually explicit pictures of him on her Facebook page and wrote about how he was a terrible boyfriend.Jan's actions are protected by the First Amendment to the Constitution.
A)True
B)False
Q3) The internet of things refers to internet-connected everyday devices,vehicles,and even buildings.
A)True
B)False
Q4) The FISA requires government agencies to delete irrelevant and personally identifying data before providing it to other agencies.
A)True
B)False
Q5) What provisions are commercial email subjected to under the CAN-SPAM Act?
Q6) Explain the core principles in the Fair Information Practices.
Page 12
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Chapter 11: Introduction to Contracts
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Q1) Robert,a minor,buys a stereo from Jane for $200.State law allows a minor to disaffirm contracts within a reasonable time after turning 18.Robert disaffirms the contract the day after turning 18 and returns the stereo.
A)This contract was a valid contract,Robert cannot disaffirm.
B)This contract was a voidable contract,Robert can disaffirm.
C)This contract was a void contract.
D)This contract was unenforceable because it needed to be in writing to be enforceable.
Q2) 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
Q3) An agreement in which parties intend to form a valid bargain,but a court declares that some rule of law prevents enforcing it is called
A)a void agreement.
B)a voidable contract.
C)an unenforceable agreement.
D)a quasi-contract.
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Page 13
Chapter 12: Agreement: Offers and Acceptances
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Q1) Software clickwrap and browsewrap agreements limiting the manufacturer's maximum responsibility to a refund of the purchase price even if the software destroys your hard drive have generally been found to be binding against consumers.
A)True
B)False
Q2) On Monday,Mick puts an offer in the mail to Sheri to sell his guitar for $50.Monday night when jamming with his buddies,he decides he will really miss his old guitar and has second thoughts about selling it.Tuesday morning he puts a revocation in the mail informing Sheri he has changed his mind and the guitar is no longer for sale.The revocation is effective on Tuesday morning.
A)True
B)False
Q3) Vick Valve Company makes valves for plumbing fixtures.At the beginning of the year,it sends out a price list addressing each one,"To our valued customers." Honest Hank Hardware orders a variety of valves at the prices quoted on the price list.Vick Valve must honor the prices on the list and sell the valves to Honest Hank.
A)True
B)False
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14
Chapter 13: Consideration
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Q1) Denton agreed to build a cedar deck for the Thrashers for $7,000.After he began the work,the Thrashers asked him to add cedar flower boxes at one side.Denton replied he would,but it would cost an additional $600.The Thrashers would not be obligated to pay the additional sum because the original agreement already obligated Denton to complete the deck for $7,000.
A)True B)False
Q2) A liquidated debt is one in which A)the debtor is unable to pay.
B)there is no dispute about the amount owed.
C)the parties dispute whether any money is owed.
D)there is disagreement about the amount owed.
Q3) An agreement to settle a debt for less than the sum claimed is referred to as A)a promissory estoppel. B)an accord.
C)a satisfaction. D)rescission.
Q4) A forbearance is,in essence,the opposite of an act.
A)True B)False
Page 15
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Chapter 14: Legality
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Q1) Cherise contacted her insurance agent and said she was interested in purchasing several life insurance policies: (a)a policy on her own life for $100,000,naming her son and daughter as beneficiaries;(b)a policy on her neighbor's life for $100,000,since she had observed him engaging in reckless behavior,naming herself as beneficiary;(c)a $5,000 policy on another neighbor to cover a loan Cherise made to him,naming herself as beneficiary;and (d)a $250,000 policy on her business partner,naming herself as beneficiary.Discuss the legality of each of these potential contracts.
Q2) In many states it is illegal to lend money to help someone gamble.
A)True
B)False
Q3) What are the two most common settings for legitimate non-compete agreements?
A)real estate purchase and employment relationship
B)sale of a business and real estate purchase
C)real estate purchase and insurance purchase
D)sale of a business and employment relationship
Q4) Morality plays no part of gambling contract legality.
A)True
B)False
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Page 16
Chapter 15: Voidable Contracts: Capacity and Consent
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Q1) Larson entered Forrester's Auto Mart to purchase a used car.Larson found a vehicle with a sales price of $11,000.After Forrester answered all of Larson's questions,Forrester and Larson agreed to a sale.As Larson was leaving to get the money to pay for the car,Forrester told Larson that he thought Robert Redford formerly owned the car.Larson later learned that Robert Redford had never owned the car.If Larson seeks to rescind the deal based on Forrester's statement,Larson will
A)win because he relied on the misrepresentation.
B)win because there was a misrepresentation of a material fact.
C)lose because he will not be able to prove reliance on the misrepresentation.
D)lose because Forrester made a unilateral mistake.
Q2) Which of the following is the MOST accurate statement regarding economic duress?
A)It is never grounds for rescission.
B)It is always grounds for rescission.
C)It is a UCC concept only.
D)It may be grounds for rescission.
Q3) Describe legal capacity and discuss how it applies to minors entering into and cancelling contracts.
Q4) Discuss the meaning of "material fact" in fraud situations.
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Chapter 16: Written Contracts
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Q1) Amanda,a recent university graduate,needed a car to get to her new job.To help Amanda secure a loan for the car,Ted,a friend,agreed to pay the loan should Amanda default.Ted's promise to pay the loan is a collateral promise.His promise must be in writing to be enforceable.
A)True
B)False
Q2) Many states will not accept an e-signature on
A)a will.
B)a foreclosure notice.
C)a court order.
D)All of these are correct.
Q3) Raymond agrees to transfer an easement right to Sandra for $1,000.This contract is within the Statute of Frauds and therefore needs to be in writing to be enforceable.
A)True
B)False
Q4) Any contract involving a sale of goods of $100 or more must be in writing.
A)True
B)False
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18
Chapter 17: Third Parties
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Q1) A rock group assigns its payment under a performance contract to the Costume Shop,a business that has supplied the group with outrageous stage outfits,and to which the group owes a great sum of money.This is a(n)
A)valid assignment because of the rule of freedom to contract.
B)valid assignment because this is a simple transfer of the right to receive money.
C)invalid assignment because it increases the burden of the payor.
D)invalid assignment because this is a personal service contract.
Q2) Discuss the potential liability differences between a delegation and a novation.
Q3) Linda assigns to Ben a right to receive rent payments.In terms of Linda's warranty as the assignor,the law implies which of the following?
A)that the tenant is solvent
B)that Linda actually has a right to the rental payments
C)that the tenant will actually pay
D)No warranties are implied by law in an assignment.
Q4) Contract prohibitions against assignments are invalid as a matter of public policy.
A)True
B)False
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19
Chapter 18: Contract Termination
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Q1) Identify the factors courts consider in deciding the validity of commercial impracticability and frustration of purpose claims.
Q2) Commercial impracticability means some event has occurred that neither party anticipated and fulfilling the contract would now be extraordinarily difficult and unfair to one party.
A)True
B)False
Q3) A wholesaler of coffee notifies a retailer that it cannot fulfill its contractual obligation to deliver 1,000 pounds of coffee at the agreed upon price of $2.00 per pound next month because of recent price increases in coffee.The retailer may treat the wholesaler as having breached the contract and sue for damages even though the wholesaler's performance is not due until next month.
A)True
B)False
Q4) What does the term "substantial performance" mean? What factors are generally considered when determining whether one of the parties has substantially performed?
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Chapter 19: Remedies
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Q1) Injunctions are frequently used by courts to force employees to complete their contractual obligations with their employers.
A)True
B)False
Q2) Under the UCC,the buyer is entitled to consequential damages if the seller could have reasonably foreseen them.
A)True
B)False
Q3) To make a good faith purchase of goods similar to those in a contract is to A)rescind.
B)breach.
C)cover.
D)mitigate.
Q4) The remedy of reformation
A)applies only when money damages are inadequate.
B)can be used to correct mistakes in the original contract.
C)is available only if fraud is involved.
D)is a commonly used remedy.
Q5) Identify and describe the principal contract interests a court may seek to protect.
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Chapter 20: Practical Contracts
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Q1) In a contract modification,the phrase "charged with such amendment" refers to
A)the party who suggested the change.
B)the party who will benefit from the change.
C)the party who will be adversely affected by the change.
D)the party who did NOT suggest the change.
Q2) An honest effort to meet both the spirit and letter of the contract is termed
A)reasonable circumstances.
B)sole discretion.
C)honest representation.
D)good faith.
Q3) Outline the focused,multi-step process recommended for reading a contract before you agree to it.
Q4) Which of the following is the best example of a contract title?
A)AGREEMENT
B)LEASE AGREEMENT
C)LEASE AGREEMENT BETWEEN ALISON ALBRIGHT AND KEYSTONE PROPERTIES
D)CONTRACT BETWEEN LESSOR AND LESSEE
Q5) Define and compare the terms "vagueness" and "ambiguity."
Q6) Outline the parts of a typical contract.
Page 22
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Chapter 21: Introduction to Sales
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Q1) Harriett raises and sells hippos.In order to keep her hippos happy and healthy,she feeds them Hippo Chow,which she buys from the local pet store.Under the UCC,Harriett is
A)a merchant of both hippos and Hippo Chow.
B)a merchant of hippos,but not of Hippo Chow.
C)a merchant of Hippo Chow,but not of hippos.
D)not a merchant of either hippos or Hippo Chow.
Q2) Which of the following would be considered a merchant under the UCC?
A)A woman sells her pistol to someone responding to a classified ad.
B)A man who owns a jewelry store sells his used car to a neighbor.
C)A gun dealer sells a rifle to someone who enters his shop.
D)All of these are correct.
Q3) Uncle Brandon promises to give his motorcycle to you for free at the end of the month.This transaction is governed by UCC,Article 2,because a motorcycle is within the definition of "goods."
A)True
B)False
Q4) The UCC imposes a duty of good faith in the performance of all contracts.
A)True
B)False
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Chapter 22: Ownership, Risk and Warranties
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Q1) Garden World orders 120 hand cultivators from Green Thumb,Inc.When the cultivators arrive,they seem fine,so Garden World accepts them.As the stock person is putting the cultivators on display,she notices that the tines are loose on all the cultivators.Garden World returns the cultivators to Green Thumb,but they are lost when the delivery truck slips on an oily spot in the road and drives into a nearby lake.Discuss who bears the risk of loss for the shipment.
Q2) A statement that a particular warranty does not apply is called a(n)
A)disclaimer.
B)infringement.
C)limitation of remedy clause.
D)voidable title.
Q3) Leonardo fraudulently obtained a piece of jewelry from Jessica.He then sold the piece to Midori,who did not know about the fraud.Which of the following describes the situation?
A)Leonardo had voidable title and Midori gets a void title.
B)Leonardo had void title and Midori gets good title.
C)Leonardo had voidable title and Midori gets good title.
D)Leonardo had good title and Midori gets good title.
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Chapter 23: Performance and Remedies
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Q1) Identify the possible remedies for a seller when the buyer breaches a contract.
Q2) If applicable,course of dealing will
A)limit the buyer's right to reject for relatively routine defects.
B)allow the seller to replace defective goods with conforming goods if time permits.
C)permit a buyer to reject accepted goods if they substantially impair its value.
D)allow either the buyer or the seller to void a contract.
Q3) Assume that Sherrie's Cherries contracts with Dessert World to sell and ship 600 pounds of cherries in three equal installments of 200 pounds each.If the first installment arrives with 5 pounds of spoilage,then Dessert World may
A)reject the installment shipment because of the perfect tender rule.
B)not reject the installment if those in the food industry expect a small percentage of spoilage with fresh fruits or vegetables.
C)reject the entire contract.
D)declare a breach and "cover."
Q4) Define these terms: usage of trade,course of dealing,and course of performance and identify how they are used according to the UCC.
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Page 25
Chapter 24: Secured Transactions
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Q1) What occurs when a secured party takes back collateral because the debtor has failed to make payments when due?
A)repossession
B)default
C)authentication
D)perfection
Q2) Article 9 applies to any transaction intended to create a security interest in personal property or fixtures.
A)True
B)False
Q3) Bagsby owns a business selling insects for organic gardening.Bagsby is seeking a loan from First Natural Bank.The loan officer is asking that the loan be secured by Bagsby's inventory of insects,now owned or hereafter acquired.In order to do this,a new security agreement will need to be signed each time Bagsby gets new insects or sells his insects.
A)True
B)False
Q4) Explain the difference between attachment and perfection.
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Chapter 25: Creating a Negotiable Instrument
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Q1) Which is an unconditional order to pay?
A)"I will pay $5,000 for the painting."
B)"I will pay $2,500 for the truck if it is still running."
C)"I will pay $400 if I have the money by Friday."
D)All of these are correct.
Q2) Charlene Brown has possession of a check made out to the order of Charlene Brown (herself)which she received in payment for writing a manuscript for her publisher.Charlene is a holder in due course and the publisher cannot claim any "real" defenses to payment.Charlene has an unconditional right to be paid for the check.
A)True
B)False
Q3) Tim wrote a negotiable note.Subsequently,Tim's debts were discharged in bankruptcy.If a holder in due course presents the note for payment,Tim does not have to pay.
A)True
B)False
Q4) Matt wrote a $500 check to Alistar for some yard work that Alistar had done.What will Alistar have to do negotiate this instrument to Totally Tough,Inc.in payment for some yard equipment Alistar had bought?
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Chapter 26: Liability for Negotiable Instruments
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Q1) Mack writes a check to his maid,Marianne,in payment for services rendered.Marianne indorses the check in blank and gives the check to her masseuse,Janet,in exchange for a neck massage.Without indorsing the check,Janet gives the check to Martin,her newspaper carrier,in payment for the next four months' delivery charges.Martin indorses with a special indorsement and negotiates the check to his church,St.Mark.The church indorses the check and deposits it in its bank account.If Mack's bank later dishonors the check,to whom may St.Mark's look for recovery?
A)Martin only
B)Mack only
C)Mack,Marianne,Janet,and Martin
D)Mack,Marianne,and Martin
Q2) If an employee with responsibility for issuing instruments forges a check or other instrument,then any indorsement in the name of the payee,or a similar name,is valid as long as the person who pays the instrument doesn't know of the fraud.
A)the Imposter Rule
B)the Conversion Rule
C)the Employee Indorsement Rule
D)the Fictitious Payee Rule
Q3) List the warranties a transferor of a negotiable instrument makes.
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Chapter 27: Accountants Liability
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Q1) Manuel,in conducting an audit,must rely most heavily on rules found in generally accepted accounting principles (GAAP).
A)True
B)False
Q2) Accounting contracts can be either written or oral.
A)True
B)False
Q3) An engagement letter is a written contract
A)between an accountant and client.
B)in anticipation of marriage.
C)between a corporation and the AICPA.
D)intended to create a fiduciary duty of an accountant to his client.
Q4) After completing an audit,the most unfavorable opinion an auditor can issue is a disclaimer of opinion.
A)True
B)False
Q5) An auditor suspects its client is committing illegal acts that will have a material impact on its financial statements.What is the auditor legally required to do and under what circumstances would the auditor directly notify the SEC?
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Chapter 28: Agency Law
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Q1) The bankruptcy of an agent automatically terminates an agency relationship. A)True B)False
Q2) Larry decided to relocate to Germany.Larry hired Happy Homes,Inc.to find a buyer and contract for the sale of his house in the United States.The agency relationship between Larry and Happy Homes must be evidenced with a written agreement.
A)True
B)False
Q3) Andrew has been hired to do some work for Rossi Enterprises.What factors would a court consider in determining if Andrew is an employee or an independent contractor? Why does the designation matter?
Q4) Betsy's elderly father gave her written authority to sell the family house.Her father lived in Arizona,and she lived in Minnesota.After about two months she found a buyer for the house and signed an acceptance of the offer on March 21.Later that same day,she learned her father had died the day before (March 20).Other members of the family did not want the family house sold and claimed that the acceptance Betsy signed was void.The buyer of the house claims Betsy had the legal authority to sell the house and that the contract is binding.Who is right?
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Chapter 29: Employment and Labor Law
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Q1) The National Labor Relations Act guarantees employees the right to join unions.
A)True
B)False
Q2) As a general rule,employers have a legal obligation to disclose information about former employees to potential future employers.
A)True
B)False
Q3) Valley Mart told its employees that they would be fired if they actively supported a unionizing effort.Valley Mart has committed an unfair labor practice.
A)True
B)False
Q4) 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
Q5) Some courts have held that employee handbooks create binding contract terms.
A)True
B)False
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Chapter 30: Employment Discrimination
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Q1) Regarding Title VII,the Supreme Court ruled that an employer may only discriminate against a woman if the position she is seeking has been historically occupied by a male more than 75 percent of the time.
A)True
B)False
Q2) As part of the hiring process,it is legal for employers to use any personal information potential employees post on social media.
A)True
B)False
Q3) There are four types of illegal activity under the Civil Rights Act of 1964.Which choice lists these four?
A)disparate treatment,disparate impact,hostile environment,and retaliation
B)disparate employment,unfair promotions,hostile environment,and unfair firing
C)false reports,retaliation,prima facie discrimination,sexual harassment
D)religious disparaging,racial profiling,sexual harassment,unfair promotions
Q4) The EEOC is the federal agency responsible for enforcing Title VII.
A)True
B)False
Q5) Discuss the two categories of sexual harassment.
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Chapter 31: Starting a Business: Llcs and Other Options
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Q1) For those wishing to purchase a franchise,the Federal Trade Commission acts as a guardian ensuring that the business idea is sound and that the information in the Franchise Disclosure Document is accurate.
A)True
B)False
Q2) The Federal Trade Commission requires franchisors to
A)give prospective franchisees a franchise disclosure document at least 14 business days prior to the signing of a contract or payment of any money.
B)give prospective franchisees earnings information on the company.
C)disclose any litigation the company has ever been involved in.
D)let prospective franchisees know how many franchisees have gone out of business in the prior five years.
Q3) Trudy wishes to buy a national franchise.What information is the seller legally required to provide before she buys the franchise?
Q4) What is a joint venture? Briefly explain the tax and liability implications of a joint venture.
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Chapter 32: Partnerships
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Q1) Dennis and Claudia were partners who operated a retail store.They agreed to end the partnership.Dennis agreed to stay at the store and oversee the going-out-of-business sale.Claudia agreed to deal with the accountants and other matters not directly related to the hands-on operation of running the store.Claudia received notice that the store's liability policy would expire on July 1.She decided not to renew the policy and let it lapse.The going-out-of-business sale would not be completed until August 1.In July,a customer slipped and fell in the store.When Dennis learned that Claudia had allowed the liability policy to lapse,he was very upset and claimed he should not be liable for the customer's injury.Is Dennis liable to the customer? Explain.
Q2) In Banker v.Estate of Banker the court held that
A)it could not intervene in the affairs of a partnership.
B)when proof of an agreement is lacking,a partner cannot receive compensation for work done.
C)regardless of a written agreement to the contrary,a partner can receive compensation for work done.
D)all parties doing work for a partnership are entitled to compensation for work done to further the partnership business.
Q3) Identify and briefly discuss the management rights and duties of a partner.
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Chapter 33: Life and Death of a Corporation
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Q1) Corporate stock can be divided into categories called ________,which can be further divided into ________.
A)authorized shares,classes
B)classes,series
C)equity,assets
D)debentures,classes
Q2) Zach decides to incorporate his business under the name of "Zamm." In addition to "Zamm," the Model Act requires that Zach include one of the following words: "corporation," "incorporated," "limited," or "company."
A)True
B)False
Q3) Isabel,Wesley,Gina,and Lucas worked together intensively to form and become the only shareholders of a corporation that is environmentally conscious.Is there anything they can do to avoid having shares of stock in their company sold to someone who does not share their vision for the environment?
Q4) The lawyer who forms the corporation cannot legally serve as its incorporator.
A)True
B)False
Q5) Discuss how a corporation is terminated.
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Chapter 34: Management Duties
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Q1) Which of the following statements is correct with respect to state efforts to offer protection to companies targeted for hostile takeovers?
A)Courts offer the only legal protection to companies targeted for hostile takeovers.
B)Statutory law offers the only legal protection to companies.
C)Both statutory law and the state courts have provided some degree of protection for companies.
D)State courts and state statutes have offered no protection for companies targeted for hostile takeovers.
Q2) Which of the following is the most appropriate term to use when describing management's duty to its shareholders?
A)official duty
B)legal duty
C)fiduciary duty
D)statutory duty
Q3) The Williams Act regulates the conduct of the target company in a takeover situation.
A)True
B)False
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Chapter 35: Shareholder Rights
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Q1) Under both state and federal law,a shareholder can generally revoke a proxy at any time.
A)True B)False
Q2) A derivative lawsuit is filed by a shareholder of the corporation if his or her own rights have been harmed.
A)True B)False
Q3) Under the Model Act,who has the right to call a special meeting of the shareholders to vote on an emergency issue that cannot wait until the next annual meeting?
A)The board of directors and shareholders who own at least 10 percent of a company's stock
B)Any group of shareholders that is at least 25 in number and holds 25 percent of a company's stock
C)The board of directors and the CEO
D)Only the board of directors
Q4) Overall,directors get paid very little for the amount of work they perform.
A)True B)False
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Chapter 36: Bankruptcy
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Q1) When Dudley files his Chapter 7 petition,he lists the following debts: How will each of these debts be treated by the bankruptcy court.
a.$25,000 in back child support and alimony
b.$15,000 for liabilities incurred after drinking and driving
c.$10,000 for past-due student loans
d.$5,000 for past-due rent to his landlord
e.$550 for a past-due phone bill
Q2) Individual debtors are allowed to keep some assets in a Chapter 7 bankruptcy.
A)True
B)False
Q3) Which of the following is a primary goal of the Bankruptcy Code?
A)to preserve as much of the debtor's property as possible
B)to pay off the debtor's creditors as quickly as possible
C)to secure debt counseling for the debtor
D)to keep the debtor from falling behind in payments
Q4) Generally,filing bankruptcy stops the collection activity of creditors.
A)True
B)False
Q5) What are the three main purposes of the federal Bankruptcy Code? How are these purposes supported and fostered in the Code?
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Chapter 37: Securities Regulation
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Q1) Which of the following represents a valid Regulation A Tier 1 offering?
A)selling $3 million of securities in any 12-month period with a $250,000 individual investor limit
B)selling $10 million in securities in any 12-month period;investors can't buy more than 10% of their annual income or net worth
C)selling $20 million of securities in any 12-month period with no individual investor limit
D)selling $20 million in securities in any 12-month period;investors can't buy more than 5% of their annual income or net worth
Q2) When a stock underwriter acts as the company's agent in selling stock,it is called a A)company underwriting.
B)express underwriting.
C)firm commitment underwriting.
D)best efforts underwriting.
Q3) Discuss the process an issuer follows for either an IPO or a secondary offering.
Q4) The Fallwater Partnership wants to incorporate and is considering using a DPO.Explain what a DPO is and discuss the advantages and disadvantages of this course of action.
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Chapter 38: Antitrust
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Q1) Both the Justice Department and the Federal Trade Commission have the authority to enforce antitrust laws.
A)True
B)False
Q2) In vertical price-fixing,the manufacturer sets the
A)minimum prices that retailers may charge.
B)maximum prices that retailers may charge.
C)number of items a retailer may sell at a specific price.
D)date by which a retailer must sell products.
Q3) If competitors act in concert but without an explicit agreement,they are engaged in A)a tying arrangement.
B)monopolization.
C)reciprocal dealing.
D)conscious parallelism.
Q4) Per se violations are subject to both civil and criminal penalties.
A)True
B)False
Q5) Discuss when monopoly power is not a violation of Section 2 of the Sherman Act.
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Chapter 39: Consumer Protection
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Q1) Consumers have a right to
A)exclude as obsolete information about a bankruptcy discharge 7 years previously. B)know the name of anyone to whom credit information has been supplied by a consumer reporting agency within the last 3 years.
C)have their own version of a disputed credit situation included in their credit file. D)have investigative reports become obsolete after 1 year.
Q2) The Fun Tyme Toy Company discovers that one of its products can easily break,exposing children to potential injury from the sharp parts.Under the Consumer Product Safety Act of 1972,how long does Fun Tyme have to report this defect to the Consumer Product Safety Commission?
A)24 hours
B)3 days
C)7 days
D)30 days
Q3) The FTC may consider an act unfair if it simply violates public policy.
A)True
B)False
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Chapter 40: Environmental Law
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Q1) The Toxic Substances Control Act regulates
A)chemicals other than pesticides,foods,drugs,and cosmetics.
B)insecticides.
C)natural gas.
D)pesticides.
Q2) Armand Industries is producing a foul-smelling odor as a by-product of its factory's operations.However,the emission is not harmful to the health of those exposed to it.Armand would be subject to a primary national ambient air quality standard established by the EPA.
A)True
B)False
Q3) Which law requires the EPA to set national standards for substances if they are potentially harmful to human health?
A)Resource Conservation and Recovery Act
B)Oil Pollution Act
C)Safe Drinking Water Act
D)Ocean Dumping Act
Q4) The disposal of nonhazardous solid waste has generally been left to the states.
A)True
B)False
Page 42
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Chapter 41: Intellectual Property
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Q1) Of the following,which is an advantage of trademark registration?
A)Potential damages are lower.
B)After five years the mark becomes almost impossible to challenge.
C)It allows the trademark owner to use the TM symbol to put others on notice of the protection.
D)It can't be used as an internet domain name.
Q2) Explain what a trademark is,and list the four different types of "marks" that can be protected under trademark law.Explain how each mark is used.
Q3) A color cannot be trademarked since it cannot be kept from use by other businesses.
A)True
B)False
Q4) 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.
Q5) Briefly define patent,copyright,and trademark,and explain how long they last.
Page 43
Q6) Identify the main provisions of the Digital Millennium Copyright Act.
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Chapter 42: Real Property and Landlord Tenant Law
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Q1) The bank who lends money in exchange for a mortgage on the borrower's house is considered to be the A)mortgagee.
B)mortgagor.
C)profitor.
D)profitee.
Q2) Ali and Latosha bought a house through a mortgage they secured from their local bank.When they failed to make their mortgage payments,the bank used ________ to foreclose on the property and sell it.
A)a lien
B)adverse possession
C)easement by prescription
D)reversion
Q3) Juan has the right to walk (or drive)across his neighbor's property to reach the highway.Juan's right is referred to as an easement,which allows use of the land.
A)True
B)False
Q4) Discuss the tenant's and the landlord's basic duties under a landlord-tenant relationship.
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Chapter 43: Personal Property and Bailment
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Q1) If property is mislaid,the finder of the property will have a superior claim to possession of the property against everyone except the true owner.
A)True
B)False
Q2) Which of the following would NOT be considered personal property?
A)collection of vinyl record albums
B)field of soybeans
C)antique quilt
D)None of these are correct.
Q3) Alexander loans Miko his baking dish so she can make lasagna for dinner tonight for her family.What kind of bailment is this?
A)bailor benefit bailment
B)bailee benefit bailment
C)constructive bailment
D)mutual benefit bailment
Q4) Distinguish between a contract and a gift.Give an example of each.
Q5) All bailments have to be by agreement between the bailor and bailee.
A)True
B)False
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Chapter 44: Planning for the Future: Wills, Trusts and Insurance
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Q1) Which of the following is true about wills?
A)A will can be amended to change specific terms by execution of a codicil.
B)The testatrix cannot disinherit her minor children without stating a reason in the will.
C)If the will meets the legal technicalities,the surviving spouse cannot override it.
D)Once a will is written,it cannot be changed.
Q2) Myron had two children,Cheryl and Pete,who predeceased him.Cheryl had three children and Pete had one child.Myron had a will.Which of the following is true?
A)If Myron's will indicates that the issue are to inherit per stirpes,Pete's child will receive one half of Myron's estate.
B)If Myron's will indicates that the issue are to inherit per stirpes,Pete's child will receive one fourth of Myron's estate.
C)If Myron's will indicates that the issue are to inherit per capita,Pete's child will receive one half of Myron's estate.
D)If Myron's will indicates the issue are to inherit per capita,each of Cheryl's children will receive one sixth of Myron's estate.
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