Test Bank for Essentials of Business Law 12th Edition 2024 By Anthony Liuzzo (All Chapters 1-38)

Chapter 1

Student name:__________ 1) The Uniform Commercial Code has been adopted in its entirety by all 50 states. ⊚ true ⊚ false

2) The Uniform Commercial Code (UCC) was prepared in 1952. ⊚ true ⊚ false

3) The Uniform Commercial Code is a set of laws governing various commercial transactions

that are designed to bring uniformity to the laws of the different states. ⊚ true ⊚ false

4) Many legal obligations are based on moral obligations, but not all moral obligations are

legally enforceable. ⊚ true ⊚ false

5) A court has no jurisdiction if it has the authority to hear appeals from other courts. ⊚ true ⊚ false

6) Federal district courts do not have original jurisdiction to hear all appeals from state trial

courts. ⊚ true ⊚ false

7) There are 50 federal circuit courts of appeals, one circuit for each state. ⊚ true ⊚ false

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Chapter 1 8) Although no single person can possibly know the entire body of law, it is important that the

average person understand: A) some of the general principles of law.

B) how to avoid common legal problems and pitfalls.

C) when to seek professional help.

D) All of the options are correct.

9) The party who begins a lawsuit by filing a complaint in the appropriate court is called the: A) defendant.

B) plaintiff.

C) attorney.

D) aggrieved.

10) Although the ordinary applications of law are not always exciting, it is important to

understand certain essential legal principles because they affect: A) one’s business.

B) one’s personal life.

C) both one’s business and one’s personal life.

D) It is not important to understand legal principles.

11) Every business must comply with _______ laws.

A) federal B) state C) local D) All of the options are correct.

12) Legislatures at all levels of government pass many _______ that apply only to businesses and

individuals, but some laws apply specifically to governments.

A) laws B) rules C) injunctions D) None of the options are correct.

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Chapter 1 13) The ever-changing body of law that affects everyone in our country has arisen from a number

of sources and, as a result, laws sometimes: A) don’t need to be followed.

B) conflict with one another.

C) cancel each other out.

D) None of the options are correct.

14) State laws require that barbers and pharmacists pass examinations to be _______.

A) licensed to practice in their profession B) corporate officers C) immune from lawsuits D) enrolled in the Bar Council

15) Administrative law is: A) the study of the federal Constitution, its interpretation by the federal courts, and its

relationship to existing laws.

B) the body of rules, regulations, and decisions created by administrative agencies.

C) the study of the rights and obligations of individuals and includes the law of property, the law of contracts, and the law of torts.

D) concerned with the conduct of nations in their relations with other nations.

16) A_______ is a written agreement between two or more countries that serves to establish

terms of an international relationship.

A) contract B) mandate C) covenant D) treaty

17) Treaties become legally binding when they are approved by_______ of the Senate.

A) one-third B) two-thirds C) one quarter D) half

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Chapter 1 18) The_______ system of law is known as the common law and still influences legal decisions

in the United States today.

A) civil B) German C) English D) customary

19) The principles and ideals that protect individual liberty and freedom are incorporated in the

_______.

A) U.S. Executive Order Number 1579 B) operating agreement of a typical limited liability company (LLC) C) memorandum of articles of a typical corporation D) Constitution of the United States

20) In the United States, _______ give(s) limited, reasonable powers to the federal government.

A) the federal Constitution B) executive orders C) treaties D) common law

21) Administrative agencies have the authority to: A) establish rules that have the force of law.

B) establish rules that do not have the full force of law.

C) establish rules that the courts must follow.

D) Administrative agencies do not have any authority to establish rules.

22) The literal translation of "stare decisis" would mean _______.

A) "to stand on decided cases" B) "to send a summons" C) "to postpone a hearing without a date" D) "during the pendency of a proceeding"

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Chapter 1 23) The effects of court decisions that involve the same or similar facts is called: A) statutory law.

B) case law.

C) precedent.

D) administrative law.

24) Administrative agencies include: A) state agencies such as public service commissions.

B) local agencies such as boards of health.

C) federal agencies such as the National Labor Relations Board.

D) All of the options are correct.

25) The laws passed by Congress and by state legislatures are called _______.

A) ordinances B) executive orders C) statutes D) notices

26) Civil law is the study of the rights and obligations of individuals and includes: A) the law of property.

B) the law of contracts.

C) the law of torts.

D) All of the options are correct.

27) Both federal and state constitutions are general statements of the powers of governments and

the rights of individuals. The specific applications of powers and rights are provided for in laws enacted by: A) federal, state, and local governments.

B) federal governments only.

C) state governments only.

D) local governments only.

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Chapter 1 28) The Uniform Commercial Code was _______.

A) enacted in 1962 by Congress to create a uniform federal law for commercial

transactions in the United States B) created in 1952 by the National Conference of Commissioners to aid states as they drafted laws regarding commercial transactions C) adopted by all 50 states in 1943 to create a cohesive understanding of commercial transactions in the United States D) a part of federal common law and was created in 1976 in a decision of the U.S. Supreme Court

29) The regulation of acts against the public (society) is classified as what area of law?

A) Civil law B) Criminal law C) Real property law D) Contract law

30) The law concerned with the unenforceable obligations that people have to one another is

known as _______.

A) international law B) rural law C) moral law D) constitutional law

31) The enforcement of any and all moral obligations results from _______.

A) actions by federal or state agencies B) actions by state courts C) actions by federal courts D) the effect on a person's conscience

32) Most legal scholars agree that today's laws provide adequate protection of the _______ of the

individual.

A) obligations B) responsibility C) duties D) rights

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Chapter 1 33) Courts that are given the power to hear only certain kinds of cases have _______. Examples

are family courts, traffic courts, and tax courts.

A) incorporation B) ratio decidendi C) special jurisdiction D) venue

34) “Jurisdiction” is the authority of a court, as granted by a constitution or legislative act, to: A) B) C) D)

ordain and establish new laws. hear and decide cases. rule on the constitutionality of laws. enforce moral law.

35) The federal court system includes specialized courts that hear only certain kinds of cases. An

example is: A) U.S. Tax Court.

B) U.S. Bankruptcy Court.

C) U.S. Claims Court.

D) All of the options are correct.

36) The federal district courts have original jurisdiction in cases involving _______.

A) criminal matters arising out of state statute B) probate matters arising out of state statute C) cases in which state law conflicts with county ordinances D) federal questions arising out of federal statute

37) If one of the parties in a case feels that he or she did not have a fair trial in the court of

original jurisdiction, he or she can: A) remand the case back to the original court for reconsideration.

B) seek arbitration instead.

C) seek an appeal in a state appellate court.

D) All of the options are correct.

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Chapter 1 38) What is “civil law”?

39) Explain what the term "precedent" means and how it is followed by courts in the United

States.

40) What is the name of the uniform law that has attempted to create uniformity in state laws

dealing with business and commercial transactions?

41) What classification of law deals with the conduct of government agencies and enforcement

of their regulations?

42) Write a brief explanation of the federal court system.

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Chapter 1 43) In what court would a case involving an appeal of a decision made by the Federal Trade

Commission be tried?

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Chapter 1

Answer Key Test name: Chapter 1 1) FALSE 2) TRUE 3) TRUE 4) TRUE 5) FALSE 6) TRUE 7) FALSE 8) D 9) B 10) C 11) D 12) A 13) B 14) A 15) B 16) D 17) B 18) C 19) D 20) A 21) A 22) A 23) B 24) D 25) C 26) D 27) A 28) B 29) B 30) C 31) D 32) D 33) C 34) B 35) D 36) D 37) C

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Chapter 1 38) Essay 39) Essay 40) Essay 41) Essay

The administrative branch is a reference to the part of our government that is managed by government agencies. Government agencies manage through rule making and regulation enforcement. The law that concerns the actions of government agencies is called administrative law.

42) Essay

The federal court system has three main levels: the trial court, called the District Court, the main appellate court, called the Circuit Court of Appeals, and the highest court in the United States that decides constitutional matters, the Supreme Court.

43) Essay

The U.S. Circuit Court of Appeals would have jurisdiction in this case.

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Chapter 2

Student name:__________ 1) The development of technology has introduced a burgeoning array of ethical questions. ⊚ true ⊚ false

2) Legal and moral beliefs and standards are derived from values. ⊚ true ⊚ false

3) Businesses acting on their ethical considerations usually do not focus on corporate

responsibility and the development of codes of conduct. ⊚ true ⊚ false

4) A corporate code of ethics is a set of guidelines limited in compliance and enforcement to the

most senior management of a corporation. ⊚ true ⊚ false

5) It is possible for a corporation's code of ethics to make it clear what a company expects of its

personnel in terms of the ethical dimensions of corporate policies and actions. ⊚ true ⊚ false

6) Trade associations are a source of ethical business practices since they typically develop

industry guidelines. ⊚ true ⊚ false

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Chapter 2 7) A defendant is an individual who calls attention to illegal actions in the workplace by

notifying their employer or the government. ⊚ true ⊚ false

8) The fact that the Enron and Arthur Anderson cases dominated the media and resulted in

numerous congressional investigations showed the widespread concern with: A) the role of educational institutions in the field of ethics.

B) the overregulation of corporations.

C) the power of the government.

D) ethical behavior in business.

9) The news abounds with examples of unethical behavior in business, including: A) poor treatment of employees.

B) using insider information for personal gain.

C) environmental damage from operations.

D) All of these options are correct.

10) Ethical issues involving the Internet and computer technology have prompted people to

consider ethical issues such as: A) easements.

B) false imprisonment.

C) discrimination.

D) privacy.

11) Morals are _______ as to what is right and wrong.

A) individual and societal beliefs B) agency-enforced beliefs C) government-enforced laws D) duty-based beliefs

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Chapter 2 12) _______ are beliefs or standards considered worthwhile, and from which a society derives its

moral rules. Morals are beliefs about behavior as judged by society.

A) Mission statements B) Values C) Ethics D) Moral codes

13) The values held by _______ may differ from those of the larger culture.

A) a company B) employees C) a subculture D) the government

14) Individual and group values are influenced by: A) religion B) traditions C) customs D) All of the options are correct.

15) Legal mandates are imposed on individuals or groups by: A) authorities or governments.

B) other individuals.

C) organizations.

D) All of the options are correct.

16) The philosophical study of what is right and wrong, good and bad, is known as: A) morals.

B) ethics.

C) values.

D) whistleblowing.

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Chapter 2 17) A larger culture has a certain genre of values that are different from the values held by

employees of a corporation or by a department within a company. This may be known as a: A) counter-culture.

B) para-culture.

C) cross-culture.

D) subculture.

18) The terms “morals,” “ethics,” and “values”: A) are interchangeable.

B) have different definitions and applications.

C) are all words used to describe the standards and principles that govern the behavior of

individuals within a society.

D) All of the options are correct.

19) All of the following are influencing factors on both group values and individual values

except: A) B) C) D)

wealth. customs. religion. traditions.

20) _______ are imposed on individuals or groups by authorities or governments.

A) Morals B) Legal mandates C) Ethical considerations D) Values

21) Ethical principles: A) generally do not come from within individuals or organizations.

B) are imposed on individuals or groups by authorities or governments.

C) have been the foundation of many of our laws.

D) are the same as values.

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Chapter 2 22) Congress passed the Sarbanes–Oxley Act in: A) B) C) D)

1999.

2002.

2010.

2005.

23) Ethical considerations generally spring from: A) government authorities.

B) legal mandates.

C) individuals or organizations.

D) None of these options are correct.

24) The Sarbanes-Oxley Act placed greater responsibility on upper management to closely

monitor _______ of firms in the United States.

A) the financial dealings and disclosures B) the whistleblower claims C) the moral standards D) the ethical considerations

25) Congress passed the _______ as a result of cases like Enron.

A) Securities Exchange Act B) Sarbanes–Oxley Act C) Dodd-Frank Act D) Whistleblower Protection Act

26) Legal mandates are usually more precise than _______ issues.

A) statutes B) regulations C) ordinances D) ethical

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Chapter 2 27) The Sarbanes-Oxley Act established a board to oversee _______ in the United States.

A) accounting practices B) employee complaints C) trade practices D) trade negotiations

28) The actions of corporations that are intended to demonstrate the corporate wish to behave in

a compliant fashion take many forms and are conducted under the banner of: A) corporate responsibility.

B) national mandate.

C) patriotic duties.

D) corporate governance.

29) _______ require(s) the analysis of decisions based on creating the greatest good for largest

number of people.

A) Outcome-based reasoning B) Duty-based reasoning C) Morality D) Ethical practices

30) ________ requires analysis of decisions based on creating the greatest good for the most

number of people.

A) Duty-based reasoning.

B) Unethical reasoning.

C) Fact-based reasoning.

D) Outcome-based reasoning.

31) Duty-based reasoning requires that ethical decisions should be based on: A) creating the best outcome for the largest number of people.

B) the consequences of actions.

C) thought experiments.

D) creating the best outcome for a small, elite group of people.

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Chapter 2 32) A growing awareness of the importance of ethics is evident in the responses of: A) businesses.

B) educational institutions.

C) trade and professional associations.

D) All of the options are correct.

33) The U.S. Office of Government Ethics is concerned with all of the following topics, except: A) conflicting financial interests.

B) consumer protection.

C) financial disclosure.

D) misuse of position.

34) All of the following are examples of self-regulatory standards of conduct created by trade

associations, expect: A) telephone marketing.

B) sweepstakes.

C) marketing to children.

D) billboard marketing.

35) Businesses concerned with ethics usually focus on: A) punishment.

B) corporate responsibility and the development of codes of conduct.

C) a mission statement.

D) tamping down whistleblowers.

36) People or groups who may be affected by a firm’s actions or decisions are called: A) B) C) D)

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whistleblowers. interested parties. stakeholders. plaintiffs.

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Chapter 2 37) The term used to describe corporate codes of ethics that employees are expected to follow is: A) mission statement.

B) morals.

C) credo.

D) duty-based reasoning.

38) The federal government and many states have _______ that protect whistleblowers from

retaliation.

A) statutes B) morals C) values D) credos

39) A person who reveals to a governmental authority, or to news media, information regarding

some illegal wrongdoing or conduct that he or she regards as unethical is called a(n): A) ethics guru.

B) whistleblower.

C) quality assuror.

D) shareholder.

40) Being a whistleblower is difficult and may require an individual to be confronted with an

ethical _______ when considering reporting things.

A) statute B) regulation C) dilemma D) quantum

41) Whistleblowers are often regarded as _______ by their peers and employers.

A) heroes B) good candidates for promotion C) outcasts D) None of the options are correct.

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Chapter 2 42) The usual motivation behind an individual becoming a whistleblower is the outrage to a

person's sense of: A) knowledge.

B) self-esteem.

C) ethics.

D) confidence.

43) Explain what the term whistleblower means. Give an example of a federal agency that has

created incentives for whistleblowers.

44) YumBurger is an example of a corporation that dealt with a particular ethical issue, livable

wages for its employees, and, despite a legal mandate from the government, took what action?

45) Companies establish ethical compliance by doing what?

46) What is the importance of the Federal Sentencing Guidelines?

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Chapter 2 47) What are the basic functions of the U.S. Office of Government Ethics?

48) What are some non-legal penalties experienced by firms that engage in unethical practices?

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Chapter 2

Answer Key Test name: Chapter 2 1) TRUE 2) FALSE 3) FALSE 4) FALSE 5) TRUE 6) TRUE 7) FALSE 8) D 9) A 10) D 11) A 12) B 13) C 14) D 15) A 16) B 17) D 18) B 19) A 20) B 21) C 22) B 23) C 24) A 25) B 26) D 27) A 28) A 29) B 30) D 31) B 32) D 33) B 34) D 35) B 36) C 37) C

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Chapter 2 38) A 39) B 40) C 41) C 42) C 43) Essay 44) Essay 45) Essay 46) Essay 47) Essay

The U.S. Office of Government Ethics is concerned with conflicting financial interests, misuse of position, financial disclosure, impartiality in performing official duties, and other areas of concern.

48) Essay

Results may include unfavorable public relations, loss of consumer goodwill and confidence, and poor employee morale.

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Chapter 3

Student name:__________ 1) A crime is an offense against the public at large. ⊚ true ⊚ false

2) Crimes are typically classified into three groups: 1. (1) treason, 2. (2) misdemeanor, and 3. (3) contract breaches, according to the seriousness of the offense. ⊚ true ⊚ false

3) A felony is a crime punishable by death or imprisonment in a federal or state prison for a

term exceeding one year. ⊚ true ⊚ false

4) A misdemeanor is a crime punishable by a prison sentence of no more than one year. ⊚ true ⊚ false

5) A category of illegal activity that includes embezzlement, stock swindles, fraud against

insurance companies, credit card fraud, computer fraud, and theft of computer programs is generally known as white-collar crime. ⊚ true ⊚ false

6) Defamation is defined as the taking of property in the possession of another person against

that person's will and without the threat of bodily harm. ⊚ true ⊚ false

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Chapter 3 7) The crime of larceny includes the various forms of theft, robbery, hijacking, embezzlement,

and shoplifting. ⊚ true ⊚ false

8) Only the giver of a bribe can be charged with the offense of bribery. ⊚ true ⊚ false

9) The crime of murder consists of wrongfully making or altering the writings of another with

the intent to defraud. ⊚ true ⊚ false

10) Statutes are designed primarily to: A) protect corporations’ interests.

B) protect the public at large.

C) protect customer interests.

D) protect whistleblowers.

11) At times, a corporation may be held _______ for the actions or omissions of its employees.

A) unofficially liable B) liable-in-tort C) ethically liable D) criminally liable

12) A person who operates an automobile recklessly or negligently and causes injury to another,

or damages his or her property, has committed both the _______ of reckless driving and the _______ of negligence.

A) crime, mistake B) crime, tort C) fault, error D) violation, treason

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Chapter 3 13) A private wrong that causes injury to another person's physical well-being, property, or

reputation is called: A) a felony.

B) an ethical issue.

C) a tort.

D) white-collar crime.

14) Corporations can be held _______ liable for the actions or omissions of their employees.

A) negligently B) criminally C) ethically D) morally

15) Many statutes reflect legal principles derived from _______ law.

A) tort B) moral C) common D) treason

16) _______ determine(s) what is and what is not a crime.

A) Opinions of legal scholars B) Corporate by-laws C) Public opinion D) Statutory law

17) Felony crimes are punishable by: A) treason.

B) death or imprisonment of more than one year.

C) imprisonment for no more than one year.

D) None of the options are correct.

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Chapter 3 18) Examples of misdemeanors include all of the following except: A) certain traffic offenses.

B) thefts of large amounts of money.

C) use of illegal measuring devices.

D) relatively minor infractions of statutes.

19) Crimes are classified into three groups according to the seriousness of the offense. They are

_______.

A) treason, felony, and misdemeanor B) bilateral, unilateral, and personal C) offer, acceptance, and consideration D) formal, informal, and hybrid

20) Misdemeanor crimes are punishable by: A) death.

B) imprisonment of more than one year.

C) tort.

D) fine and imprisonment of no more than one year.

21) Treason against the United States includes _______.

A) actions that constitute a breach of contract against another individual B) slanderous acts against a domestic corporation C) civil action in court against a state or local government entity D) levying war against the U.S.

22) Examples of misdemeanors include all of the following except _______.

A) murder B) thefts of small amounts of money C) traffic offenses D) use of illegal measuring devices

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Chapter 3 23) Examples of felonies include all of the following except: A) murder.

B) arson.

C) speeding.

D) bribery.

24) A misdemeanor is a _______ serious offense than a felony.

A) more B) less C) Misdemeanors and felonies are equally serious offenses.

D) A misdemeanor is not a legal offense.

25) RICO prohibits an organization’s employees from engaging in: A) B) C) D)

racketeering. misdemeanors. foreign trade. petty theft.

26) The most common white-collar crime, historically, is: A) extortion.

B) assault.

C) arson.

D) embezzlement.

27) The Racketeer Influenced and Corrupt Organizations Act of 1970 was a successful attempt to

combat: A) white-collar crime.

B) misdemeanors.

C) illegal trade.

D) arson.

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Chapter 3 28) The Racketeer Influenced and Corrupt Organizations Act of 1970 was originally created to

restrict the entry of _______ crime into _______ businesses.

A) international, legitimate B) organized, illegitimate C) organized, legitimate D) reckless, legitimate

29) The term “white-collar crime” originally related only to _______ crimes against businesses,

usually committed by employees of the business.

A) violent B) nonviolent C) moral D) felonious

30) In recent years, white-collar crime has been applied to nonviolent crimes committed by

business firms as well as against business firms. In this newer, broader application, whitecollar crime also encompasses all of the following crimes except: A) stock swindles.

B) credit card fraud.

C) income tax evasion.

D) murder.

31) A fraud that occurs when a person or company provides false information to potential

investors to influence their decisions to buy or sell securities is known as: A) assault.

B) securities racketeering.

C) securities fraud.

D) kidnapping.

32) Securities fraud also encompasses all of the following crimes except: A) theft of trade secrets.

B) theft of an investor’s assets.

C) stock trading based on nonpublic information.

D) wrongful manipulation of financial statements.

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Chapter 3 33) The various forms of theft, robbery, hijacking, embezzlement, and shoplifting are types of: A) murder.

B) assault.

C) plundering.

D) larceny.

34) A type of securities fraud in which large gains are promised to investors, but in reality, newer

investments are used to provide a return on older investments is called: A) insider trading.

B) unethical trading.

C) a Ponzi scheme.

D) plotting.

35) A special category of crime providing for the punishment of persons who burn their own

property with the aim of collecting insurance money is called: A) larceny.

B) burning to deceive.

C) burning to defraud.

D) burning to embezzle.

36) Arson is the _______ act of causing the burning of another’s property.

A) B) C) D)

willful or malicious unintentional accidental unpremeditated

37) The crime of bribery consists of giving or taking money or property of value with the intent

of: A) B) C) D)

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influencing someone. assaulting someone. kidnapping someone. murdering someone.

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Chapter 3 38) Stealing from a vehicle in transit or the vehicle itself is known as: A) battery.

B) assault.

C) hijacking.

D) shoplifting.

39) A person who makes false statements to a bank for the purpose of obtaining a loan can be

prosecuted for the offense of: A) false pretenses.

B) embezzlement.

C) murder.

D) perjury.

40) The act of signing another person's name to a credit card charge slip without that person’s

permission is an example of: A) perjury.

B) murder.

C) forgery.

D) robbery.

41) The act of giving false information on a government form can be an example of: A) perjury.

B) murder.

C) battery.

D) slander.

42) The act of taking or demanding money or other property from someone by using force,

threats of force, or economic harm is known as: A) forgery.

B) extortion.

C) identity theft.

D) robbery.

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Chapter 3 43) The act of wrongfully taking money or other property that has been entrusted to a person as a

part of his or her employment is referred to as: A) embezzlement.

B) bribery.

C) forgery.

D) slander.

44) Frequently, persons with knowledge of computers access the credit card numbers of

consumers who have made purchases on the Internet and use these credit card numbers without authorization. This act constitutes the crime of: A) credit card fraud.

B) liable.

C) slander.

D) securities fraud.

45) When an unscrupulous individual steals the name and personal information of someone else

by stealing private mail, by obtaining personal data on the Internet, or by soliciting personal information from an unwitting victim over the telephone, it is known as: A) identity theft.

B) battery.

C) slander.

D) libel.

46) What 1970 law is the main tool used against racketeering in the United States?

A) EEOC B) FSLA C) FLMA D) RICO

47) In the case of _______, both parties are willing participants, whereas with _______ one

person is willing and the other is unwilling.

A) a Ponzi scheme, bribery B) bribery, extortion C) extortion, bribery D) extortion, a Ponzi scheme

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Chapter 3 48) Define the term "crime" and identify and explain the three classifications of crime.

49) Define "embezzlement."

50) White-collar crimes are often committed against businesses but are sometimes committed by

firms. Give an example of the latter.

51) Define "perjury."

52) Explain larceny.

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Chapter 3

Answer Key Test name: Chapter 3 1) TRUE 2) FALSE 3) TRUE 4) TRUE 5) TRUE 6) FALSE 7) TRUE 8) FALSE 9) FALSE 10) B 11) D 12) B 13) C 14) B 15) C 16) D 17) B 18) B 19) A 20) D 21) D 22) A 23) C 24) B 25) A 26) D 27) A 28) C 29) B 30) D 31) C 32) A 33) D 34) C 35) C 36) A 37) A

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Chapter 3 38) C 39) A 40) C 41) A 42) B 43) A 44) A 45) A 46) D 47) B 48) Essay

A violation of a statute is a crime. Crimes are classified as treason, felonies, and misdemeanors.

Federal and state law determine and specify the punishment. Treason is a major crime defined by the Constitution of the United States. A felony is a serious crime against society with a prison sentence of more than a year, or a fine. A misdemeanor is an offense that is less serious than a felony and is punishable with a fine and/or imprisonment for no more than one year.

49) Essay 50) Essay 51) Essay 52) Essay

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Chapter 4

Student name:__________ 1) The law of torts does not include duties imposed by contract but rather is concerned with the

violation of private rights. ⊚ true ⊚ false

2) Defamation is the harming of a person's reputation and good name by the communication of

a false statement. ⊚ true ⊚ false

3) Fraud is the spreading of damaging words or ideas about a person, directly or indirectly, in

all other forms not considered libel. ⊚ true ⊚ false

4) A nuisance entails the complete taking of another's property. ⊚ true ⊚ false

5) Conversion involves removal, damage, destruction, or unauthorized use of another person's

property. ⊚ true ⊚ false

6) Under the doctrine of contributory negligence, injured parties are prevented from recovering

damages if they were partly at fault for the injury. ⊚ true ⊚ false

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Chapter 4 7) Under the doctrine of comparative negligence, an injured party bringing a lawsuit is not

prevented from recovering damages if the injured party was partly at fault. ⊚ true ⊚ false

8) Negligence per se occurs when a defendant, in a case of negligence, has violated a law that

was enacted in order to prevent the type of injury that occurred. ⊚ true ⊚ false

9) Defamation, nuisance, conversion, and negligence are various kinds of: A) administrative actions.

B) criminal offenses.

C) common torts.

D) commerce factors.

10) A tort is a(n) _______ of the rights of an identifiable individual or business that has been

wronged either intentionally or by negligence.

A) violation B) offense C) nuisance D) defamation

11) The law of torts deals with violations of rights to: A) a contract.

B) an identifiable individual or business.

C) a divorcing party.

D) a trademark infringement.

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2

Chapter 4 12) If a person is accused of defamation but had a special privilege in making the defamatory

statement, the person alleging defamation cannot: A) arbitrate the complaint.

B) recover damages.

C) file a complaint.

D) sue in court.

13) For a statement to be considered defamatory, it must be addressed to: A) the public at large.

B) a third party.

C) an attorney.

D) None of the options are correct.

14) The tort of defamation includes which of the following?

A) Slander only B) Libel only C) Libel and slander D) None of the options are correct.

15) Occasionally, more than one party may be guilty of spreading a defamatory statement. For

example, suppose a newspaper reporter includes a previously published defamatory statement on a website. The reporter, along with the party who originally created the false statement, may: A) not be found guilty of defamation.

B) not be found guilty of bribery.

C) be found guilty of bribery.

D) be found guilty of defamation.

16) Libel is the spreading of _______ statements in written form.

A) true B) verifiable C) correct D) damaging

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3

Chapter 4 17) Defamation on radio, television, and websites is considered: A) slander.

B) libel.

C) nuisance and slander.

D) negligence.

18) Many libel cases involve defamatory statements published in all of the following except: A) books.

B) movies.

C) newspapers.

D) magazines.

19) The most common form of slander involves: A) physical assault.

B) spoken words.

C) forgery.

D) cartoons.

20) The tort of trade libel is similar to _______ but deals with an individual’s title to or to the

quality or conduct of a business.

A) negligence B) negligence per se C) traditional defamation D) nuisance

21) Slander is the spreading of damaging words or ideas about a person, _______, in all other

forms not considered libel.

A) directly B) indirectly C) directly and/or indirectly D) None of the options are correct.

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4

Chapter 4 22) Examples of libel could include all of the following except: A) written words.

B) true statements.

C) cartoons.

D) effigies.

23) Libel does not need to be: A) correct.

B) proven.

C) direct.

D) verifiable.

24) Libel includes the spreading of damaging statements in the form of: A) cartoons.

B) likenesses.

C) pictures.

D) All of these options are correct.

25) Subtle suggestion or implication is enough to bring about legal charges of: A) libel.

B) slander.

C) negligence.

D) negligence per se.

26) _______ is not a valid defense to charges of slander.

A) Humor B) Truth C) Fact D) Absolute privilege

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5

Chapter 4 27) The tort of slander is the spreading of damaging words or ideas about a person, directly or

indirectly, in all other forms not considered _______.

A) defamation B) libel C) an intentional tort D) negligence

28) A nuisance is a(n) _______ interference with the enjoyment of life or property.

A) lawful B) unlawful C) required D) approved

29) In conducting business, a firm and its owners have the right not to be subjected to: A) politically correct statements.

B) truthful statements.

C) commercially disadvantaged statements.

D) false and malicious statements.

30) In recent years, the threat of _______ by former employees who are unhappy with the

references given by former employers has gotten so serious that many firms refuse to respond to any inquiry about former workers—even those who have good records.

A) scandal B) libel suits C) negligence suits D) nuisance suits

31) The tort of trade libel deals with: A) a firm's incorporation documents.

B) the quality of a firm's research activities.

C) spoken defamation of a company.

D) an individual's title to property.

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6

Chapter 4 32) The tort of _______ does not require a directly defamatory statement.

A) slander B) libel C) negligence D) negligence per se

33) Making a defamatory statement to a single person: A) will not provide the basis for legal action.

B) might provide the basis for legal action.

C) might provide the basis for a negligence per se action.

D) None of these options are correct.

34) There are two common defenses to charges of defamation: A) truth and intent.

B) truth and privilege.

C) privilege and opportunity.

D) intent and opportunity.

35) An example of an individual who has a special privilege against a charge of defamation is

a(n) _______.

A) attorney B) mailman C) lunch lady D) school teacher

36) A person can be charged with creating a private nuisance for all of the following except: A) causing loud noises.

B) creating foul odors.

C) breaking into someone else’s home.

D) shining bright lights.

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7

Chapter 4 37) The interference of the public's enjoyment of life or property is called a(n) _______.

A) public nuisance B) corporate nuisance C) international nuisance D) private nuisance

38) The law gives each person the right to own and use personal property without interference

from others. When this right is denied or abridged by another, the wrongdoer is said to have committed the tort of: A) conversion.

B) libel.

C) negligence.

D) nuisance.

39) Conversion may involve any of the following except: A) damaging remarks.

B) wrongful detention.

C) illegal assumption of ownership.

D) wrongful taking.

40) An action for the tort of conversion is one way to: A) award punitive damages.

B) attach private property.

C) notify the government of wrongdoing.

D) replace money or property that has been stolen or inadvertently taken.

41) A term that is used in cases involving the negligence of professionals is: A) false imprisonment.

B) vis major.

C) malpractice.

D) incorporation.

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8

Chapter 4 42) _______ is the failure to exercise necessary care to protect others from unreasonable risk of

harm.

A) B) C) D)

Nuisance Slander Negligence Negligence per se

43) The concept of _______ is intended to focus attention on whether an accident could have

been avoided if the person alleged to be responsible had acted reasonably.

A) libel B) slander C) unavoidable accident D) reasonable person

44) The term_______ as used in the law means essentially the same as when it is used

generally—that is, to describe an act performed by one person as a substitute for another.

A) “vicarious” B) “defamation” C) “negligence” D) “slander”

45) A completely fictitious individual who is assumed to have the "judgment and skill" one

would expect from a person with the strengths and limitations of the person whose behavior is being judged is: A) a person with a criminal background.

B) a person with a legal background.

C) a person of ordinary prudence.

D) a person with a high IQ.

46) Contributory negligence is _______ the party who is charged with negligence.

A) an intentional act by B) a legal defense of C) a defamatory act by D) an admission of guilt by

.

9

Chapter 4 47) The act of charging a negligent act of one person to another is called: A) indirect negligence.

B) secondhand negligence.

C) vicarious negligence.

D) negligence per se

48) Under a doctrine known as _______, people may be liable for injuries to others whether or

not they have done something wrong.

A) general liability B) negligence per se C) conversion D) strict liability

49) Describe "defamation," including how it relates to libel and slander, and what constitutes a

defamatory act.

50) Explain the kinds of actions that can be slanderous.

51) Explain the phrase "reasonable person."

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10

Chapter 4 52) The law gives everyone the right to enjoy their land without unreasonable interference from

others. What tort would be applicable if that right is denied?

53) Describe the term "negligence" as it applies to the law of torts.

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11

Chapter 4

Answer Key Test name: Chapter 4 1) TRUE 2) TRUE 3) FALSE 4) FALSE 5) TRUE 6) TRUE 7) TRUE 8) TRUE 9) C 10) A 11) B 12) B 13) B 14) C 15) D 16) D 17) B 18) B 19) B 20) C 21) C 22) B 23) C 24) D 25) A 26) A 27) B 28) B 29) D 30) B 31) D 32) A 33) B 34) B 35) A 36) C 37) A

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12

Chapter 4 38) A 39) A 40) D 41) C 42) C 43) C 44) A 45) C 46) B 47) C 48) D 49) Essay 50) Essay

Slander is the spreading of damaging words or ideas about a person, directly or indirectly, in all other forms not considered libel. Slander includes spoken words, gestures, actions, and even omissions.

51) Essay

Under the doctrine of the "reasonable person of ordinary prudence" a completely fictitious individual is assumed to have the judgment and skill one would expect from a person with the strengths and limitations of the person whose behavior is being judged.

52) Essay

The law gives each person the right to own and use personal property without interference from others. When this right is denied or abridged by another, the wrongdoer is said to have committed the tort of conversion.

53) Essay

Negligence is the failure to exercise necessary care to protect others from unreasonable risk of harm.

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13

Chapter 5

Student name:__________ 1) In the United States, power for the federal and state governments come from the U.S.

Constitution and state constitutions. ⊚ true ⊚ false

2) The process of a court deciding whether a law is contrary to the Constitution is known as the

doctrine of judicial review. ⊚ true ⊚ false

3) The right to bear arms as articulated in the Second Amendment has limitations. ⊚ true ⊚ false

4) If Owen refused to testify on the premise that the information he would divulge would self-

incriminate him, he can legally do so under the First Amendment. ⊚ true ⊚ false

5) The Eighth Amendment ensures that people in the United States who are accused of a crime

will not be subject to excessive bail. ⊚ true ⊚ false

6) The Fourteenth Amendment, which guarantees due process and equal protection to all

citizens, applies to actions of all state governments. ⊚ true ⊚ false

.

1

Chapter 5 7) Under the Fourteenth Amendment, if a state law discriminates on the basis of race or national

origin, or if the law infringes on a fundamental constitutional right, the state must show that the law passes the rational basis test. ⊚ true ⊚ false

8) The rational basis test is a standard that courts use to measure whether a legislature had a

compelling interest for enacting a particular statute that infringes on an individual's rights. ⊚ true ⊚ false

9) The Sixteenth Amendment grants the federal government the power to impose and collect a

tax on individuals' incomes. ⊚ true ⊚ false

10) The Internal Revenue Service (IRS) is a federal agency established by Congress and tasked

with administering and collecting federal income tax under the Sixteenth Amendment. ⊚ true ⊚ false

11) One of the functions of the IRS is to educate and improve citizens' understanding of the

nation's tax laws. ⊚ true ⊚ false

12) The United States Constitution forms the basis for: A) all American law.

B) U.S. state law only.

C) U.S. federal law only.

D) international law.

.

2

Chapter 5 13) The U.S. Constitution confers express and _______ powers on the government.

A) implied B) corporate C) unlimited D) criminal

14) _______ powers are those that are specifically stated in the U.S. Constitution.

A) Express B) Implied C) Converted D) Judicial

15) Each amendment to the United States Constitution must be proposed by a two-thirds vote of

Congress and ratified, or approved, by the legislatures of _______ of the 50 states.

A) one-fourth B) two-fourths C) three-fourths D) Approval must be unanimous.

16) Since its inception, the Constitution of the United States has been amended _______ times.

A) zero B) three C) 27 D) over 100

17) If a state or local law is inconsistent with the federal law, the state or local law may be

declared unconstitutional, and the federal law must be followed. This is known as: A) emergency law.

B) the supremacy clause.

C) the doctrine of preemption.

D) judicial review.

.

3

Chapter 5 18) The first 10 amendments of the U.S. Constitution are referred to as: A) the supremacy clause.

B) the separation of powers.

C) the Bill of Rights.

D) implied powers.

19) Within the federal government, there are three distinct branches, forming: A) the bill of rights.

B) a separation of powers.

C) the express powers.

D) implied powers.

20) All of the following are considered clauses of the U.S. Constitution EXCEPT: A) competitive clause.

B) full faith and credit clause.

C) supremacy clause.

D) commerce clause.

21) The doctrine of preemption applies only in instances where the law in question pertains to a

power that _______ has expressly or implicitly granted to Congress.

A) the Bill of Rights B) the Supreme Court C) judicial review D) the Constitution

22) The Constitution is divided and subdivided into all of the following EXCEPT: A) articles.

B) sections.

C) clauses.

D) papers.

.

4

Chapter 5 23) The supremacy clause is a provision of the United States Constitution that: A) grants Congress the power to regulate trade with foreign nations, and among the

several states, and with the Indian tribes.

B) mandates that each state respect and enforce both the judgments awarded by courts in other states, and the statutes and case law of other states.

C) prohibits the states from discriminating on the basis of race or national origin.

D) requires judges to follow federal law in the event of a conflict with state law.

24) A provision of the Constitution that mandates that each state respect and enforce both the

judgments awarded by courts in other states and the statutes and case law of other states is known as: A) judicial review.

B) full faith and credit clause.

C) supremacy clause.

D) commerce clause.

25) The _______ is a provision of the U.S. Constitution that grants Congress the power to

regulate trade with foreign nations, and among the several states, and with the Indian tribes.

A) bill of rights B) commerce clause C) supremacy clause D) doctrine of preemption

26) Courts have defined _______ as the movement or exchange of goods, persons, or

information between states.

A) consumerism B) judicial review C) commerce D) the doctrine of preemption

.

5

Chapter 5 27) The supremacy clause also requires states to recognize the provisions of _______ over any

conflicting state regulations.

A) the Bill of Rights B) judicial review C) U.S. treaties D) None of the options are correct.

28) Freedom of speech is covered under which Amendment?

A) First Amendment B) Second Amendment C) Fourth Amendment D) Sixteenth Amendment

29) The _______ requires that government not interfere with an individual’s practicing the

religion of his or her choice.

A) First Amendment B) free exercise clause C) doctrine of preemption D) establishment clause

30) It is _______ under the U.S. Constitution for a municipality to pass a law limiting what a

journalist can write or say about a political candidate or issue.

A) permitted B) prohibited C) frowned upon D) sanctioned

31) All of the following examples of individual behavior may be limited or silenced under the

First Amendment EXCEPT: A) speech that incites imminent danger.

B) speech that is defamatory.

C) child pornography.

D) political or religious speech.

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6

Chapter 5 32) The establishment clause makes it illegal for the government to: A) create a national religion.

B) create policies that favor one gender over another.

C) favor one race or ethnicity over another in policy or practice.

D) limit free speech.

33) The act of burning the American flag is considered _______.

A) protected speech B) unprotected speech C) illegal D) slander

34) The right to bear arms is protected under the _______ Amendment.

A) First B) Second C) Eighth D) Sixteenth

35) Under the _______, police officers and other government officials must have probable cause

to conduct a personal or property search.

A) First Amendment B) Eighth Amendment C) Fifth Amendment D) Fourth Amendment

36) Examples of unreasonable searches and seizures include all of the following EXCEPT: A) a detention of longer than 48 hours after a criminal arrest.

B) stops of motorists at sobriety checkpoints to investigate possible instances of driving

under the influence.

C) a nonconsensual extraction of blood.

D) the gathering of fingerprint and DNA evidence in certain circumstances.

.

7

Chapter 5 37) The Fifth Amendment requires that all persons be granted procedural and _______ due

process.

A) reflective B) contractual C) substantive D) administrative

38) The prohibition against trying a defendant more than once for the same offense is called

_______.

A) double jeopardy B) self-incrimination C) eminent domain D) supremacy clause

39) The Eighth Amendment prevents the government from imposing an unjustly harsh _______

on a person convicted of a crime.

A) fine B) sentence C) ruling D) punishment

40) The Eighth Amendment provides for all of the following EXCEPT: A) restricting both the severity and the types of punishments that may be imposed by

federal and state governments.

B) mandating that people accused or convicted of crimes are not to be subject to excessive bail.

C) preventing the government from imposing an unjustly harsh fine on a person convicted of a crime.

D) allowing for barbarous punishment against an individual convicted of a crime.

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8

Chapter 5 41) Under the Fourteenth Amendment, if a law discriminates on the basis of sex, or if the law

restricts commercial speech, the state must demonstrate that the law passes the _______ test.

A) strict scrutiny B) effect on conscience C) intermediate scrutiny D) rational basis

42) If a law places restrictions on economic or property interests, or if the law discriminates on a

basis other than race, sex, national origin, and related categories, the state must show that the law passes the _______ test.

A) rational basis B) corporate assurance C) intermediate scrutiny D) strict scrutiny

43) The Fourteenth Amendment to the U.S. Constitution does not permit _______ from denying

individual due process.

A) the federal government B) states C) international bodies D) corporate entities

44) The _______ Amendment grants the federal government the power to impose and collect a

tax on individuals' incomes.

A) Sixteenth B) Eighth C) Fourteenth D) Fourth

45) The _______ is a federal agency established by Congress and tasked with administering and

collecting federal income tax.

A) FDIC B) FDA C) IRS D) SEC

.

9

Chapter 5 46) Identify and describe the process of deciding if a law violates the Constitution.

47) Describe the doctrine of preemption.

48) Discuss the First Amendment's protection of free speech and what types of speech under the

First Amendment may be limited or silenced.

49) Provide examples of searches and seizures considered to be unreasonable under the Fourth

Amendment.

50) What power does the Sixteenth Amendment grant the federal government and what agency

was created by Congress to aid the federal government in administering these powers?

.

10

Chapter 5

Answer Key Test name: Chapter 5 1) TRUE 2) TRUE 3) TRUE 4) FALSE 5) TRUE 6) TRUE 7) FALSE 8) FALSE 9) TRUE 10) TRUE 11) TRUE 12) A 13) A 14) A 15) C 16) C 17) C 18) C 19) B 20) A 21) D 22) D 23) D 24) B 25) B 26) C 27) C 28) A 29) B 30) B 31) D 32) A 33) A 34) B 35) D 36) B 37) C

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11

Chapter 5 38) A 39) A 40) D 41) C 42) A 43) B 44) A 45) C 46) Essay

Both federal and state courts have the power to determine whether laws enacted by legislatures or decisions made by lower courts violate the provisions of the Constitution. If a court decides that a law is contrary to the Constitution, the law will be declared unconstitutional and therefore invalid.

47) Essay

The doctrine of preemption is a principle that states that when certain state or local laws are inconsistent with the federal law, the federal law must be followed.

48) Essay

The First Amendment gives Americans freedom of speech; but not all speech is protected under this amendment.

49) Essay 50) Essay

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12

Chapter 6

Student name:__________ 1) Administrative agencies typically regulate economic matters as part of their supervision over

a particular activity or area. ⊚ true ⊚ false

2) The legislative branch consists of elected representatives who have the responsibility for

passing laws that consider the will of the people. ⊚ true ⊚ false

3) An administrative hearing conducted by an administrative agency is in some respects like an

informal court trial. ⊚ true ⊚ false

4) The hearings conducted by an administrative agency provide for a jury. ⊚ true ⊚ false

5) After administrators of an agency are appointed and approved, it is generally rather easy to

remove them. ⊚ true ⊚ false

6) Courts rarely reverse the decisions of an administrative agency. ⊚ true ⊚ false

.

1

Chapter 6 7) To determine whether an administrative agency has abused its authority, the courts are

guided by the statutes that established the agency and by the constitutions of the United States and the individual states. ⊚ true ⊚ false

8) Though agencies receive criticism, they are not accused of being "captured" by the

enterprises they were created to regulate. ⊚ true ⊚ false

9) In many cases, the need for specialized expertise in a given area can usually come only from

the industry being regulated. ⊚ true ⊚ false

10) An administrative agency is a _______ body responsible for the control and supervision of a

particular activity or area of public interest.

A) corporate B) contracted C) governmental D) judicial

11) Legislatures lack the time and expertise to make the necessary rules to govern the operations

of complex areas of social and economic life, such as: A) energy.

B) taxation.

C) transportation.

D) All of the options are correct.

.

2

Chapter 6 12) When an agency is established, the legislature usually specifies all of the following

EXCEPT: A) the purpose of the agency.

B) the powers of the agency.

C) the actions the agency may take in carrying out the intentions of the law.

D) the penalties for failing to follow the agency’s rules.

13) Which agency establishes safety standards for products?

A) Consumer Financial Protection Bureau (CFPB) B) Consumer Product Safety Commission (CPSC) C) Federal Trade Commission (FTC) D) Internal Revenue Service (IRS)

14) What is the purpose of the Consumer Financial Protection Bureau (CFPB)?

A) Protects employees from illegal discrimination.

B) Protects consumers with respect to financial products and services.

C) Regulates activities related to the environment.

D) Regulates radio and TV communications.

15) Administrative agencies: A) exist only at the federal level of government.

B) exist at all levels of government: federal, state, and local levels.

C) exist only at the city/municipality level of government.

D) exist only at the state level of government.

16) Administrative agencies often carry out which of the following functions of government?

A) executive.

B) legislative.

C) judicial.

D) All of the options are correct.

.

3

Chapter 6 17) The courts at the federal level include all of the following EXCEPT: A) district courts.

B) appeals courts.

C) chancery courts.

D) the U.S. Supreme Court.

18) At the state level, the legislative branch is often called: A) the Senate.

B) the House of Representatives.

C) the general assembly.

D) the president.

19) The general assembly, like the federal Congress, consists of two houses, EXCEPT in: A) Minnesota B) Hawaii C) Maine D) Nebraska

20) Courts at the local level include all of the following EXCEPT: A) municipal courts.

B) supreme courts.

C) justice-of-the-peace courts.

D) magistrate courts.

21) Each state organizes its courts into all the following levels EXCEPT: A) trial courts.

B) appeals courts.

C) tribunal courts.

D) a supreme court.

.

4

Chapter 6 22) An agency, in performing its duties, can regulate economic matters such as: A) price.

B) entry into a particular geographical area.

C) entry into a particular kind of business.

D) All of the options are correct.

23) A number of governmental agencies distribute _______ of various kinds to farmers, persons

in need of public assistance, students, individuals who are unemployed, and senior citizens.

A) canned goods B) loans C) subsidies and benefits D) prizes

24) The executive branch of government sees that all legislation is: A) declared constitutional.

B) enforced.

C) drafted.

D) interpreted under the law.

25) The legislative branch of government is made up of: A) appointed officials.

B) elected representatives.

C) equal numbers of all political parties.

D) community leaders.

26) The two houses of Congress are the: A) Supreme Court and the Senate.

B) Internal Revenue Service and the Consumer Protection Agency.

C) House of Representatives and the Senate.

D) FBI and CIA.

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5

Chapter 6 27) The judicial branch of government determines if: A) there is a need for amendment in legislation.

B) an additional section is needed when drafting a law.

C) there have been violations of the law.

D) a law must be enforced.

28) What is a typical function of an administrative agency?

A) Regulating conduct of individuals and businesses.

B) Levying war on a country.

C) Negotiating treaties with foreign countries.

D) Declaring laws unconstitutional.

29) To comply with _______, the merchant must attend the hearing at the specified time and

place to answer the inspector’s complaint.

A) a summons B) a subpoena C) arbitration D) bylaws

30) If a merchant refuses to appear before an administrative agency hearing: A) the merchant can be imprisoned indefinitely.

B) the merchant can have their citizenship revoked.

C) the merchant can be put to death.

D) his or her license can be revoked.

31) A trial-like judicial proceeding, without a jury, in which an administrative agency rules on

matters of the law that the agency is charged with enforcing is known as: A) a subpoena.

B) a benefit.

C) an administrative hearing.

D) a regulation.

.

6

Chapter 6 32) The _______ of an agency includes the daily operations of the agency and the establishment

of general policies and objectives.

A) executive function B) legislative function C) judicial function D) None of the options are correct.

33) The rules and regulations established by the CPA resemble the laws passed by a legislature

and: A) B) C) D)

are considered propositions. are known as proposals. have the force of law. do not have the force of law.

34) The voter has the opportunity to vote the head of the executive branch into and out of office

at: A) B) C) D)

regulatory agencies. administrative agencies. all three levels of the government. the local/municipal level.

35) There are _______ general patterns in the executive organization of an administrative

agency.

A) one B) zero C) two D) four

36) What government entity will determine if an agency has acted beyond its authority?

A) The courts B) The military C) The diplomatic corps D) The vice president

.

7

Chapter 6 37) Rules and regulations are established by _______, not by _______.

A) the agency, elected representatives B) a jury, the agency C) elected representatives, the agency D) due process, the agency

38) The hearings conducted by an administrative agency do not provide for _______, and the

procedures are not as _______ as a regular court hearing.

A) due process, casual B) a jury, formal C) a jury, casual D) lawyers, casual

39) To determine whether an administrative agency has abused its authority, the courts are

guided by the statutes that established the agency and by the Constitution of the United States and the: A) resolutions of the United Nations.

B) constitutions of the individual states.

C) rulings of the International Court of Justice.

D) executive orders issued by the senators of each state.

40) The “judge” at an administrative agency hearing is not entirely _______ because they are

determining whether a person or firm has complied with the agency’s own rules rather than with statutes enacted by the legislature.

A) impartial B) in power C) fair D) None of the options are correct.

41) Voters elect all of the following executives EXCEPT: A) the president.

B) the governor.

C) the mayor.

D) the administrator.

.

8

Chapter 6 42) As a practical matter, the courts seldom reverse the decisions of the agency unless it can be

shown that the agency has: A) not abused its authority.

B) become political in its enforcement.

C) not acted ultra vires.

D) abused its authority.

43) The determinations reached at a hearing conducted by an administrative agency can be

_______.

A) ignored B) reassessed if the business pays a fine C) appealed D) opposed

44) A number of critics allege that certain administrative agencies have been _______ by the

enterprises they were created to regulate.

A) inspired B) founded C) intimidated D) captured

45) Some have suggested in their criticism of the current government structure that heads of

administrative agencies should be _______.

A) elected by the people B) appointed by the United Nations C) appointed by the military D) delegated by the diplomatic corps

46) The insurance industry is an example of a very complicated industry with a large need for

effective regulators to protect: A) businesses.

B) doctors.

C) agents.

D) consumers.

.

9

Chapter 6 47) Why is there a need for delegated legislation?

48) Give a brief explanation of the role of administrative agencies as instruments of the

government and provide at least one example of an administrative agency.

49) What services can an administrative agency typically provide?

50) Describe the two executive organizational patterns of administrative agencies.

51) Describe the similarities and differences between the judicial function of an administrative

agency and the formal judicial system.

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10

Chapter 6

Answer Key Test name: Chapter 6 1) TRUE 2) TRUE 3) TRUE 4) FALSE 5) FALSE 6) TRUE 7) TRUE 8) FALSE 9) TRUE 10) C 11) D 12) D 13) B 14) B 15) B 16) D 17) C 18) C 19) D 20) B 21) C 22) D 23) C 24) B 25) B 26) C 27) C 28) A 29) B 30) D 31) C 32) A 33) C 34) C 35) C 36) A 37) A

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11

Chapter 6 38) B 39) B 40) A 41) D 42) D 43) C 44) D 45) A 46) D 47) Essay

Legislatures lack the time and expertise to make the necessary rules to govern the operations of complex areas of our social and economic life, such as energy, taxation, transportation, environmental pollution, employee safety, and communication. Neither do legislatures have the time or expertise to supervise the many details of these complex areas on a daily basis. As a result, legislatures delegate these responsibilities to administrative agencies, or regulators.

48) Essay 49) Essay

Although the United States is largely a capitalist country, in which the private sector provides most of the goods and services needed by the people, many believe that certain essential services cannot be efficiently provided by the private sector. Some governments at all levels provide goods and services, such as electricity, water, highway maintenance, hospital care, and public housing.

50) Essay 51) Essay

.

12

Chapter 7

Student name:__________ 1) A contract must show mutual agreement, which is also referred to as "a meeting of the

minds." ⊚ true ⊚ false

2) A promise to give up something of value that a person has a legal right to keep or to agree to

do something that a person is not legally required to do is known as equity. ⊚ true ⊚ false

3) A person who discusses the terms of a purchase with a salesperson, pays cash for the

purchase, and takes the item with them has made a valid oral contract. ⊚ true ⊚ false

4) It is usually advisable to not put a contract in writing if the transaction is important,

complicated, involves a large amount of money, or will extend over a long period of time. ⊚ true ⊚ false

5) An express contract must specifically state the agreement of the parties and can be oral or in

writing. ⊚ true ⊚ false

6) A simple contract is defined as an informal contract made without the formalities of a seal. ⊚ true ⊚ false

.

1

Chapter 7 7) It is required for a formal contract to be written under seal. ⊚ true ⊚ false

8) An entire or indivisible contract can contain two or more parts, and each part is required to be

independent of the other. ⊚ true ⊚ false

9) An executed contract is one in which all terms of the agreement have been fully performed

by all parties to the contract. ⊚ true ⊚ false

10) The Uniform Commercial Code (UCC) defines _______ as “the total legal obligation which

results from the parties’ agreement as affected by the Uniform Commercial Code or any other applicable rules of law.”

A) tangible personal property B) a contract C) an agreement D) an offer

11) If an agreement imposes a legal obligation, a(n) _______ contract results.

A) unenforceable B) enforceable C) illegal D) moral

.

2

Chapter 7 12) All contracts are agreements, but not all agreements are contracts. The PRIMARY reason is

that: A) B) C) D)

certain agreements cannot be licensed under law. certain agreements cannot be enforced by law. agreements do not fall under any classification of contracts. terms of an agreement usually are different from those of a contract.

13) Tangible personal property includes all of the following EXCEPT: A) a table.

B) a car.

C) a cell phone.

D) a copyright.

14) The part of the Uniform Commercial Code (UCC) that is relevant to contract law is: A) Article 3.

B) Article 2.

C) the preamble.

D) the Bill of Rights.

15) Property that can be moved is known as: A) intangible property.

B) tangible property.

C) common law.

D) a fixed asset.

16) Legal contracts may relate to: A) the sale of merchandise or services.

B) employment.

C) the transfer of ownership of land.

D) All of the options are correct.

.

3

Chapter 7 17) Contracts can be _______.

A) extended or revised on consent of both parties B) breached at any time by any party C) unenforceable in community property states D) declared void by any party for any reason

18) An indication made by the offeree that he or she agrees to _______ the terms of the offer is

an acceptance.

A) offer B) acceptance C) mutual agreement D) contract

19) The person making a proposal is known as: A) the proposer.

B) the offeror.

C) the offeree.

D) the contractor.

20) An indication made by the offeree that he or she agrees to _______ the terms of the offer is

an acceptance.

A) consider B) be bound by C) revise D) be validated by

21) In order to enter into a binding contract, the parties must be: A) members of the bar.

B) attorneys.

C) of legal age.

D) All of the options are correct.

.

4

Chapter 7 22) All but one of the following elements is required of an enforceable contract. The exception

is: A) B) C) D)

offer and acceptance. mutual agreement. consideration. simple form.

23) The state of mind that exists between an offeror and an offeree when a valid offer has been

accepted and the parties know what the terms are and have agreed to be bound by them is known as: A) arbitration.

B) negotiation.

C) mutual agreement.

D) acceptance.

24) In most cases, each party to a contract must promise either to give up something of value that

they have a legal right to keep, or to do something that they are not otherwise legally required to do. This exchange of promises is called: A) an offer and acceptance.

B) competence.

C) consideration.

D) mutual agreement.

25) The requirement that the form of a contract be correct for the terms of the contract to be

enforceable is known as: A) legitimate form.

B) proper form.

C) casual form.

D) legal form.

26) Legality of purpose is the requirement that a contract: A) be voidable.

B) can be void.

C) may contain a mala fide intention.

D) not violate the law.

.

5

Chapter 7 27) An indication made by the offeree that they agree to be bound by the terms of the offer is

known as: A) an enforceable offer.

B) a mutual agreement.

C) free consent.

D) acceptance.

28) What is the legal term for parties to a contract having a clear understanding of what they are

undertaking with no confusion on whether there is a contract?

A) Legality of purpose B) Mutual agreement C) Consideration D) Competency of the parties

29) An agreement that is reduced to writing on a permanent surface is called: A) a written agreement.

B) a written form.

C) legal wording.

D) proper form.

30) If only one party promises something, such as paying a certain amount of money, and the

other party promises nothing, then the agreement: A) is enforceable.

B) has consideration.

C) lacks consideration.

D) is incompetent.

31) In order to _______ enter into a contract, the functioning of a party’s mind must not be

impaired.

A) legally B) casually C) orally D) informally

.

6

Chapter 7 32) Entering into a contract with persons of legal age and normal mentality is considered within

the element of: A) legality of purpose.

B) competency of the parties.

C) mutual agreement.

D) proper form.

33) A telephone conversation can result in a(n): A) enforceable oral contract.

B) statutory contract.

C) contingent contract.

D) written covenant.

34) In divisible contracts, the _______ provides that "where the circumstances give either party

to a contract for sale the right to make or demand delivery in lots, the price, if it can be apportioned, may be demanded for each lot."

A) formal contract B) mutual agreement C) executory contract D) law of sales

35) A written contract can come in all of the following forms EXCEPT: A) a printed statement.

B) an email.

C) a voice memo.

D) a handwritten note.

36) A transaction that is neither oral nor written but is still legally binding is considered: A) an express contract.

B) an implied contract.

C) a formal contract.

D) a simple contract.

.

7

Chapter 7 37) A simple contract must not be: A) written.

B) oral.

C) formal.

D) implied.

38) The meaning of an implied contract is drawn from the: A) actions and conduct of the parties.

B) interpretations of a written contract.

C) interpretations of an oral contract.

D) actions of third parties.

39) When a customer asks a merchant to deliver an article to his home with no mention of

payment, the buyer implies that he or she will pay the market price of the article when it is delivered or when the bill is presented. This is an illustration of: A) an implied contract.

B) consideration.

C) an incorporation agreement.

D) a formal contract.

40) The seal on a formal contract may consist of any of the following, EXCEPT: A) an impression on the paper.

B) the letters "L.S." C) the word "Seal."

D) a UCC certified mark.

41) A contract that is made up of two or more parts, each part being independent of the others, is

known as: A) a divisible contract.

B) an indivisible contract.

C) a simple contract.

D) a formal contract.

.

8

Chapter 7 42) An entire contract is also known as a(n): A) indivisible contract.

B) divisible contract.

C) specialty contract.

D) executed contract.

43) A contract in which the terms of the agreement have not yet been fully performed is called: A) a formal contract.

B) a simple contract.

C) an indivisible contract.

D) an executory contract.

44) An executory contract is an agreement in which: A) a future act or obligation remains to be performed under its terms.

B) a past act or service was performed within the last three years.

C) a past act or service was performed recently but was not recorded.

D) the agreement has been completed in all respects by all parties.

45) A contract in which all of the terms of the agreement have been fully performed by both

parties is: A) a divisible contract.

B) an executory contract.

C) an executed contract.

D) an invalid agreement.

46) A(n) _______ contract is an agreement that results in an obligation that is legally

enforceable.

A) void B) invalid C) voidable D) valid

.

9

Chapter 7 47) An agreement that lacks one or more of the essential elements of a contract from the very

beginning is a: A) voidable and unenforceable contract.

B) void and unenforceable contract.

C) valid and enforceable contract.

D) void but enforceable contract.

48) An agreement that may be rejected by one of the parties for a legally acceptable reason is

a(n): A) B) C) D)

voidable contract. void contract. implied contract. valid contract.

49) An agreement using blockchain technology in which the terms are digitally written into the

lines of code across a network that can be accessed, but not modified, by the parties to the contract is called: A) an email agreement.

B) a smart contract.

C) an encrypted contract.

D) cryptocurrency.

50) Cryptocurrency is a(n) _______ currency not connected with any country’s central banking

system.

A) manually encrypted B) blockchain C) digitally encrypted D) immutable

51) Define "contract" and state the elements of a valid contract.

.

10

Chapter 7 52) Briefly explain the kinds of contracts that exist.

53) In the event of a dispute involving an oral agreement for the sum of $500 that was entered

into for a period of one year, how would the parties establish exactly what was agreed to between them?

54) Describe the conditions that determine the enforceability of a contract.

.

11

Chapter 7

Answer Key Test name: Chapter 7 1) TRUE 2) FALSE 3) TRUE 4) FALSE 5) TRUE 6) TRUE 7) TRUE 8) FALSE 9) TRUE 10) B 11) B 12) B 13) D 14) B 15) B 16) D 17) A 18) A 19) B 20) B 21) C 22) D 23) C 24) C 25) B 26) D 27) D 28) B 29) A 30) C 31) A 32) B 33) A 34) D 35) C 36) B 37) C

.

12

Chapter 7 38) A 39) A 40) D 41) A 42) A 43) D 44) A 45) C 46) D 47) B 48) A 49) B 50) C 51) Essay 52) Essay 53) Essay 54) Essay

.

13

Chapter 8

Student name:__________ 1) Offer and acceptance are optional elements of a contract. ⊚ true ⊚ false

2) As a general rule, if an offer is to be definite and certain, it should not be like a newspaper

story but should be like a gossip magazine and describe generalizations and innuendo. ⊚ true ⊚ false

3) If goods are advertised in a newspaper at an incorrect price, and the fault is that of the

newspaper, the merchant may be able to recoup his or her losses from the publication. ⊚ true ⊚ false

4) Acceptance of a public offer by anyone, as indicated by the performance of the act, results in

an enforceable contract. ⊚ true ⊚ false

5) The general rule of contract law provides that the acceptance of an offer may be on terms

slightly different than the offer. ⊚ true ⊚ false

6) The Uniform Commercial Code (UCC) provides that additional (or different) terms are to be

construed as proposals for addition to the contract, and between merchants, become part of the contract. ⊚ true ⊚ false

.

1

Chapter 8 7) An offer may never be terminated by a lapse of time. ⊚ true ⊚ false

8) After an offer is rejected by the offeree, it can never be revived or made into a counteroffer

once the communication of the rejection has been received by the offeror. ⊚ true ⊚ false

9) Of the six essential elements to a valid contract, the first two are: A) offer and acceptance.

B) offer and negotiation.

C) proposal and acceptance.

D) proposal and rejection.

10) A proposal that is both offered by the offeror and accepted by the offeree is a _______

contract.

A) void B) invalid C) quasi D) valid

11) When an offer specifies all the terms and conditions of a contract, it is considered: A) definite and certain.

B) indefinite.

C) debatable.

D) negotiable.

12) The omission of one or more _______ terms does not necessarily make the offer invalid.

A) valid B) essential C) nonessential D) unnecessary

.

2

Chapter 8 13) All of the following are considered to be forms of oral communication in making an offer

EXCEPT: A) radio.

B) e-mail.

C) television.

D) telephone.

14) _______ are usually considered offers to buy.

A) Acceptances B) Purchase orders C) Invitations to trade D) Requests for proposals

15) In the case of purchase orders, the buyer of the goods is the _______ and the seller is the

_______.

A) offeror, offeree B) offeror, customer C) purchaser, offeror D) offeree, offeror

16) A valid offer must be all of the following EXCEPT: A) definite and certain.

B) stated in writing.

C) made with serious intent.

D) communicated to the offeree.

17) When an offer of sale does not specify a price, it is assumed that the parties intended: A) a reasonable price.

B) a negotiable price.

C) not to enter a contract.

D) a nominal price.

.

3

Chapter 8 18) Offers made under all of the following circumstances would be considered invalid EXCEPT: A) offers made in anger.

B) offers made in jest.

C) offers made under severe emotional strain.

D) offers made with serious intent.

19) When communicating an offer, the communication may be implied by: A) custom and tradition.

B) the actions of the parties.

C) the actions of third parties in similar situations.

D) the Uniform Commercial Code.

20) Under the Uniform Commercial Code (UCC), the omission of one or more essential terms

does not necessarily make the offer invalid as long as the contract contains sufficient information to suggest that the parties intended to enter into a contract. This is from what section of the UCC? A) UCC 2-309 B) UCC 2-310 C) UCC 2-204 D) UCC 2-308

21) In order for an offer to be valid it must be communicated to the: A) offeree.

B) local court.

C) Secretary of State.

D) Securities and Exchange Commission.

22) The offer and acceptance issue gets complicated when there is little or no direct contact

between the parties, as in the case of all of the following EXCEPT: A) bidding.

B) advertising.

C) public offers.

D) agreement.

.

4

Chapter 8 23) An announcement published for the purpose of creating interest and attracting a response by

many people is known as: A) invitation to negotiate.

B) an invitation to trade.

C) an offer.

D) a proposal.

24) The words "first come, first served" in advertisements create a language of: A) rejection.

B) promise.

C) acceptance.

D) request.

25) If an advertisement offers a reward for information that might lead to the arrest of a criminal

or to the return of a lost article, it is regarded as a: A) request for an offer.

B) reward offer.

C) public offer.

D) call for a bid.

26) A call for a bid or estimate for materials to be furnished or work to be done is not considered

an offer, but rather: A) a request for an offer.

B) an invitation to negotiate.

C) something that can be accepted or rejected by the person calling for the bid.

D) All of the options are correct.

27) Most cities and states have regulations in place that require the government to accept the

_______ bidder on a project.

A) lowest B) highest C) wealthiest D) poorest

.

5

Chapter 8 28) A request for an offer or an invitation to negotiate that can be accepted or rejected by the

person calling for a bid is known as: A) a request for proposal.

B) an invitation to trade.

C) an invitation to negotiate.

D) an executory contract.

29) Acceptance of a public offer by anyone, as indicated by the performance of the act, results in: A) a void contract.

B) an enforceable contract.

C) an unenforceable contract.

D) an illegal agreement.

30) The general rule regarding the effective date and time an acceptance becomes binding is: A) upon receipt by the offeree.

B) three days after acceptance is sent.

C) three days after receipt of the acceptance.

D) when the parties intend.

31) A rule that states that an acceptance sent via the postal system or by courier is effective when

sent is known as: A) the courier rule.

B) the postal rule.

C) the mailbox rule.

D) the mail rule.

32) A conditional, or qualified, acceptance of an offer is known as: A) a negotiation tactic.

B) a counteroffer.

C) a communication.

D) an acceptance.

.

6

Chapter 8 33) A person cannot be compelled to speak or to write in order to avoid a(n): A) void agreement.

B) voidable agreement.

C) binding agreement.

D) illegal agreement.

34) The mailbox rule is also known as: A) the postal acceptance rule.

B) the postal rule.

C) the mail delivery rule.

D) the postal service rule.

35) _______ varies on whether an acceptance sent via email, fax, or text message is effective

when sent or when received.

A) International law B) Federal law C) State law D) The law does not vary.

36) Offers are terminated for the following reason(s): A) lapse of time.

B) revocation.

C) rejection.

D) All of the options are correct.

37) An offer that has been neither accepted nor rejected by the offeree can be: A) revoked by the offeror.

B) withdrawn by the offeror.

C) Both revoked by the offeror and withdrawn by the offeror.

D) None of the options are correct.

.

7

Chapter 8 38) When no definite time for acceptance is stated in an offer, the offer terminates after the

passing of: A) a reasonable time.

B) 90 days.

C) 60 days.

D) three years.

39) Under the UCC, a written offer by a merchant to buy or sell goods that states that the offer

will be held open for a specified time period: A) can always be revoked.

B) can be revoked by spoken word.

C) cannot be revoked during that time period.

D) can be revoked during that time period, but only in writing.

40) An offer is _______ terminated as a result of the _______ or legal incapacity of either the

offeror or the offeree.

A) eventually, disability B) never, death C) rarely, disability D) immediately, death

41) If the offeror dies or becomes incompetent, then the offeree: A) can renegotiate the terms of the contract.

B) can no longer accept the offer.

C) must wait 30 days before proceeding with the contract.

D) can still accept the offer.

42) The determination of what is considered a reasonable time in the case of termination of a

contract by lapse of time can vary according to the: A) assessment of a court-appointed judge.

B) circumstances.

C) opinion of the parties.

D) opinion of the witnesses.

.

8

Chapter 8 43) The offer, once rejected by the offeree, cannot be revived or made into a counteroffer once

the communication of the rejection has been received by the: A) court.

B) offeree.

C) offeror.

D) offeree's agent.

44) If the offeror acknowledges the rejection but restates the offer, the offeree: A) loses the opportunity to accept but retains the authority to make a counteroffer.

B) does not have any opportunity to accept, reject, or make a counteroffer.

C) cannot revive the offer or make a counteroffer.

D) still has the opportunity to accept, reject, or make a counteroffer.

45) What are the criteria for a valid offer?

46) What are different means of communication of an offer?

47) What is an invitation to trade?

.

9

Chapter 8 48) What are the two conditions that must be met for an acceptance to be valid?

49) Is an acceptance valid if it states terms additional to or different from those offered or agreed

upon? Please explain.

.

10

Chapter 8

Answer Key Test name: Chapter 8 1) FALSE 2) FALSE 3) TRUE 4) TRUE 5) FALSE 6) TRUE 7) FALSE 8) TRUE 9) A 10) D 11) A 12) B 13) B 14) B 15) A 16) B 17) A 18) D 19) B 20) C 21) A 22) D 23) B 24) B 25) C 26) D 27) A 28) A 29) B 30) D 31) C 32) B 33) C 34) A 35) C 36) D 37) C

.

11

Chapter 8 38) A 39) C 40) D 41) B 42) B 43) C 44) D 45) Essay 46) Essay 47) Essay 48) Essay 49) Essay

.

12

Chapter 9

Student name:__________ 1) A fraud charge can be proven if it is available in writing, or if it is spoken or by acts or

conduct. ⊚ true ⊚ false

2) Fraud is the intentional misstatement or nondisclosure of a material fact made by one party

with the hope of influencing the other party. ⊚ true ⊚ false

3) In the eyes of the law, a contractual mistake is a belief that is not in accord with the facts. ⊚ true ⊚ false

4) Mistakes relating to contracts may not be concerned with the nature of the subject matter or

the quality of the subject matter. ⊚ true ⊚ false

5) A person who has power and abuses it to control the actions of another person on the basis of

a special or confidential relationship commits fraud. ⊚ true ⊚ false

6) A physician may never have the power to control the actions of their patients. ⊚ true ⊚ false

.

1

Chapter 9 7) The "take-it-or-leave-it" contracts, known as contracts of adhesion, are quite common and are

normally enforceable. ⊚ true ⊚ false

8) Courts have long been reluctant to uphold unconscionable contracts, but more recently the

UCC has made such contracts less likely to be enforced. ⊚ true ⊚ false

9) Genuineness of agreement is said to be present in a contract when there is: A) knowledge of falsity.

B) a true meeting of the minds.

C) puffing.

D) duress.

10) Genuineness of agreement in a contract is also known as: A) truth of agreement.

B) reality of agreement.

C) veracity of agreement.

D) verity of agreement.

11) If agreement of either party is obtained by fraud, misrepresentation, mistake, undue

influence, or duress, or if the contract is one of adhesion, or is unconscionable, a(n): A) executed contract results.

B) valid contract results.

C) void contract results.

D) voidable contract results.

.

2

Chapter 9 12) For the injured party to claim fraud, they must prove all of the following statements or acts

EXCEPT that it: A) was a misstatement or nondisclosure of a material fact.

B) was made with knowledge of its falsity or with reckless disregard of its truth.

C) was not intended to cause the other party to enter into the agreement.

D) was relied on by the injured party.

13) In order to prove a fraud case, a plaintiff must demonstrate _____ elements.

A) five B) four C) three D) six

14) Intentional concealment is also known as: A) intentional nondisclosure of material facts.

B) intentional disclosure of material facts.

C) deliberate nondisclosure of material facts.

D) calculated disclosure of material facts.

15) The mere expression of a salesperson's opinion is known as _____.

A) fraud B) puffing C) misrepresentation D) a white lie

16) Puffing is considered an expression of: A) fact.

B) legalese.

C) opinion.

D) time.

.

3

Chapter 9 17) “Dealer’s talk” is another term for: A) B) C) D)

puffing. lying. fraud. misrepresentation.

18) All of the following are fraudulent except: A) intentional concealment.

B) intentional nondisclosure.

C) false statements.

D) puffing.

19) If an injured party in a lawsuit can prove only _____, the contract can be canceled, and the

injured party cannot sue for additional damages.

A) fraud B) puffing C) mistake D) misrepresentation

20) When a misstatement is made _____, it amounts to fraud.

A) recklessly B) knowingly C) intentionally D) All of the options are correct.

21) Arnold hired BluWater Pool Company to build a swimming pool in his backyard. It was only

after construction had begun that Arnold learned from a neighbor that local zoning ordinances prohibited backyard swimming pools in the community. The salesperson for BluWater admitted that he had been thinking about another community where no prohibitions existed. Arnold may _____ the contract if he wishes.

A) void B) not void C) sue against D) complain about

.

4

Chapter 9 22) The _____ misstatement or nondisclosure of a material fact made by one party with the hope

of influencing the other party amounts to misrepresentation.

A) intentional B) pre-planned C) unintentional D) willful

23) Misrepresentation is a misstatement of a _____ that results in inducing another to enter into

an agreement to their injury.

A) misrepresentation B) lie C) material fact D) All of the options are correct.

24) An injured party who can successfully prove misrepresentation only has the remedy to: A) bring a lawsuit for damages.

B) cancel the contract.

C) accept the contract.

D) claim specific performance.

25) For a contract to be dissolved because of a mistake, the law usually requires that the mistake

be: A) B) C) D)

.

unilateral. intentional. mutual.

All of these answers might apply to a contract dissolved because of a mistake.

5

Chapter 9 26) Randolf, a wealthy connoisseur of arts, was invited to an art exhibition. He became very

interested in one of the showcased art exhibits and approached the manager to buy the piece.

While he was interested in the painting of the catalogue number 1201, the art gallery's manager mistakenly assumed he was interested in another piece. When it was time to complete the transaction, the manager realized that he had instead sold and delivered the wrong painting and immediately clarified this with Randolf. In this instance, the contract can be canceled by either party for: A) homicide.

B) puffing.

C) negligence.

D) mutual mistake.

27) Court decisions involving mistakes in contracts are often complex and the courts attempt to

determine if the mistake was: A) intentional.

B) unintentional.

C) criminal.

D) unilateral.

28) If the mistake in the contract is made by only one party, then it is considered a(n): A) mutual mistake.

B) unilateral mistake.

C) corporate mistake.

D) conditional mistake.

29) The law makes it clear that a mistaken belief must concern: A) an existing fact.

B) precedent.

C) misrepresentation.

D) unilateral fraud.

.

6

Chapter 9 30) If the mistake in the contract is made by both parties, then it amounts to a(n): A) corporate mistake.

B) unilateral mistake.

C) mutual mistake.

D) conditional mistake.

31) _____ relating to contracts may be concerned with the nature of the subject matter or the

quality of the subject matter.

A) Puffing B) Mistakes C) Influences D) Misstatements

32) Contractual mistake is a term for when belief of the parties is not in accord with: A) the facts.

B) opinion.

C) conjecture.

D) reasonable guessing.

33) A contract resulting from the use of undue influence is: A) voidable.

B) criminal.

C) void.

D) always enforceable.

34) When someone uses their power over another improperly to their personal advantage, _____

is said to exist.

A) fraud B) undue influence C) misrepresentation D) duress

.

7

Chapter 9 35) Sometimes a person has the power to control the actions of another because of a special or

confidential relationship to that person. Such relationships are found in all of the following, EXCEPT that of a(n): A) client and vendor.

B) physician or nurse and a patient.

C) attorney and a client.

D) employer and an employee.

36) Undue influence requires that one party to an agreement uses their power for _____

advantage.

A) the government's B) personal C) the court's D) a third party's

37) Undue influence involves the improper use of excessive pressure by the _____ member of a

confidential relationship to convince the _____ party to enter a contract that greatly benefits the first party.

A) weaker, dominant B) older, younger C) vender, customer D) dominant, weaker

38) The act of applying unlawful or improper pressure or influence to a person in order to gain

that person’s agreement to a contract is called: A) puffing.

B) duress.

C) extortion.

D) misrepresentation.

.

8

Chapter 9 39) When _____ are used to _____ someone into entering a contract, the agreement may be

dissolved by the injured party.

A) threats, force B) bribes, cajole C) bribes, confuse D) bribes, pressure

40) The pressure under duress can take the form of: A) a threat of bodily harm to an individual.

B) a threat to one’s family.

C) a threat of serious loss or damage to property.

D) All of the options are correct.

41) A contract drawn by one party that must be accepted as is on a take-it-or-leave-it basis is

called a(n): A) illegal contracts.

B) contract of adhesion.

C) voidable contract.

D) expressed contract.

42) Contracts of adhesion are: A) common.

B) usually enforceable.

C) drawn by one party.

D) All of the options are correct.

43) Contracts that involve parties of unequal bargaining power are often considered: A) unconscionable.

B) contracts of adhesion.

C) inadequate.

D) illegal.

.

9

Chapter 9 44) An unconscionable contract is a contract that is all of the following EXCEPT: A) one-sided.

B) oppressive.

C) shockingly unfair or unjust.

D) equitable.

45) Courts have long been reluctant to uphold unconscionable contracts, and with the UCC it

has: A) B) C) D)

required such contracts to be reduced to writing. made such contracts less likely to be enforced. encouraged the agreement of such contracts. made such contracts more likely to be enforced.

46) When the UCC was written, it was intended that an unconscionable clause would apply only

to: A) B) C) D)

the sale of goods. leasing an apartment. intellectual property. opening a checking account.

47) Explain how defective agreements can occur.

48) Explain a "contract of adhesion."

.

10

Chapter 9 49) What is an "unconscionable contract," and what are the court's options when handling one?

.

11

Chapter 9

Answer Key Test name: Chapter 9 1) TRUE 2) TRUE 3) TRUE 4) FALSE 5) FALSE 6) FALSE 7) TRUE 8) TRUE 9) B 10) B 11) D 12) C 13) A 14) A 15) B 16) C 17) A 18) D 19) D 20) D 21) A 22) C 23) C 24) B 25) C 26) D 27) D 28) B 29) A 30) C 31) B 32) A 33) A 34) B 35) A 36) B 37) D

.

12

Chapter 9 38) B 39) A 40) D 41) B 42) D 43) B 44) D 45) B 46) A 47) Essay 48) Essay 49) Essay

.

13

Chapter 10

Student name:__________ 1) The promisor may not make a promise to pay a sum of money to the promisee for the

performance of a certain act. ⊚ true ⊚ false

2) Most consumer protection statutes praise and protect unconscionable contracts and contracts

of adhesion. ⊚ true ⊚ false

3) Sometimes the unequal bargaining power of parties to a contract gives one party an unfair

advantage when dealing with those who lack the economic power to enter into a contract on an equal footing. ⊚ true ⊚ false

4) Consideration required in an enforceable contract can take only one form. ⊚ true ⊚ false

5) The exchange of money is not a mandatory requirement for consideration. ⊚ true ⊚ false

6) A pledge or a subscription, which is a promise to donate money, is unenforceable. ⊚ true ⊚ false

.

1

Chapter 10 7) With regard to pledges and subscriptions, most courts have held that there is no consideration

given by a charitable institution for money that is donated. ⊚ true ⊚ false

8) It is not permitted in the United States for a person who has a claim against another to give

up, or release, their claim without an exchange of consideration by making a written statement to that effect. ⊚ true ⊚ false

9) The promises exchanged by the parties to a contract, either to give up something of value

they have a legal right to keep, such as money or property; to do something they are not otherwise legally required to do, such as performing a service; or to refrain from an action is known as: A) consideration.

B) offer and acceptance.

C) mutual agreement.

D) competence of parties.

10) _____ in a contract may be more than the promises exchanged by the parties.

A) Consideration B) Forbearance C) A pledge D) None of the options are correct.

11) Jack promised to pay his nineteen-year-old nephew $300 on the nephew's twenty-second

birthday if the nephew refrained from smoking cigarettes until he graduated from Western State College. This contract is legal and illustrates the promise of: A) pledge or subscription.

B) corporate fine.

C) forbearance as consideration.

D) implied contract.

.

2

Chapter 10 12) Forbearance is the promise to _____ that a party has a legal right to do.

A) do something B) refrain from doing something C) act on something D) All of the options are correct.

13) A party who makes a promise, the _____, may make a promise to pay a sum of money to

another party, the _____, for the performance of a certain act.

A) promisor, promisee B) promise, promisor C) incorporator, incorporatee D) organizer, client

14) Contracts in which the parties have unequal bargaining power are known as: A) illusory contracts.

B) pledges.

C) contracts of adhesion.

D) gratuitous promises.

15) If the consideration in a contract is a promise to perform an illegal act, or to avoid performing

an act that is legally required to be performed, the contract is: A) valid.

B) void.

C) legal.

D) a barren promise.

16) A legally enforceable contract will not be enforced if it: A) poses unforeseen expenses.

B) is inconvenient to fulfill.

C) is difficult to fulfill.

D) is impossible to fulfill.

.

3

Chapter 10 17) How many essential characteristics of valid consideration are there?

A) Two B) Three C) Four D) Five

18) The essential characteristics of valid consideration include: A) legality, adequacy, and the possibility of performance.

B) fulfillment of social, moral, and ethical obligations.

C) accuracy, brevity, and efficiency of performance.

D) intention, practices, and policies.

19) The law assumes that, as long as no undue pressure is brought to bear, the parties are: A) not allowed to negotiate an offer.

B) not allowed to enter into another contract.

C) required to accept proposed contract terms.

D) free to reject a proposed unfair contract.

20) A contract is _____ if it requires a person to do something they are already required to do,

such as obey all traffic laws.

A) not enforceable B) enforceable C) morally enforceable D) valid

21) If a party to a contract realizes that their contractual obligation is difficult but not impossible,

then the party can _____.

A) breach the contract legally B) perform the duties that have been agreed to C) send notice to the court and not perform the duties D) demand more payment before performing duties

.

4

Chapter 10 22) The most common form of valid consideration is the promise of _____ by one party for the

promise of _____ by another.

A) a favor, goods B) money, goods C) money, an act D) a good deed, money

23) A promise of an act by one party in exchange for the promise of an act by another is an

example of: A) a void contract.

B) valid consideration.

C) incorporation.

D) a voidable contract.

24) Many contracts in which part of the consideration is _____ involve agreements not to

compete.

A) a pledge B) a general release C) a barren promise D) forbearance

25) Valid consideration does not have to be either the performance of an act or the payment of

money. One party to a contract may wish to exchange their promise to pay money for a promise of _____ from the other party.

A) action B) inaction C) money D) a pledge

26) Charitable organizations frequently raise money by asking for: A) discounts.

B) bribes.

C) pledges.

D) corporate shares.

.

5

Chapter 10 27) An enforceable pledge may be donated to all of the following EXCEPT: A) a church.

B) a mosque.

C) a hospital.

D) a chain restaurant.

28) Because these pledges to charitable organizations are usually for _____, the courts have

generally held that they are _____.

A) worthy causes, morally unenforceable B) worthy causes, unenforceable C) worthy causes, enforceable D) None of the options are correct.

29) Contractual _____ means one party is exchanging a promise for money in exchange for

inaction.

A) pledge B) forbearance C) promise D) morality

30) In some cases that involve contracts to sell goods, the Uniform Commercial Code (UCC)

dispenses with the requirement of consideration in certain contracts that involve any of the following EXCEPT: A) a merchant's written firm offer that provides that the contract is irrevocable.

B) a written discharge of a claim for an alleged breach of contract.

C) a merchant's written firm offer that provides that the contract is voidable.

D) modifications of existing contracts.

31) Which section of the Uniform Commercial Code deals with modification of an existing

contract?

A) Section 2-209 B) Section 2-208 C) Section 2A-107 D) Section 2A-108

.

6

Chapter 10 32) The UCC provides that "any claim or right arising out of an alleged breach can be discharged

in whole or in part without consideration by a written waiver or renunciation signed and delivered by the aggrieved party." Such a written agreement is called a: A) corporate release.

B) general release.

C) barren promise.

D) preexisting duty.

33) Statutes in many states have permitted a person who has a claim against another to give up,

or _____, their claim without an exchange of _____ by making a written statement to that effect.

A) pledge, promises B) release, consideration C) release, validity D) release, pledges

34) If a claim is deemed frivolous, there is no _____, because, in effect, the releasing party is not

giving up anything.

A) pledge B) validity C) modification allowed D) forbearance

35) Section 2A-107 of the Uniform Commercial Code (UCC) provides for a written agreement

called: A) B) C) D)

a pledge. a promise. a general release. a specific release.

36) Agreements that lack consideration are generally: A) not enforceable.

B) enforceable.

C) unlawful.

D) valid.

.

7

Chapter 10 37) Something that a person is not legally bound to do but that they may feel bound to do

because of love, friendship, honor, sympathy, conscience, or another reason is called: A) good Samaritan consideration.

B) moral consideration.

C) considered loyalty.

D) a promise.

38) A(n) _____ is one that involves a promise to do something one is already required to do.

A) broken pledge B) sterile promise C) barren promise D) preexisting duty

39) A promise to do something that one is already required to do either by law or by contract

represents no additional sacrifice and is: A) a general release.

B) an illegal act.

C) not valid consideration.

D) fraudulent.

40) Past consideration is a promise to pay someone for a benefit _____ it is received.

A) before B) after C) within 30 days before D) within 60 days before

41) A promise to pay an existing debt or to obey the law, or a similar promise, is called a: A) pledge.

B) gratuitous promise.

C) barren promise.

D) covenant.

.

8

Chapter 10 42) The obligation to perform acts already required is known as a: A) pious obligation.

B) corporate duty.

C) social obligation.

D) preexisting duty.

43) A promise that is generally not valid consideration and is considered a gratuitous promise,

except in cases of moral consideration, is called: A) past consideration.

B) future consideration.

C) current consideration.

D) present consideration.

44) A promise that consists of an indefinite, open-ended statement purporting to be an agreement

is known as a(n): A) gratuitous promise.

B) illusory promise.

C) preexisting duty.

D) barren promise.

45) A person who makes a promise without requiring some benefit in return has made a: A) gratuitous promise.

B) barren promise.

C) pledge or subscription.

D) onerous contract.

46) Courts may justify the enforcement of some contracts, even though there is no consideration,

by stating that there was: A) monetary consideration.

B) pecuniary consideration.

C) fiscal consideration.

D) moral consideration.

.

9

Chapter 10 47) A promise made without receiving anything in return is called a _____ promise.

A) barren B) gratuitous C) preexisting D) illusory

48) A promise to repay someone for a benefit after the benefit has been received is known as: A) past consideration.

B) a pre-meditated contract.

C) prior consideration.

D) future consideration.

49) What are the characteristics of valid consideration?

50) Discuss the situations in which the Uniform Commercial Code does not require consideration

in contracts to sell goods.

51) Define and explain the term "general release."

.

10

Chapter 10 52) Identify four kinds of agreements that lack consideration.

53) Describe agreements supported by moral consideration.

.

11

Chapter 10

Answer Key Test name: Chapter 10 1) FALSE 2) FALSE 3) TRUE 4) FALSE 5) TRUE 6) FALSE 7) FALSE 8) FALSE 9) A 10) A 11) C 12) B 13) A 14) C 15) B 16) D 17) B 18) A 19) D 20) A 21) B 22) C 23) B 24) D 25) B 26) C 27) D 28) C 29) B 30) C 31) A 32) B 33) B 34) D 35) C 36) A 37) B

.

12

Chapter 10 38) C 39) C 40) B 41) C 42) D 43) A 44) B 45) A 46) D 47) B 48) A 49) Essay 50) Essay 51) Essay 52) Essay 53) Essay

.

13

Chapter 11

Student name:__________ 1) Incompetent parties to a contract are denied the opportunity to benefit from their legal rights. ⊚ true ⊚ false

2) A minor may not disaffirm contracts for necessaries, such as food, shelter, clothing,

employment, and medical care. ⊚ true ⊚ false

3) The law that protects minors from their contractual commitments does not intend to deny

them the opportunity to enter into contracts for necessaries that are not provided by their parents or a guardian. ⊚ true ⊚ false

4) Emancipated minors are not liable for necessaries purchased for themselves. ⊚ true ⊚ false

5) A minor is liable for the reasonable value of necessaries purchased, not the contract price. ⊚ true ⊚ false

6) If a minor injures another person or damages another person's property, the minor may be

liable for such injuries or damages and may be prosecuted by the state in a criminal action. ⊚ true ⊚ false

7) Persons of unsound mind are considered incompetent to make binding contracts. ⊚ true ⊚ false

.

1

Chapter 11 8) A person with mental illness may never exercise sound judgment. ⊚ true ⊚ false

9) If a person makes a contract for necessities while intoxicated, then such person must pay the

contract price even if exorbitant. ⊚ true ⊚ false

10) Contracts with people who have been declared incompetent by the courts are valid if the

competent people who contracted with them do not know that they had been declared incompetent by the courts. ⊚ true ⊚ false

11) A competent party is a person of __________ age and __________ mental state.

A) minor, appropriate B) minor, competent C) legal, appropriate D) majority, incompetent

12) The responsibility of determining whether a person is competent to contract rests on: A) the competent party involved in the contract.

B) the minor involved in the contract.

C) the parents of the minor involved in the contract.

D) everyone who enters into a contract with such a person.

13) A __________ is a person of legal age and at least normal mentality who is considered by

law to be capable of understanding the meaning of a contract and is permitted to enter into a valid contract.

A) incorporator B) competent party C) valid participant D) contractor

.

2

Chapter 11 14) All of the following persons are usually considered incompetent and lacking in contractual

capacity EXCEPT: A) minors.

B) persons with mental illness.

C) persons with mental challenge.

D) those of legal age.

15) A competent party with the ability to make a valid contract is known as having: A) age of majority.

B) contractual capacity.

C) contractual ability.

D) undue influence.

16) Goods and services that are essential to a minor’s health and welfare are known as: A) B) C) D)

requisites. disaffirmances. necessaries. compulsories.

17) Most contracts made by persons who have not reached the age of majority are: A) enforceable.

B) voidable.

C) valid.

D) void.

18) In most cases, whether the contract has not yet been performed or has been fully performed,

the minor may: A) disaffirm the contract.

B) renegotiate the contract.

C) claim incompetence in order to void the contract.

D) All of the options are correct.

.

3

Chapter 11 19) The legal age of majority: A) varies from state to state.

B) does not vary from state to state.

C) is federally mandated.

D) All of the options are correct.

20) Disaffirmance may be __________ by the acts of the person who has reached legal age and

wishes to disaffirm.

A) required B) implied C) ratified D) disallowed

21) The status of a contract between a minor and an adult is generally: A) subject to the minor's disaffirmance.

B) voidable at the instance of either party.

C) voidable at the instance of a third party.

D) subject to the adult's ratification.

22) A person attains the age of majority on the anniversary date of their birth, which is known as

the: A) B) C) D)

majority rule. astrology rule. coming of age rule. birthday rule.

23) The law regards actions on the part of the minor that result in emancipation as: A) abandonment.

B) disaffirmance.

C) the coming of age rule.

D) ratification.

.

4

Chapter 11 24) Disaffirming a contract would amount to: A) ratifying the contract.

B) disapproving a tripartite contract.

C) extending the contract.

D) avoiding the contract.

25) An approval of a contract made by a minor after reaching majority is called: A) ratification.

B) avoidance.

C) disaffirmation.

D) necessity.

26) According to the coming of age rule in common law, a person who celebrates their 18th

birthday on April 26, in a state where the age of majority is 18, would become an adult—and legally competent—at: A) 12:01 a.m. on April 26.

B) 12:01 a.m. on April 25.

C) 12:01 p.m. on April 25.

D) 12:01 p.m. on April 26.

27) If a reasonable period of time passes after a minor reaches legal age and has said nothing

about disaffirming the contract, then in the eyes of the law it is considered as: A) ratified.

B) incorporated.

C) avoided.

D) a void contract.

28) A contract for necessaries describes when a minor enters into a contract relating to which of

the following?

A) Clothing.

B) Shelter.

C) Medical care.

D) All of the options are correct.

.

5

Chapter 11 29) In the case of minors' contracts, silence or inaction is the basis for a(n) __________ contract

becoming a valid, enforceable contract through ratification.

A) void B) illegal C) voidable D) adhesion

30) In contract law, to indicate by a statement or act an intent __________ the terms of a contract

is known as disaffirmance.

A) to live up to B) not to live up to C) to renegotiate D) None of the options are correct.

31) With regard to minors' contracts, silence or inaction is the basis for a voidable contract

becoming a valid and enforceable contract through: A) ratification.

B) clarification.

C) justification.

D) ramification.

32) Disaffirmance must be done by the minor: A) before receiving the consideration.

B) within a reasonable time after reaching adulthood.

C) after receiving the consideration for the contract.

D) just prior to the minor reaching the legal age of adulthood.

33) __________ could result from marriage or a voluntary separation to assume adult

responsibilities.

A) Emancipation B) Disaffirmation C) Majority rule D) Ratification

.

6

Chapter 11 34) In some states the minor may avoid the contract even if they falsely represented their self as: A) being of age.

B) being a minor.

C) being under force or duress.

D) being bankrupt.

35) The law that protects minors from their contractual commitments is not intended to deny

them the opportunity to enter into __________ that are not provided by their parents, or a guardian.

A) disaffirmances B) crimes C) contracts for necessaries D) abatements

36) If a minor has paid more than they should have been charged, then the minor can: A) seek specific performance.

B) recover the overcharged amount.

C) recover punitive damages.

D) assign their rights to a third party.

37) In some cases, the courts have held that contracts made by minors who are nearly adults or

that deal with a business are: A) unenforceable contracts.

B) adhesion contracts.

C) enforceable by the parents or the guardians of the minors.

D) enforceable contracts.

38) In general, a minor may not __________ a contract for the sale or purchase of real estate.

A) disaffirm B) pledge C) necessitate D) abate

.

7

Chapter 11 39) Minors are protected against their own __________ but not against their own __________.

A) wrongdoing, inexperience B) inexperience, wrongdoing C) experience, wrongdoing D) inexperience, malfeasance

40) If a minor injures another person or damages another person’s property, the minor may be

liable for such injuries or damages and may be prosecuted by the __________ in a __________ action.

A) federal government, criminal B) state, contractual C) state, criminal D) state, malfeasance

41) In most states parents will not be held liable for the __________ committed by minors.

A) torts B) contracts C) crimes D) friendships

42) A minor may be held liable for money damages in a tort action when they: A) destroy property.

B) cause another person to suffer a money loss through negligence.

C) persuade another person to break a contract.

D) All of the options are correct.

43) When a minor makes damaging statements in writing, they can be held liable for the act of: A) libel.

B) slander.

C) negligence.

D) emancipation.

.

8

Chapter 11 44) Being unable to make binding contracts due to having an unsound mind and being unable to

safeguard one's own interests is __________.

A) indecency B) indifference C) duress D) incompetency

45) An intoxicated person may __________ a contract where, due to the extent of intoxication,

the person was unable to understand the nature and effect of the contract.

A) avoid B) be locked into C) ratify D) affirm

46) A person with mental illness is liable for the __________ value of necessities that they buy.

A) contract B) reasonable C) market D) profit margin

47) Courts will find a person who is heavily intoxicated legally __________ to enter into a

contract.

A) competent B) incompetent C) too compromised D) a competent party

48) Describe competent parties, and how they relate to the capacity to contract.

.

9

Chapter 11 49) Explain and elaborate on the following statement: The law that protects minors from their

contractual commitments is not intended to deny them the opportunity to enter into contracts for necessaries that are not provided by their parents or a guardian.

50) In a contract between a minor and an adult, the minor has the privilege of disaffirmance. Are

there circumstances under which the minor may not cancel the contract?

51) Are mentally incompetent persons eligible to enter into a contract? Why or why not?

52) Is a contract made by a person declared mentally incompetent binding? Explain.

.

10

Chapter 11

Answer Key Test name: Chapter 11 1) FALSE 2) TRUE 3) TRUE 4) FALSE 5) TRUE 6) TRUE 7) TRUE 8) FALSE 9) FALSE 10) FALSE 11) C 12) D 13) B 14) D 15) B 16) C 17) B 18) A 19) A 20) B 21) A 22) C 23) A 24) D 25) A 26) B 27) A 28) D 29) C 30) B 31) A 32) B 33) A 34) A 35) C 36) B 37) D

.

11

Chapter 11 38) A 39) B 40) C 41) A 42) D 43) A 44) D 45) A 46) B 47) B 48) Essay 49) Essay 50) Essay 51) Essay 52) Essay

.

12

Chapter 12

Student name:__________ 1) Examples of agreements that violate government statutes and are unenforceable by the courts

are contracts for the sale of alcohol by licensed distributors. ⊚ true ⊚ false

2) Usury laws are not applicable to transactions between corporations in some states. ⊚ true ⊚ false

3) Persons attempting to influence public officials are exposed and prosecuted every year. ⊚ true ⊚ false

4) Monopoly power is the term used to describe a situation in which many people or firms share

the market in a particular area or for a certain product. ⊚ true ⊚ false

5) The Robinson-Patman Act makes it unlawful to discriminate, directly or indirectly, in matters

involving product pricing, advertising, and promotion. ⊚ true ⊚ false

6) Under the Robinson-Patman Act a seller of goods may legally charge a certain customer a

lower price if the seller can prove that the lower price is a result of savings due to largequantity sales to that customer. ⊚ true ⊚ false

.

1

Chapter 12 7) Private franchises are another form of legal monopoly which are sometimes called natural

monopolies. ⊚ true ⊚ false

8) Zoning regulations may not act as legal restraints of trade. ⊚ true ⊚ false

9) Broad classifications of illegal agreements include agreements: A) contrary to biblical law and other religions.

B) made against the security and welfare of the public.

C) that fail to make both parties a profit.

D) that are made orally between two people.

10) If the parties to a contract are legally competent and have reached mutual agreement, the law

requires that the __________ of the agreement be legal.

A) purpose B) franchise C) exculpatory cause D) monopoly

11) If the contract is divisible, and if one or more parts have a legal purpose, then those

components are usually: A) unenforceable.

B) enforceable.

C) illegal.

D) licensed.

.

2

Chapter 12 12) There are three broad classifications of illegal agreements: (1) agreements that are contrary to

common law, (2) agreements declared illegal by statute, and (3) __________.

A) agreements made in a foreign country B) agreements that courts have found to be against the security of the general public C) agreements reviewed by a Native American court or tribunal D) agreements between two corporations

13) How many states have legislation regulating gambling?

A) 49 B) 21 C) States are not responsible for regulating gambling.

D) All states have legislation regulating gambling.

14) Some state statutes and local ordinances that regulate the creation and performance of certain

types of contracts on Sundays and legal holidays are referred to as: A) blue laws.

B) white laws.

C) black laws.

D) red laws.

15) Contracts made on a legal holiday can generally be performed: A) on the next business day following the holiday.

B) on the same day as the legal holiday.

C) within one month prior to the holiday.

D) within one week from the date of the legal holiday.

16) In many states, the __________ apply to retail installment credit sales and credit card

transactions.

A) interest statutes B) gambling agreements C) usury statutes D) wagering agreements

.

3

Chapter 12 17) If a loan is made at an interest rate __________ that that allowed by state law, the lender is

guilty of usury.

A) higher than B) lower than C) equal to D) None of the options are correct.

18) In order to qualify for a professional license, the applicant may have to pass a(n) __________

examination.

A) oral B) written C) both oral and written D) All of the options are correct.

19) The charge for use of borrowed money is known as: A) consideration.

B) interest.

C) surcharge.

D) champerty.

20) Examples of contracts that might be made on a Sunday or on a legal holiday and ratified on a

weekday are the following types of contracts: A) gambling and wagering agreements.

B) usurious agreements.

C) payment of a note.

D) unlicensed transactions.

21) Which type of agreement is one in which performance by one party depends on the

occurrence of an uncertain event?

A) A gambling agreement B) A Sunday agreement C) A blue law D) A usury agreement

.

4

Chapter 12 22) To protect the public, most states require persons engaged in certain businesses, professions,

and occupations to be: A) licensed.

B) from international countries.

C) monopolized.

D) unlicensed.

23) Risking money or something of value on the uncertain outcome of a future event is legally

known as: A) negotiating.

B) gambling.

C) taking a chance.

D) interest betting.

24) If the purpose of a licensing requirement is solely to raise revenue for the jurisdiction, and

not to ensure competency, the absence of a license: A) creates an illegal and unenforceable contract.

B) makes the agreement void.

C) does not make the agreement void.

D) creates a legal but void agreement.

25) If the purpose of a statute is regulatory and enforcement of licensing requirements is clearly

in the public interest, then an unlicensed transaction is: A) valid.

B) ratified.

C) voidable.

D) illegal.

26) Examples of gambling that may be illegal in some states include all of the following

EXCEPT: A) office pools.

B) online gambling.

C) betting on a Native American reservation.

D) None of the options are correct.

.

5

Chapter 12 27) An agreement to give false testimony or to suppress evidence falls under agreements that: A) are in restraint of trade.

B) are in restraint of licensing.

C) obstruct or pervert justice.

D) All of the options are correct.

28) An agreement made with an intention to defraud creditors or other persons is referred to as

a(n): A) B) C) D)

agreement against public policy. wagering agreement. usurious agreement. dealership agreement.

29) A person’s promise to pay money to their child on the condition that the child never marries

would be: A) valid.

B) enforceable by majority.

C) unenforceable.

D) ratified.

30) Some agreements are unenforceable because they are __________, such as agreements in

restraint of marriage.

A) in the best interest of the public B) necessary C) morally wrong D) contrary to the interests of the public

31) An agreement to encourage a lawsuit in which one or more parties have no legitimate interest

is: A) B) C) D)

.

unlicensed. a subversion. champerty. a transaction.

6

Chapter 12 32) Agreements to defraud creditors and other persons are: A) void and unenforceable.

B) legal but not enforceable.

C) legal and enforceable.

D) valid.

33) Agreements are not typically considered __________ if one party __________ uses their

influence.

A) illegal, improperly B) voidable, wrongfully C) legal, wrongfully D) unconscionable, properly

34) Courts require that parties have clean hands, meaning they are not using __________ acts as

the basis for a lawsuit.

A) illegal B) legal C) corporate D) foreign

35) In 1890, Congress passed the Federal Antitrust Act. Similar antitrust statutes have been

passed by most states to prohibit: A) racial discrimination.

B) local anticompetitive practices.

C) payment of taxes.

D) religious discrimination.

36) Which act(s) forbid certain agreements that tend to unreasonably inhibit competition, fix

prices, allocate territories, or limit production?

A) The Robinson-Patman Act B) The Sherman Antitrust Act C) The Sunday Agreement Act D) The Blue Laws

.

7

Chapter 12 37) Two pharmacies agreed to serve a particular section of a town by offering medicines at lower

prices in order to create a monopoly and discourage competition among other stores. This would be a(n): A) agreement in restraint of trade.

B) non-solicitation agreement.

C) usurious agreement.

D) agreement to defraud creditors.

38) A situation in which one or more people or firms control the market in a particular area or for

a particular product is called a(n): A) enhancement.

B) exclusive contract.

C) restraint.

D) monopoly.

39) The Sherman Antitrust Act is also known as the: A) Robinson-Patman Act. B) Federal Antitrust Act. C) Economic Liberty Act. D) Clayton Act.

40) An illegal scheme used to influence a public official might involve: A) giving “no-show” or “no-work” jobs to relatives of political officials.

B) making contributions to political campaigns.

C) offering vacations as bribes.

D) All of the options are correct.

41) If a federal or state government grants a firm or person a license to conduct a specific

business, then such business may be known as a: A) private franchisee.

B) sponsored incorporation.

C) private monopoly.

D) government-granted franchise.

.

8

Chapter 12 42) A community may designate certain areas as zones for: A) light industrial.

B) commercial.

C) residential.

D) All of the options are correct.

43) The __________ of a private franchise system is called a franchisor.

A) incorporator B) parent firm C) franchisee D) organizer

44) A __________ is a special kind of business organization involving a contractual relationship

between a parent firm and an independent company.

A) government-granted monopoly B) retailer C) wholesaler D) private franchise

45) Like zoning regulations, safety and environmental regulations also serve as: A) criminal statutes.

B) foreign protection laws.

C) legal restraints of trade.

D) policies encouraging monopolization.

46) Federal and state legislatures have enacted statutes to protect the __________ of the general

population from the effects of pollution of the atmosphere and bodies of water.

A) health and welfare B) movable property C) immovable property D) educational status

.

9

Chapter 12 47) What is an illegal agreement and give two examples?

48) Describe "usurious agreements."

49) What constitutes an "illegal restraint of trade?" Explain and provide an example.

50) What are the legal rights and responsibilities of a franchisee in a private franchise agreement?

51) What effects do zoning regulations and environmental and safety regulations have on the

corporate sector?

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10

Chapter 12

Answer Key Test name: Chapter 12 1) FALSE 2) TRUE 3) TRUE 4) FALSE 5) TRUE 6) TRUE 7) FALSE 8) FALSE 9) B 10) A 11) B 12) B 13) D 14) A 15) A 16) C 17) A 18) D 19) B 20) C 21) A 22) A 23) B 24) C 25) D 26) D 27) C 28) A 29) C 30) D 31) C 32) A 33) C 34) A 35) B 36) B 37) A

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11

Chapter 12 38) D 39) B 40) D 41) D 42) D 43) B 44) D 45) C 46) A 47) Essay 48) Essay

If a loan is made at an interest rate higher than that allowed by state law, the lender is guilty of usury, which is defined as charging interest higher than the law permits. Such usurious agreements are illegal and void. In some states, usury laws do not apply to transactions between corporations. In many states, the usury statutes apply to retail installment credit sales and credit card transactions. Most states have varying usury rates, depending on the kind of loan.

49) Essay

Competition in public sales and in bidding for contracts is essential in our market-oriented economy because the competition of a free market encourages lower prices, improved products, and better service. Unless specifically permitted by law, agreements to suppress or eliminate competition are illegal and unenforceable. These kinds of agreements are said to be in restraint of trade. For example, a monopoly is illegal because it results in restraint of trade.

50) Essay

A private franchise is a special kind of business organization involving a contractual relationship between a franchisor (the parent firm) and a franchisee (the independent company). In a private franchise, the contractual relationship provides that the franchisor will supply certain services, such as management consulting, to the franchisee and will allow the franchisee to use the franchisor's name, join with others in national advertising, and secure other benefits. The private franchise is a form of business organization that is usually used in businesses such as fast-food chains, motels, automobile dealerships, and gasoline service stations.

51) Essay

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12

Chapter 13

Student name:__________ 1) The parol evidence rule states that any spoken or written words that are in conflict with what

the written contract states can be introduced as evidence in a court of law. ⊚ true ⊚ false

2) Oral evidence introduced after a contract is signed may never be legally accepted even if it

clarifies some point in a written agreement. ⊚ true ⊚ false

3) A guaranty, or promise, to pay the debts or settle the wrongdoings of another if they do not

make settlement personally is always enforceable even if it is not written. ⊚ true ⊚ false

4) The Statute of Frauds mandates that a contract that obviously cannot be completed within

one year may not be oral. ⊚ true ⊚ false

5) According to the Statute of Frauds, all contracts to sell real property, or any interest in it, may

be oral. ⊚ true ⊚ false

6) If there is full performance of an oral agreement to sell real property, the contract still needs

to be in writing to be enforceable according to the Statute of Frauds. ⊚ true ⊚ false

.

1

Chapter 13 7) Sales of personal property in the amount of $500 or more must be in writing. ⊚ true ⊚ false

8) To satisfy the Statute of Frauds, a written contract or agreement must contain a description of

the consideration promised. ⊚ true ⊚ false

9) _______ is a mandatory requirement to make a contract valid.

A) Litigation B) Competency of parties C) Parol evidence D) All of the options are correct.

10) _______ is one of the essential elements of a valid contract.

A) Litigation B) Parol evidence C) Profitability of transaction for both parties D) Legality of purpose

11) The element of proper form requires that certain contracts must be: A) witnessed by several witnesses.

B) in writing.

C) court ordered.

D) profitable to all parties.

12) _______ is one of the essential elements of a valid contract.

A) Litigation B) Parol evidence C) Mutual agreement D) Guaranty

.

2

Chapter 13 13) _______ refers to supplementary evidence or conditions, which may be written or oral, that a

party wants to add to a written contract.

A) “Guaranty” B) “Parol evidence” C) “Antenuptial evidence” D) “Prenuptial evidence”

14) Which of the following specifically states that the terms of a written contract may not be

changed by evidence of any prior agreement?

A) Statute of Frauds B) parol evidence rule C) 11th Amendment to the U.S. Constitution D) Uniform Commercial Code (UCC)

15) There are numerous exceptions to the parol evidence rule, with perhaps the most common

being when _______ evidence serves to clear up an _______ part of an agreement.

A) oral, ambiguous B) written, ambiguous C) oral, unambiguous D) written, implied

16) The rule that any spoken or written words in conflict with what the written contract states

cannot be introduced as evidence in a court of law is known as: A) the parol evidence rule.

B) the prenuptial evidence rule.

C) the Statute of Frauds.

D) the prenuptial rule.

17) The term parol means _______.

A) speech or words B) actions C) writings or memorandum D) thoughts

.

3

Chapter 13 18) All of the following are exceptions that apply to the parol evidence rule EXCEPT: A) contracts that contain obvious typographical errors.

B) contracts of adhesion.

C) subsequent oral modifications.

D) contracts that are partly written and partly oral.

19) The law requiring that certain contracts be in writing in order to be enforceable is called: A) the Antenuptial Statute.

B) the Prenuptial Agreement.

C) the Statute of Frauds.

D) the Statute of Finances.

20) The _______ derives from _______ law.

A) Statute of Frauds, English B) Statute of Frauds, Spanish C) Uniform Commercial Code, Spanish D) Uniform Commercial Code, French

21) All of the following are true of the Statute of Frauds EXCEPT: A) the name is taken from the English law of 1677.

B) the name is a derivative of a law called "An Act for Prevention of Frauds and

Perjuries."

C) it applies to executory and executed contracts.

D) it does not prohibit a person from legally entering into oral contracts.

22) The _______ only specifies that certain contracts must be in writing to be _______.

A) Statute of Frauds, enforceable B) Statute of Frauds, beneficial C) Uniform Commercial Code, enforceable D) Uniform Commercial Code, profitable

.

4

Chapter 13 23) That certain kinds of contracts should be in writing is a requirement under the: A) Statute on Discrimination.

B) Statute of Frauds.

C) Statutes on Employment.

D) Statute of Principles.

24) It is important to note that the Statute of Frauds does _______ a person from legally entering

into oral contracts for certain kinds of agreements.

A) prohibit B) not prohibit C) stop D) embargo

25) The Statute of Frauds applies only to _______ contracts—that is, contracts that have yet to be

performed.

A) guaranty B) executory C) antenuptial D) prenuptial

26) All of the following types of contracts must be in writing to be legally enforceable EXCEPT: A) agreements by an executory or administrator to pay the debts of a deceased person.

B) agreements that cannot be completed in less than one year.

C) agreements that can be completed in less than one year.

D) agreements to sell personal property for $500 or more.

27) Any agreements to sell an interest in real property must be: A) approved by a court-appointed judge.

B) an oral contract to be enforceable.

C) signed in the presence of an administrator.

D) in writing unless there has been partial performance.

.

5

Chapter 13 28) Under the Uniform Commercial Code, agreements for the sale of personal property must be

_______ if they are for at least _______.

A) in writing, $100 B) made orally, $500 C) in writing, $500 D) made orally, $1,000

29) According to the Statute of Frauds, if the life of the contract is _______ and there is a

possibility of it being completed _______, it need not be in writing.

A) indefinite, within two years B) definite, within two years C) definite, within one year D) indefinite, within one year

30) An executor is a person: A) who inherits property from a deceased person.

B) who has drafted the will of the deceased.

C) named in a will who serves as the personal representative of a deceased person.

D) who is named by a court to arbitrate matters of law.

31) According to the Statute of Frauds, to be enforceable, agreements that cannot be completed

in less than one year: A) must be oral if for an amount of more than $500.

B) can be oral.

C) can be oral only if witnessed.

D) must be in writing.

32) To be enforceable, agreements in contemplation of marriage: A) must be in writing and signed after the marriage.

B) must be oral and done in front of a court official after the marriage has occurred.

C) can be oral if the parties are both over the age of 21 years.

D) must be in writing and signed before the marriage.

.

6

Chapter 13 33) An exchange of promises made by persons planning to marry is known as a(n): A) arranged agreement.

B) self-arranged agreement.

C) mutual agreement.

D) prenuptial agreement.

34) _______ agreements often include a provision whereby they expire after a long period of

time.

A) B) C) D)

Guaranty Antenuptial Parol None of the options are correct.

35) The Statute of Frauds specifies _______ types of contracts that must be in writing to be

enforceable.

A) 2 B) 4 C) 6 D) 8

36) A personal representative named by the court to perform as the executor would in instances

in which the deceased person has not left a will is called the: A) administrator.

B) incorporator.

C) executor.

D) representative.

37) A(n) _______ has legal authority to arrange for the distribution of the assets of a _______

person.

A) B) C) D)

.

executor or administrator, deceased executor or administrator, living beneficiary, deceased beneficiary, living

7

Chapter 13 38) A(n) _______ to pay the debts or settle the wrongdoings of another if the person does not

make settlement personally is not enforceable unless it is _______.

A) guaranty, in oral format B) antenuptial agreement, approved by a non-interested third party C) guaranty, in written format D) antenuptial agreement, submitted to a court for review

39) In _______ sales, the sale is completed at the fall of the hammer.

A) prenuptial B) real property C) memorandum D) auction

40) A(n) _______ is generally regarded as satisfying the writing requirement for the Statute of

Frauds in the case of online sales.

A) oral acceptance B) webpage or an email C) telephonic confirmation D) None of the options are correct.

41) A contracting party intending to authenticate a written agreement may use any symbol as

their: A) B) C) D)

acceptance. seal. signature. revocation.

42) A _______ is a written contract or agreement that is required under the Statute of Frauds.

A) draft B) memorandum C) synopsis D) brief

.

8

Chapter 13 43) Most important contracts are printed and _______ by the parties to the agreement.

A) signed by hand B) accepted orally C) emailed D) None of the options are correct.

44) A memorandum must include all of the following to satisfy the Statute of Frauds, EXCEPT

the: A) B) C) D)

signatures of the parties. names of the parties. purpose of the agreement. family details of the parties.

45) Under the Statute of Frauds, if a memorandum is going to be handwritten, then it must be

_______.

A) written in Latin B) legible C) written in blue ink D) devoid of any numbers

46) Give an example of a contract under the Statute of Frauds that does not need to be in writing.

47) Are prenuptial agreements enforceable? Explain why or why not.

.

9

Chapter 13 48) In the case of an auction bid, how is a sale completed if it is made by telephone?

.

10

Chapter 13

Answer Key Test name: Chapter 13 1) FALSE 2) FALSE 3) FALSE 4) TRUE 5) FALSE 6) FALSE 7) TRUE 8) TRUE 9) B 10) D 11) B 12) C 13) B 14) D 15) A 16) A 17) A 18) B 19) C 20) A 21) C 22) A 23) B 24) B 25) B 26) C 27) D 28) C 29) D 30) C 31) D 32) D 33) D 34) B 35) C 36) A 37) A

.

11

Chapter 13 38) C 39) D 40) B 41) C 42) B 43) A 44) D 45) B 46) Essay 47) Essay 48) Essay

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12

Chapter 14

Student name:__________ 1) Under no circumstance can a third party have rights or obligations under a contract. ⊚ true ⊚ false

2) An incidental beneficiary has no legal rights to benefits resulting from a contract. ⊚ true ⊚ false

3) The person who transfers their rights is known as the assignee; the third party to whom the

rights are transferred is known as the assignor. ⊚ true ⊚ false

4) An assignment must always be in writing. ⊚ true ⊚ false

5) Members of the armed services are not permitted to assign their pay. ⊚ true ⊚ false

6) An example of a party to a personal-service contract is a musician. ⊚ true ⊚ false

7) Even employment contracts may never be assigned. ⊚ true ⊚ false

.

1

Chapter 14 8) The obligation to perform duties involving unique skills in personal-service contracts ends at

the time of death. ⊚ true ⊚ false

9) A third party will have _______ and duties under a contract if the purpose of the contract is

to benefit the third party.

A) rights B) commercial losses C) court costs D) fines

10) Normally, _______ to a contract have rights and duties under it.

A) third parties B) only the two parties C) none of the parties D) All of the options are correct.

11) One who may benefit as an indirect consequence of a contract is called a(n): A) consequential beneficiary.

B) contracting party.

C) incidental beneficiary.

D) guarantor.

12) A life insurance policy is an example of a(n): A) second-party contract.

B) third-party contract.

C) contract of adhesion.

D) implied contract.

.

2

Chapter 14 13) Third parties to a contract are affected by the contract if they: A) are witnesses to the contract.

B) are third-party beneficiaries or incidental beneficiaries.

C) are generally aware that a contract exists between the parties.

D) are notaries to the contract.

14) John contracted with an artist, Alice, to create a painting of his family’s farmhouse for

$1,000. The artist was informed that the painting was to be presented to John’s son as a birthday gift. Just before the painting was finished, John died. Alice learned that she could sell the painting through an art gallery for an amount in excess of $10,000. She offered to return to John’s son the portion of the fee that his father had already paid, but the son insisted that Alice fulfill the terms of the contract. The son, who is not one of the contracting parties, is a _______ and is entitled to _______.

A) third-party beneficiary, cash damages B) third-party beneficiary, receive the painting C) assignor, cash damages D) guarantor, renegotiations

15) An incidental beneficiary has _______ rights in the contract, regardless of the size of their

gain or benefit.

A) diminished B) no C) equal D) fewer

16) A third-party beneficiary to a contract has a legal right to the benefits resulting from the

contract if it is the intent of the _______ to benefit the third party.

A) judge B) contracting parties C) guarantor D) All of the options are correct.

.

3

Chapter 14 17) The beneficiary named in an insurance policy is legally a(n): A) substantial beneficiary.

B) material beneficiary.

C) incidental beneficiary.

D) third-party beneficiary.

18) Randy and Donald were property developers, and they decided to construct a condominium

in a certain neighborhood. Jim, who owned a chain of restaurants, heard of this agreement and opened a new restaurant in the same neighborhood even before the condominium construction began. However, the plan for the condominium was not approved by the state authorities, and the project was cancelled. Jim suffered losses as a result, but he had no rights in the contract because he was a(n): A) incidental beneficiary.

B) substantial beneficiary.

C) material beneficiary.

D) third-party beneficiary.

19) In general, a person who agrees in a contract to perform a particular task may: A) not delegate the task to someone else.

B) delegate the task to a specifically assigned lawyer.

C) delegate the task to someone else.

D) None of the options are correct.

20) A party to an existing contract may appoint a third person to perform contractual duties; this

appointment is known as: A) a delegation.

B) recovery.

C) an assignment.

D) a novation.

.

4

Chapter 14 21) A party to a contract will not be obligated by an assignment made by the other party without

their knowledge until: A) notified.

B) stamped.

C) agreed to.

D) rejected.

22) The party who guarantees the promises assigned is known as the: A) assignee.

B) guarantor.

C) beneficiary.

D) transferee.

23) “No delegation of performance relieves the party delegating of any duty to perform or any

liability for breach,” according to: A) the 2nd Amendment to the U.S. Constitution.

B) the Uniform Commercial Code (UCC).

C) the Personal-Service Contract Rule.

D) Article I of the U.S. Constitution.

24) Most rights are assignable, except in cases in which the obligations of the parties would be

significantly: A) altered.

B) recorded.

C) rejected.

D) shared.

25) In most states, the law permits parties to a contract to _______ their rights to another by

_______.

A) delegate, recovery B) delegate, proclamation C) transfer, proclamation D) transfer, assignment

.

5

Chapter 14 26) In a contract, the term “duties” means _______, but not _______.

A) B) C) D)

tasks and performances, responsibilities tasks, performances assignments, tasks responsibilities, tasks and performances

27) If the original contract is required to be _______ under the Statute of Frauds, the assignment

_______.

A) in writing, must also be in writing B) written, may be either written or oral C) written, is vacated D) oral, must also be oral

28) Which of the following contracts can be assigned?

A) When a party to a contract has died.

B) Assignments prohibited by law.

C) Contracts that include assignment restrictions.

D) Contracts that require personal service.

29) When parties to a contract include in the contract itself a specific provision _______

assignment, such a contract is called a contract with assignment restrictions.

A) forbidding B) allowing C) forcing D) None of the options are correct.

30) Musicians are hired because of their special personal skills; because of this, their services

under a contract: A) may be performed by a registered third party.

B) may be delegated.

C) may be sold to another party.

D) may not be delegated.

.

6

Chapter 14 31) When parties to a contract include in the contract itself a specific provision forbidding

assignment, both parties are: A) prevented from assigning their rights or delegating duties.

B) still permitted to assign their rights or delegate duties.

C) legally bound to open renegotiation.

D) None of the options are correct.

32) A contract may prohibit _______ from assigning their rights or delegating their duties.

A) one party or both parties B) only one party C) only both parties D) only third parties

33) In a _______, the party who hires the specific person to perform certain duties has a

substantial interest in having only the hired person perform.

A) prenuptial agreement B) personal-service contract C) delegation contract D) delegation of duties

34) The transfer of a party’s duties under a contract is called a(n) _______.

A) B) C) D)

assignment delegation incorporation reorganization

35) A party’s duties can be transferred to a third party only if the duties do not involve: A) B) C) D)

.

unique skills. a guarantee. common abilities. money.

7

Chapter 14 36) Rights or duties under a contract may be assigned by a court of law when a contracting party: A) earns profits.

B) incurs losses.

C) opens a new business.

D) dies or becomes bankrupt.

37) The laws dealing with bankruptcy provide that the _______ of a bankrupt person or business

be assigned to the trustee in bankruptcy.

A) assets and contracts B) unique skills C) debt D) All of the options are correct.

38) When a contracting party dies, contract rights are assigned to the: A) administrator or executor of the estate.

B) court.

C) Congress.

D) creditors of the deceased.

39) In a bankruptcy, the assets and contracts of a bankrupt person or business will be assigned to: A) the party to the contract.

B) the trustee.

C) the state.

D) the creditors.

40) When all parties to a contract agree to a significant change in the contract, the change is

called a(n): A) assignment.

B) delegation.

C) novation.

D) incorporation.

.

8

Chapter 14 41) If a third party enters a contract as the result of a _______, the party whose rights or duties

are assumed is completely relieved of any obligations.

A) bankruptcy B) personal-service contract C) delegation D) novation

42) A(n) _______ transfers all rights and obligations in a contract.

A) novation B) gift C) exemption D) execution

43) A novation requires: A) the consent of at least one party to the contract.

B) a personal-service contract.

C) mutual consent of all parties.

D) no consent.

44) A party to a contract who assigns their rights or delegates their duties to a third party is: A) allowed to hold the third party responsible for the contract execution.

B) held responsible only until the contract is assigned.

C) not responsible for the execution of the contract.

D) never free from the contract until it is completely executed.

45) What is the difference between a third-party beneficiary and an incidental beneficiary?

.

9

Chapter 14 46) Name the three kinds of contracts that cannot be assigned.

47) State the differences between a novation and an assignment.

.

10

Chapter 14

Answer Key Test name: Chapter 14 1) FALSE 2) TRUE 3) FALSE 4) FALSE 5) TRUE 6) TRUE 7) FALSE 8) TRUE 9) A 10) B 11) C 12) B 13) B 14) B 15) B 16) B 17) D 18) A 19) C 20) A 21) A 22) B 23) B 24) A 25) D 26) A 27) A 28) A 29) A 30) D 31) A 32) A 33) B 34) B 35) A 36) D 37) A

.

11

Chapter 14 38) A 39) B 40) C 41) D 42) A 43) C 44) D 45) Essay 46) Essay 47) Essay

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12

Chapter 15

Student name:__________ 1) A contract cannot provide for its termination after a certain period of time. ⊚ true ⊚ false

2) A tender of performance is a rejection of a contract offer and is considered evidence of intent

to not fulfill the terms of a contract. ⊚ true ⊚ false

3) In a case of impossibility of performance, the contract is considered void, and the parties are

discharged. ⊚ true ⊚ false

4) A deliberate change of an important element in a written contract that affects the obligations

of the parties is known as a material rejection. ⊚ true ⊚ false

5) A party who announces the intention to break a contract is said to have created an

anticipatory breach. ⊚ true ⊚ false

6) When a party breaches a contract, the injured party has no duty to mitigate the amount of

damages. ⊚ true ⊚ false

.

1

Chapter 15 7) A court order of specific performance prohibits a party from performing a certain act. ⊚ true ⊚ false

8) Contracts may be terminated by which of the following?

A) agreement B) performance C) breach D) All of the options are correct.

9) All of the following are acceptable methods of terminating a contract EXCEPT: A) laws and regulations protecting the consumer.

B) operation of law.

C) impossibility of performance.

D) ratification.

10) If the parties to a contract create a new contract, then the old contract is considered _______.

A) terminated B) amended C) improved D) incorporated

11) A contract may provide for its termination after __________ or __________.

A) 90 days, when the new fiscal year begins B) a certain period of time, upon the occurrence of a certain event C) a certain period of time, after one party loses profit D) a certain period of time, after one party opts out

12) A contract termination is not necessary if the contract is: A) negotiated.

B) fulfilled.

C) ratified.

D) tendered.

.

2

Chapter 15 13) If a tender of goods or the performance of an act is refused, the person making the offer: A) is subject to suit.

B) has committed a class B misdemeanor.

C) must repeat the offer before witnesses.

D) is relieved of the obligation to perform.

14) All of the following requirements must be met for a tender of money or performance to be

valid EXCEPT: A) payment must be made by check if money is mentioned in the contract.

B) the tender must be made as specified in the contract.

C) when tender of payment is made, it must be for the exact amount.

D) if the contract calls for the delivery of specific goods, only the tender of these particular goods will satisfy the contract.

15) Substantial performance occurs when a party to a contract executes all of the promised terms

and conditions of the contract with the exception of: A) minor details that nonetheless materially affect the intent of the agreement.

B) minor details that do not materially affect the intent of the agreement.

C) substantial details that materially affect the intent of the agreement.

D) mutually agreed upon omissions.

16) If a tender of payment is refused by the creditor, the debt is __________.

A) irrecoverable B) tendered C) cancelled D) not canceled

17) If a contract calls for the delivery of __________, the contract will be satisfied with the

tender of those particular goods.

A) substitute goods B) specific goods C) alternate goods D) equal goods

.

3

Chapter 15 18) “Substantial performance” requires that a party show __________ towards their obligations

under the contract.

A) frustration of purpose B) good faith C) malice D) intent

19) In the case of contracts that are impossible to perform, the contract is: A) referred to a court for the court to order performance.

B) valid and must be performed.

C) unenforceable but must be performed.

D) void and the parties are discharged.

20) Death or the disabling illness of a party to a contract terminates the obligation of the party to

perform if it can be shown that the contract: A) is for an amount greater than $500.

B) cannot be performed within the designated timeframe.

C) requires the special skills or talents of the contracted party.

D) None of the options are correct.

21) Under the Uniform Commercial Code, if the goods under contract are partially destroyed: A) the contract is automatically rescinded and the parties are restored to their status quo

ante without the possibility of seeking enforcement under the contract's original terms.

B) the contract is enforceable and may not be cancelled by either party.

C) the seller may demand the right to inspect the damaged goods in order to decide whether to deliver replacement conforming goods or alternatively require the buyer to accept them in their damaged state and provide allowance for the damages.

D) the buyer may demand the right to inspect the damaged goods in order to decide whether to reject them or to accept them in their damaged state and claim an allowance for the damages.

.

4

Chapter 15 22) A personal-service contract that does not call for a special skill or talent possessed by the

deceased or ill person: A) excuses performance.

B) does not excuse performance.

C) sometimes excuses performance.

D) None of the options are correct.

23) According to the doctrine of frustration of purpose: A) where both parties know the purpose of a contract and, through no fault of either

party, the reason for the contract no longer exists, the contract is terminated.

B) the promisor is estopped from denying the existence of a contract where the promisee has detrimentally relied on that promise.

C) complete performance is not achieved because of minor deviations from the agreedupon performance.

D) in a contract for the sale of goods, one or more terms may be missing but the court can find a contract, nonetheless, where the parties have intended to make a contract.

24) When unforeseen circumstances make it impossible to fulfill the terms of a contract, it is

known as: A) termination.

B) impossibility of performance.

C) impossibility of purpose.

D) frustration of purpose.

25) A deliberate alteration made to a written contract that affects the rights of the parties results

in: A) B) C) D)

.

termination. a modification. a novation. ratification.

5

Chapter 15 26) A material alteration in a contract is one that: A) is made deliberately.

B) affects the rights or obligations of the parties.

C) results in termination of the contract.

D) All of the options are correct.

27) Laws and regulations that increase the cost of performing a contract __________ the parties

from their contractual obligations.

A) absolve B) do not absolve C) void the contract and absolve D) None of the options are correct.

28) If a new law is passed requiring special packaging for imported plants, and this required

packaging increases the total cost of the plants, the seller is: A) relieved of their obligations.

B) not relieved of their obligations.

C) given an extension to fulfill their obligations.

D) None of the options are correct.

29) If a law or regulation makes the performance of a contract illegal, the contract is: A) void from the beginning.

B) terminated by alteration.

C) voidable.

D) enforceable.

30) A contract is enforceable even if: A) the contract calls for a special skill or talent possessed by a party to the contract that

dies before timely performance can be rendered.

B) laws and regulations enacted after the contract is entered into make performance illegal.

C) the contract is terminated by operation of law.

D) laws and regulations increase the cost of performance.

.

6

Chapter 15 31) __________ occurs when a party to a contract refuses to perform as required by the contract

or performs in an unsatisfactory manner.

A) Ratification of contract B) Tender of performance C) Breach of contract D) Tender of goods

32) A party who announces an intention to break a contract is said to create a(n): A) anticipatory breach.

B) promissory breach.

C) nominal breach.

D) expected breach.

33) A person who renounces an obligation to pay on a(n) __________ cannot be sued until after

the due date of the first payment on the note.

A) promissory note B) government bond C) equitable note D) escrow agreement

34) If a party has completely failed to perform contractual obligations within the time specified: A) the nonbreaching party is not required to pay under any circumstances.

B) the nonbreaching party may be required to pay for the work that has already been

completed.

C) the contract is terminated.

D) the contract may be terminated only under certain conditions.

35) Which act states that a borrower may cancel a contract for any type of personal loan within

three days of entering into the contract?

A) Fair Credit Reporting Act B) Truth in Lending Act C) Commission Trade Act D) Equal Credit Reporting Act

.

7

Chapter 15 36) The acronym "FTC" stands for __________.

A) Federal Trade Commission B) Federal Transit Congress C) Federal Trade Contractor D) Foreign Trade Corporation

37) A number of federal, state, and local laws and regulations allow consumers to terminate a

contract __________, in order to protect consumers from questionable sales techniques and other pitfalls.

A) unilaterally B) at any time C) under certain conditions D) with permission from a judge

38) The FTC’s “cooling off” rule requires that the salesperson explain the cancellation rights: A) B) C) D)

before the sale. at the time of the sale. after the sale. within 30 days of the sale.

39) A court ordered remedy that directs a party to perform as they agreed to do is called: A) specific performance.

B) punitive damages.

C) nominal damages.

D) an injunction.

40) At times, the parties to a contract include a statement right in their contract wherein damages

are explicitly set in the event one of the parties breaches the agreement. Such a statement is called a(n): A) liquidated damages clause.

B) exclusion clause.

C) specific performance clause.

D) loss payable clause.

.

8

Chapter 15 41) Courts will generally enforce liquidated damages clauses: A) provided the damages specified are closely related to the actual damages.

B) if it is vague and unrelated to the actual damages in the case.

C) if the damages specified amount to a forfeiture.

D) if it is 100x the value of actual damages at issue.

42) A court order prohibiting the performance of a certain act is termed a(n): A) injunction.

B) transaction.

C) punitive damages.

D) complaint.

43) An injunction is also called a(n): A) exaction.

B) complaint.

C) restraining order.

D) anticipatory breach.

44) In some states, __________ is temporary.

A) a material alteration B) an injunction C) a restraining order D) an anticipatory breach

45) Provide an example of a contract terminated by performance.

.

9

Chapter 15 46) What is contractual impossibility of performance? Provide an example of a contract that

would likely be deemed impossible to perform.

47) Explain a liquidated damages clause.

.

10

Chapter 15

Answer Key Test name: Chapter 15 1) FALSE 2) FALSE 3) TRUE 4) FALSE 5) TRUE 6) FALSE 7) FALSE 8) D 9) D 10) A 11) B 12) B 13) D 14) A 15) B 16) D 17) B 18) B 19) D 20) C 21) D 22) B 23) A 24) B 25) A 26) D 27) B 28) B 29) A 30) D 31) C 32) A 33) A 34) C 35) B 36) A 37) C

.

11

Chapter 15 38) B 39) A 40) A 41) A 42) A 43) C 44) C 45) Essay 46) Essay 47) Essay

.

12

Chapter 16

Student name:__________ 1) Title is intangible property. ⊚ true ⊚ false

2) A negotiable warehouse receipt, like the negotiable order bill of lading, requires that the

original copy be presented to the warehouser after the goods are surrendered to someone claiming them. ⊚ true ⊚ false

3) Title passes when the parties intend it to pass. ⊚ true ⊚ false

4) The two types of conditions found in contracts for conditional sales are conditions precedent

and conditions antecedent. ⊚ true ⊚ false

5) It is possible to have possession of goods without having title, just as it is possible to have

title without having possession. ⊚ true ⊚ false

6) If the owner of goods entrusts proof of ownership to someone in possession of the goods, the

goods can be recovered by the true owner from an innocent purchaser. ⊚ true ⊚ false

.

1

Chapter 16 7) A salesperson must have the express or implied permission of the titleholder of the

merchandise to sell it. ⊚ true ⊚ false

8) Situations of wrongful possession occur when property, such as stolen goods, is transferred

without the permission of the owner. ⊚ true ⊚ false

9) The concept of __________ was crucial in making determinations of the rights and

responsibilities of the parties to a contract, prior to the adoption of the Uniform Commercial Code.

A) fungible goods B) title C) personal property D) estoppel

10) The __________ right of ownership is called title.

A) tangible B) intangible C) fungible D) conditional

11) Legal disputes often involve the determination of who holds the title when a(n): A) government entity intervenes.

B) contract commences.

C) loss occurs.

D) illegal activity occurs.

.

2

Chapter 16 12) An automobile certificate of title is __________.

A) proof of a legal title B) a legal title C) a court document indicating challenge to a title D) a course that licenses title examiners

13) Real estate, also known as __________, is land and all articles permanently attached to it,

such as buildings and trees.

A) real property B) property in rem C) property in persona D) intellectual property

14) Only __________ property is affected by the law of sales and the __________.

A) intellectual, Uniform Commercial Code B) foreign, Uniform Commercial Code C) personal, Uniform Commercial Code D) business, Uniform Business Code

15) Personal property includes all property EXCEPT: A) cars.

B) clothing.

C) real estate.

D) copyrights.

16) An order bill of lading is: A) negotiable.

B) non-negotiable.

C) immediately void.

D) the same as a bill of sale.

.

3

Chapter 16 17) A handwritten bill of sale is: A) immediately void.

B) potentially voidable.

C) effective.

D) legally estopped.

18) A bill of sale is an example of how a title may be __________ from the owner to the buyer.

A) shared B) eliminated C) amended D) passed

19) How many different kinds of bills of lading exist?

A) Only one.

B) Two. C) Three.

D) Four.

20) Bills of lading are covered by: A) Article 6 of the UCC. B) Article 4 of the UCC. C) Article 7 of the UCC. D) None of the options are correct.

21) In the case of goods shipped by air, an __________ is prepared. One copy of the document is

signed by the __________.

A) airbill, common carrier B) air manifest, common carrier C) airbill, judge D) air manifest, judge

.

4

Chapter 16 22) A receipt for goods that are to be shipped is known as a: A) bill of lading.

B) warehouse receipt.

C) bill of sale.

D) bill of purchase.

23) A negotiable order bill of lading can be used to ensure that the carrier will not deliver the

goods until the receiver surrenders the original copy of the order bill of lading to the: A) importer.

B) retailer.

C) dealer.

D) carrier.

24) A warehouse receipt is used for goods that are being: A) imported.

B) impounded.

C) exported.

D) stored.

25) Rachel agrees to purchase a car for $18,000. Rachel and the seller agree that Rachel will

return the following day with a license plate to pick up the vehicle. In this case, the title passes: A) at the time of agreement.

B) after Rachel drives the vehicle.

C) at the time of purchase.

D) when Rachel returns with the license plate.

26) In the event that the intent of the parties with regard to the passage of title is unclear, title

passes at the moment when the parties: A) unconditionally agree to sell.

B) petition the court for approval of title passage.

C) rescind the contract.

D) conditionally agree to enter into a contract.

.

5

Chapter 16 27) Conditions in a sales contract that must be met after title has passed are known as: A) conditions precedent.

B) conditions subsequent.

C) simultaneous conditions.

D) conditions of no consequence.

28) A sale, in which contract provisions specify conditions that must be met by one of the parties,

is called a(n): A) altruistic sale.

B) substantial sale.

C) conditional sale.

D) premeditated sale.

29) A person who finds an article has good title against anyone EXCEPT: A) the county recorder.

B) a related party.

C) a remote party.

D) the true owner.

30) A thief can pass title to a stolen good to __________.

A) a bad faith purchaser B) the court C) a good faith purchaser D) no one

31) If the owner of goods entrusts proof of ownership to someone in possession of the goods, the

goods cannot be recovered by the true owner from a(n): A) innocent purchaser.

B) past purchaser.

C) seller.

D) middleman.

.

6

Chapter 16 32) For title to pass by estoppel, the purchaser must be able to prove that the purchase was: A) made in good faith.

B) made from one in rightful possession.

C) given value by the buyer.

D) All of the options are correct.

33) A legal bar to the use of contradictory words or acts in asserting a claim against another is

known as: A) estoppel.

B) condition.

C) redeeming power.

D) restraining order.

34) It is possible for title to goods to be passed by a(n) __________ who does not currently have

title to the goods.

A) owner B) non-owner C) remote party D) None of the options are correct.

35) When the owner of goods entrusts property to a person who sells the same type of goods and

that person sells the property to an innocent third party, the owner is __________ the goods from the third party.

A) allowed to recover B) required to recover C) estopped from recovering D) None of the options are correct.

.

7

Chapter 16 36) When the owner of cash or commercial paper, such as a check, makes it payable to bearer,

who then gives it to a third person, the original owner cannot demand the return of the money from a third party to whom it was given in exchange for something of value. This is an example of: A) estoppel.

B) consideration.

C) wrongful possession.

D) a warehouse receipt.

37) The titleholder of stolen goods __________ estopped.

A) is sometimes B) is never C) is always D) None of the options are correct.

38) A salesperson in a retail store or service station is known as a(n): A) incidental party.

B) corporate party.

C) remote party.

D) fungible party.

39) A salesperson of the titleholder of certain merchandise may sell the products of the

titleholder because the salesperson has__________ permission of the titleholder.

A) only the express B) neither express nor implied C) only the implied D) express or implied

40) As representatives of the owner of the goods, the individuals who have the right to make

legitimate sales are known as: A) remote parties.

B) third parties.

C) veteran parties.

D) amicus retailers.

.

8

Chapter 16 41) __________ goods are those that are generally sold __________.

A) Fungible, by title B) Fungible, by measure C) Estopped, in cash D) Remote, by measure

42) When stolen goods are transferred without the permission of the owner, it amounts to: A) rightful possession.

B) wrongful possession.

C) estopped possession.

D) repossession.

43) Wheat, sugar and flour are sold by weight and measure and are examples of: A) fungible goods.

B) moss goods.

C) sustainable goods.

D) transit goods.

44) For title to __________ goods to pass, it is important that the goods are __________.

A) nonperishable, not ascertained.

B) fungible, ascertained.

C) perishable, not ascertained.

D) None of the options are correct.

45) What are the differences between real and personal property?

.

9

Chapter 16 46) What are the various methods by which title passes?

47) Explain how in certain circumstances it is possible for title to goods to be passed to a third

party by a non-owner who does not have title.

.

10

Chapter 16

Answer Key Test name: Chapter 16 1) TRUE 2) FALSE 3) TRUE 4) FALSE 5) TRUE 6) FALSE 7) TRUE 8) TRUE 9) B 10) B 11) C 12) A 13) A 14) C 15) C 16) A 17) C 18) D 19) B 20) C 21) A 22) A 23) D 24) D 25) A 26) A 27) B 28) C 29) D 30) D 31) A 32) D 33) A 34) B 35) C 36) A 37) B

.

11

Chapter 16 38) C 39) D 40) A 41) B 42) B 43) A 44) B 45) Essay 46) Essay 47) Essay

.

12

Chapter 17

Student name:__________ 1) An agreement that has as a purpose the immediate transfer of title to personal property in

return for consideration is a contract for services. ⊚ true ⊚ false

2) In an entire sales contract, if all the components are interdependent and included in the same

order, payment for the contract is not required until the whole order is filled. ⊚ true ⊚ false

3) When a contract provides for the sale of goods subject to the buyer's approval, the transaction

is a sale on approval. ⊚ true ⊚ false

4) When a purchaser takes title to goods, but has the right to return them within a specified or

reasonable time, the purchaser does not assume all the obligations of ownership while the goods are in the purchaser’s possession. ⊚ true ⊚ false

5) A conditional sales contract is a way of selling merchandise with the condition that title will

remain with the buyer until the purchase price has been paid. ⊚ true ⊚ false

6) If a buyer refuses to accept delivery of goods, the seller can store the goods for the buyer but

cannot sue to recover the sales price. ⊚ true ⊚ false

.

1

Chapter 17 7) An unpaid seller has no right to stop goods in transit and order the carrier to hold them for

the seller. ⊚ true ⊚ false

8) In the event that the seller delivers goods that are not as specified in the contract, the buyer

may revoke the contract and return the goods that are substantially different from those that were ordered. ⊚ true ⊚ false

9) Article 2 of the Uniform Commercial Code (UCC) covers contracts for: A) real estate transfers.

B) services.

C) sales.

D) leases.

10) Contracts for services are considered _________ and are _________ by the UCC. A) ordinary contracts, covered B) material contracts, not covered C) ordinary contracts, not covered D) material contracts, covered

11) The term _________ as used in contracts for sale means ownership.

A) title B) debt C) beneficiary D) lease

.

2

Chapter 17 12) Goods that do not exist at the time of the sales transaction but are expected to come into the

possession of the seller are considered: A) future goods.

B) present goods.

C) upcoming goods.

D) prospective goods.

13) According to the UCC, a sale is: A) a payment for goods.

B) a negotiated transaction.

C) a void transaction.

D) the passing of title from the seller to the buyer for a price.

14) A legally enforceable agreement that has as its purpose the immediate transfer of title to

personal property in return for consideration is known as a: A) contract for sale.

B) contract for goods.

C) contract for materials.

D) contract to sell.

15) Goods that _________ and are owned by the seller at the time of sale are considered

_________ .

A) physically exist, existing goods B) physically exist, future goods C) physically exist, transferrable goods D) do not physically exist, existing goods

16) Future goods includes all of the following EXCEPT: A) growing crops and timber.

B) unborn livestock and pets.

C) vehicles.

D) goods not yet manufactured.

.

3

Chapter 17 17) The Uniform Commercial Code _________ indicates that title to goods is transferred by the

seller to the purchaser in a sale.

A) 2-105 B) 2-106 C) 2-303 D) 2-304

18) In sales contracts, the complete agreement need not be in writing, but there must be some

evidence of the: A) intention of the parties.

B) value of the item being sold.

C) fraud of the parties.

D) profitability of the agreement.

19) Sales contracts for _________ must be in writing and signed by the affected parties to be

enforceable.

A) $499 or less B) $300 or more C) $500 or more D) $1000 or more

20) According to _________, contracts for $500 or more must be _________ to be enforceable.

A) UCC 1-102, orally stated B) UCC 2-304, orally stated C) UCC 2-201, in writing D) UCC 4-402, in writing

21) In an entire sales contract, if all the components are _________ and included in _________,

payment for the contract is not required until the whole order is filled.

A) interdependent, the same order B) interdependent, any order C) dependent, the same order D) dependent, any order

.

4

Chapter 17 22) A sales contract for goods of special design, construction, or manufacture is a contract for: A) specialty goods.

B) fraud.

C) labor and materials.

D) manufacturing.

23) To be enforceable, a contract for labor and materials, even though it involves $500 or more,: A) must have two witnesses to the contract.

B) need not always be in writing.

C) should always be in writing.

D) must be certified by a notary.

24) A contract for labor and materials is a sales contract for which of the following?

A) Goods of special design B) Goods of special construction C) Goods of special manufacture D) All of the options are correct.

25) Section _________ of the Uniform Commercial Code (UCC) provides that if goods are

specially manufactured for the buyer and not suitable for sale to others, then no written agreement is required.

A) 1-103 B) 2-106 C) 2-304(2) D) 2-201(3)

26) A contract for sale with the right of return gives the buyer the opportunity to return them to

the seller _________ and gives the buyer _________.

A) within one week, temporary title B) within one month, temporary title C) at a later time, title D) at a previously agreed upon time, title

.

5

Chapter 17 27) Certain kinds of goods are frequently sold on a _________, also known as a _________.

A) quasi-contract, contract for sale with the right of return B) trial basis, contract for sale with the right of return C) trial basis, trial contract D) temporary contract, trial contract

28) A contract in which title and risk of loss remain with the seller and that provides for the sale

subject to the buyer's final decision is a(n): A) endorsement of contract.

B) quasi-contract.

C) sale on approval.

D) FOB contract.

29) A sale of goods can be made with the understanding that the purchaser takes title to the

goods but has the right to return them within: A) a reasonable time.

B) one month.

C) two months.

D) one year.

30) A reputable merchant will agree to a sale or return in order to maintain _________, rather

than because it is _________.

A) balance, legally required B) inventory, expected C) goodwill, legally required D) consignments, expected

31) At an auction sale, the seller is the owner of the goods, and the buyer is the party: A) conducting the transaction.

B) abstaining from negotiation.

C) giving the opinion.

D) making the offer.

.

6

Chapter 17 32) Before the hammer falls, a bidder may retract the bid: A) only if they cannot afford to pay.

B) within five seconds of the bid.

C) at any time.

D) The bidder may never retract the bid.

33) There is a possibility of expensive pieces of property being sold at auction for a pittance

simply because no one offered a higher bid. This possibility occurs only at an auction: A) with advertisements.

B) without reserve.

C) without advertisements.

D) with reserve.

34) A contract of selling merchandise with the condition that title will remain with the seller until

the purchase price has been paid is a: A) qualified sales contract.

B) provisional purchase.

C) restrictive purchase contract.

D) conditional sales contract.

35) Title to goods shipped FOB destination passes when the goods are _________ the buyer.

A) delivered to B) sold to C) paid for by D) None of the options are correct.

36) When goods are sold FOB shipping point, title to the goods passes from the seller to the

buyer when the carrier _________ the shipment.

A) receives B) destroys C) deports D) redacts

.

7

Chapter 17 37) “F.O.B” is the abbreviated form of: A) B) C) D)

freight on bus. found on board. freedom on board. free on board.

38) In the event of the loss of goods shipped FOB destination, the cost of transporting the goods

is paid to the _________ by the _________.

A) carrier, buyer B) seller, buyer C) carrier, seller D) seller, carrier

39) When goods are shipped FOB shipping point by common carrier, title passes from the seller

to the buyer when the goods: A) reach the carrier's warehouse.

B) are ordered by the buyer.

C) are sold by the buyer.

D) are delivered to the buyer.

40) If a seller fails to deliver goods as promised, the buyer can buy _________ to substitute for

those not delivered.

A) the same goods again B) similar goods C) goods of substantially lesser value D) goods of greater value

41) When the buyer refuses to accept delivery of the goods, the seller may: A) manhandle the buyer for rejection.

B) sue to recover the sales price.

C) destroy the goods and sue the buyer.

D) turn over the goods to the court and sue the buyer.

.

8

Chapter 17 42) Which section of the Uniform Commercial Code indicates that a seller can store goods

refused by a buyer if they are not easily resalable to another customer?

A) UCC 2-704 B) UCC 2-304 C) UCC 3-602 D) UCC 2-706

43) The Uniform Commercial Code provides that, in the absence of negligence or fraud, legal

action to remedy the breach of a sales contract must be started within how many years of the breach?

A) One year B) Two years C) Three years D) Four years

44) When the buyer refuses to pay the purchase price and the seller has possession of the goods,

the seller may _________ the goods and _________ the buyer.

A) resell, arrest B) resell, sue C) destroy, sue D) destroy, re-bill

45) When the buyer is _________, the UCC provides the seller with the right of _________.

A) insolvent, action in shipment B) insolvent, stoppage in transit C) solvent, walk out in transit D) solvent, strike out in transit

46) How does the transfer of title differ in a contract for sale and a contract to sell?

.

9

Chapter 17 47) Explain a contract of sale with the right of return.

48) Describe the purpose and terms of a conditional sales contract.

49) Explain sellers' remedies for breach of a sales contract. Provide an example.

50) Use an example to explain buyers' remedies for breach of a sales contract.

.

10

Chapter 17

Answer Key Test name: Chapter 17 1) FALSE 2) TRUE 3) TRUE 4) FALSE 5) FALSE 6) FALSE 7) FALSE 8) TRUE 9) C 10) C 11) A 12) A 13) D 14) A 15) A 16) C 17) B 18) A 19) C 20) C 21) A 22) C 23) B 24) D 25) D 26) C 27) B 28) C 29) A 30) C 31) D 32) C 33) B 34) D 35) A 36) A 37) D

.

11

Chapter 17 38) C 39) A 40) B 41) B 42) A 43) D 44) B 45) B 46) Essay 47) Essay 48) Essay 49) Essay 50) Essay

.

12

Chapter 18

Student name:__________ 1) Warranties are covered by the law of sales, contract law, and the Uniform Commercial Code,

while product liability claims are covered under tort law. ⊚ true ⊚ false

2) If a written warranty is vague and indefinite, the court will always invalidate the warranty. ⊚ true ⊚ false

3) A buyer may refuse delivery of goods if the goods are not the same as described by the seller

or do not conform to the sample or model used by the seller to effect the sale. ⊚ true ⊚ false

4) Sales talk, or puffing, does not have the effect of a warranty. ⊚ true ⊚ false

5) Implied warranties must relate to the title, not the quality of goods. ⊚ true ⊚ false

6) The implied warranty of fitness for a particular purpose is sometimes referred to as fitness of

merchantability. ⊚ true ⊚ false

7) An implied warranty of fitness does not exist if the buyer does not expressly inform the seller

of their intended use of the merchandise. ⊚ true ⊚ false

.

1

Chapter 18 8) The Magnuson-Moss Warranty Act applies only when written warranties are made

voluntarily on consumer products that cost more than $15. ⊚ true ⊚ false

9) A seller or manufacturer has significant _________ responsibility to buyers and users of

goods and services, as well as to third parties.

A) moral B) ethical C) social D) legal

10) The various provisions of the law of sales, contract law, the Uniform Commercial Code, and

tort law provide remedies to buyers and users of goods and services, and to third parties, who suffer _________ or _________.

A) emotional duress, loss of property B) physical injuries, financial losses C) physical injuries, property damage D) emotional duress, negligence

11) Product liability, covered by tort law, provides consumers and users with remedies when they

are injured or suffer property damage as a result of: A) defective services.

B) criminal acts.

C) defective goods.

D) excess tax imposition.

12) The law dealing with warranties is intended to protect: A) the general public.

B) merchants.

C) buyers.

D) interstate commerce.

.

2

Chapter 18 13) Warranties, covered by the law of sales, contract law, and the UCC, provide consumers with

_________ when goods that they purchase are not or do not perform _________.

A) remedies, as expected B) disclaimers, in a profitable manner C) remedies, in a way that brings joy to all parties D) disclaimers, efficiently

14) A kind of guarantee or promise made by a manufacturer or seller that the goods and services

offered are really what they are claimed to be, or that the goods or services are what a reasonable person has a right to expect, is known as a: A) patronage.

B) custom.

C) warranty.

D) guarantee.

15) The Uniform Commercial Code recognizes _________ promises as being express warranties.

A) explicit B) implied C) false D) suggested

16) A(n) _________ warranty is a guarantee suggested or inferred from known facts and

circumstances.

A) expressed B) false C) contingent D) implied

17) At times, a manufacturer or seller issues statements limiting a warranty to provide less

protection than the law requires. Such statements do not have the force of law, and the manufacturer or seller is still responsible for breach of: A) warranty.

B) contingency.

C) indemnity.

D) express contract.

.

3

Chapter 18 18) An express warranty that is made by the seller to the buyer and becomes part of the basis of

the agreement creates a(n) _________ that the goods will be _________.

A) implicit warranty, as promised B) explicit warranty, as promised C) contingent contract, delivered on time D) specialty contract, delivered

19) In an effort to reduce the uneasiness of buyers, sellers often send out mailings to assure

buyers that the buyers did indeed make a wise purchase, known as: A) express warranties.

B) implied warranties.

C) implied agreements.

D) disclaimers.

20) A definite promise by the seller that the goods will have certain characteristics is a(n): A) implied warranty.

B) surety bond.

C) limited warranty.

D) express warranty.

21) Express warranties can be made in many ways, including by: A) promise.

B) description.

C) sample.

D) All of the options are correct.

22) The Uniform Commercial Code states that the seller need not use formal words such as

"warrant" or "guarantee" in order to create: A) an implied warranty of merchantability.

B) an express warranty.

C) a limited warranty.

D) a disclaimer.

.

4

Chapter 18 23) The UCC requirement that the warranty be part of the basis of the agreement has been

interpreted to mean that the buyer must have: A) relied on the promise and did not dismiss it as puffing.

B) broken the promise.

C) made an implied warranty.

D) made a specific written statement.

24) The Uniform Commercial Code states that any sample or model that is made part of the basis

of the bargain creates an express warranty that the whole of the goods will conform to: A) the requisite United Nations (UN) standards.

B) similar goods available in the market.

C) expectations of a court.

D) the sample or model.

25) A rule that prevents a court from considering oral statements that are inconsistent with the

written document is known as the: A) rule of alibi.

B) rule of natural justice.

C) parol evidence rule.

D) generis rule.

26) In an effort to limit the effect of express warranties, some sellers put specific limitations in

the warranty called: A) disclaimers.

B) implied warranties.

C) lemon laws.

D) limits.

27) A disclaimer is a denial or repudiation in a(n) _________ that places specific limitations in

the warranty.

A) implied warranty B) merchant agreement C) express warranty D) None of the options are correct.

.

5

Chapter 18 28) Puffing is another name for: A) lying.

B) promising.

C) sales talk.

D) None of the options are correct.

29) The UCC provision of good title conveyance means the seller promises all of the following,

EXCEPT: A) the seller is the real owner of the goods offered for sale.

B) that the buyer can turn and resell the goods for profit.

C) there are no claims or liens of any kind against the goods that might later cause the seller to lose title to someone else who might claim ownership or interest.

D) the seller has the right to sell the goods.

30) The law’s assumption that goods sold by a merchant/seller are fit to be sold and are adequate

for the ordinary purposes for which such goods are sold is known as: A) an implied warranty.

B) an implied warranty of merchantability.

C) a limited warranty.

D) an implied warranty of fitness for a particular purpose.

31) The Uniform Commercial Code provides that when a merchant sells goods, the merchant

warrants that the goods will comply with the following requirements, EXCEPT: A) they will pass without objection in the trade under the contract description.

B) they are unfit for the ordinary purposes for which such goods are sold.

C) they conform with the promises or statements of fact made on the container or label.

D) they are adequately contained, packaged, and labeled as the agreement may require.

32) To recover for breach of the implied warranty of fitness of purpose, a buyer must prove all of

the following, EXCEPT: A) the seller profited from the transaction.

B) the seller knew or had reason to know that the buyer was relying on the seller's skill or judgment.

C) the seller knew or had reason to know the buyer's purpose.

D) the buyer relied on the seller's skill or judgment.

.

6

Chapter 18 33) Uniform Commercial Code (UCC) Section _________ describes the legal definition of a

merchant.

A) 2-313 B) 2-104(1) C) 2-312 D) 2-315(1)

34) Disclaimers of the warranty of fitness for a particular purpose must be: A) oral and not conspicuous.

B) in writing and must be conspicuous.

C) notarized and available electronically.

D) unstamped, however displayed.

35) Implied warranties can relate to either the _________ or the _________ of the goods.

A) size, weight B) title, quality C) services involved, quality D) title, weight

36) Uniform Commercial Code Section _________ states if a seller, at the time of making a

contract, knows or has reason to know any particular purpose for which the goods are required and that the buyer is relying on the seller’s skill or judgment in selecting or furnishing suitable goods, there is a(n) _________.

A) 2-315, implied warranty of merchantability B) 2-104, implied warranty of fitness for a particular purpose C) 2-315, implied warranty of fitness for a particular purpose D) 2-104, implied warranty of merchantability

37) A disclaimer of the warranty of merchantability must mention the word: A) covenant.

B) purpose.

C) merchantability.

D) warranty.

.

7

Chapter 18 38) Uniform Commercial Code Section _________ indicates that _________ is conveyed at the

end of each commercial sale.

A) 2-312, profit B) 2-312, title C) 2-104, title D) 2-312, loss

39) In addition to federal law, consumers are also protected by _________ enacted by various

countries.

A) warranties B) customs of the marketplace C) disclaimers D) lemon laws

40) Which act applies only when written warranties are made voluntarily on consumer products

that cost more than $15?

A) The Magnus Act B) The Disclaimer Protection Act C) The Warranty Rights Act D) The Magnuson-Moss Warranty Act

41) The Magnuson-Moss Warranty Act relating to warranties addresses many different kinds of

abuses to: A) consumers.

B) agents.

C) manufacturers.

D) sellers.

42) The statutes that provide remedies to consumers for products such as automobiles that

repeatedly fail to meet certain standards of quality and performance are known as: A) blue laws.

B) Friday laws.

C) lemon laws.

D) red laws.

.

8

Chapter 18 43) Which kind of warranty promises that a defective product will be repaired without charge

within a reasonable time after a complaint has been made?

A) A limited warranty B) A full warranty C) An implied warranty D) An implied warranty of merchantability

44) Lemon laws _________ from state to state.

A) are the same B) vary C) are identical D) are governed by the federal government with oversight

45) The trade between two or more states is called: A) global commerce.

B) intrastate commerce.

C) international commerce.

D) interstate commerce.

46) Differentiate between express and implied warranties.

47) What does an "implied warranty of fitness for a particular purpose" require?

.

9

Chapter 18 48) Distinguish between a full warranty and a limited warranty.

.

10

Chapter 18

Answer Key Test name: Chapter 18 1) TRUE 2) FALSE 3) TRUE 4) TRUE 5) FALSE 6) FALSE 7) FALSE 8) TRUE 9) D 10) B 11) C 12) A 13) A 14) C 15) A 16) D 17) A 18) B 19) A 20) D 21) D 22) B 23) A 24) D 25) C 26) A 27) C 28) C 29) B 30) B 31) B 32) A 33) B 34) B 35) B 36) B 37) C

.

11

Chapter 18 38) B 39) D 40) D 41) A 42) C 43) B 44) B 45) D 46) Essay 47) Essay 48) Essay

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12

Chapter 19

Student name:__________ 1) Anyone who is legally competent to act for themself may delegate that legal right to perform

to another. ⊚ true ⊚ false

2) An agency by ratification results when a principal approves an authorized act performed by

an agent. ⊚ true ⊚ false

3) An agency by operation of law is created when an interested party finds the need for an

agency to achieve a desired social policy. ⊚ true ⊚ false

4) A principal is not liable for the torts and crimes of the agent if they are committed at the

direction of the principal or while the agent is performing authorized duties during the ordinary course of the agency. ⊚ true ⊚ false

5) A principal can pay the agent the compensation they see is fair, not necessarily the amount

agreed to in the contract. ⊚ true ⊚ false

6) A principal is responsible to third parties for all agreements made by the agent on behalf of

the principal if the agent acted within the scope of their authority. ⊚ true ⊚ false

.

1

Chapter 19 7) When the agent informs the third party that the agent is acting on behalf of another and

makes the third party aware of the identity of the principal, the principal is known as a furtive principal. ⊚ true ⊚ false

8) The legal principles governing the relationship of principal and agent and of employer and

employee are very much the same. ⊚ true ⊚ false

9) It is often necessary or desirable for a person or firm to be represented by another in business

or personal dealings with third parties. This relationship is called a(n): A) principal-agency relationship.

B) incorporation-agency relationship.

C) title-agency relationship.

D) third party-agent relationship.

10) A person who represents another is known as a(n): A) principal.

B) seller.

C) agent.

D) contact.

11) A minor who has appointed an agent may avoid the contract of agency: A) in all U.S. states.

B) in some U.S. states.

C) in some local jurisdictions.

D) None of the options are correct.

.

2

Chapter 19 12) If minors are capable of properly carrying out the duties of an agency relationship,: A) then they are exempted from representing other persons as agents.

B) they may still not be eligible to enter into a contract with an agent.

C) they may still not be considered competent to represent other persons as agents.

D) then they may be considered competent to represent other persons as agents.

13) An agreement between a principal and an agent by which the agent is vested with authority to

represent the principal is known as a(n): A) contract of agency.

B) contract of adhesion.

C) agency contract.

D) general contract.

14) Depending on the nature of their relationship with their principals, agents are usually

classified as: A) a popular agent or a special agent.

B) a general agent or a special agent.

C) a common agent or an established agent.

D) a mainstream agent or an expert agent.

15) A _________ is a person authorized to assume complete charge of the principal's business

and is entrusted with general authority to act for the principal in all business–related matters.

A) general agent B) hired agent C) special agent D) super-agent

16) A special agent is a person who is delegated the authority to act only: A) in a particular kind of transaction.

B) under definite instructions.

C) with specific limits on the scope of their authority.

D) All of the options are correct.

.

3

Chapter 19 17) An agency by _________ is created when circumstances make such an agency _________.

A) necessity, profitable B) necessity, necessary C) requirement, necessary D) mandate, advantageous

18) Which legal term is used for a person who is appointed as an agent?

A) Apparent attorney B) Attorney at law C) Special attorney D) Attorney in fact

19) In an agency by ratification, a principal cannot accept the _________ of a transaction and

refuse to accept the _________.

A) benefits, obligations B) benefits, power C) power, liability D) benefits, representation

20) Power of attorney is the legal document formally creating: A) an implied contract.

B) a unilateral contract.

C) an agency.

D) a guaranty.

21) An agency by agreement appointing an agent for a two-year period must comply with the: A) Statute of Limitations.

B) Statute of Frauds.

C) Statute of Encumbrances.

D) Statute of Equitable Tolling.

.

4

Chapter 19 22) When does ratification of an agency occur?

A) After the fact B) Before the fact C) At the same time as the fact D) Agencies do not need to be ratified.

23) An agent may perform only those acts that have been authorized by the principal or: A) the spouse of the principal.

B) the court.

C) a beneficiary.

D) the Secretary of State.

24) The authority of an agent to perform the duties that are specifically stated in the contract of

agency is known as: A) express authority.

B) implied authority.

C) apparent authority.

D) gratuitous authority.

25) If an agent makes a fraudulent statement in a contract within the scope of their authority, then

the: A) B) C) D)

principal is responsible. agent may be responsible. principal is not responsible. contracting party's agent is responsible.

26) Express authority is the authority that has actually been given by the _________, either orally

or in writing.

A) principal B) lawyer C) agent D) attorney

.

5

Chapter 19 27) If an agent commits any torts or crimes acting within the scope of the agent's _________,

then both the principal and agent may be held liable.

A) mental capacity B) off duty time C) knowledge D) authority

28) Apparent authority is the authority that a third party may _________ an agent possesses,

despite the fact that the agent _________ such authority.

A) reasonably assume, does not actually possess B) reasonably assume, actually possesses C) not assume, does not actually possess D) not assume, actually possesses

29) The authority of an agent can be: A) express.

B) implied.

C) apparent.

D) All of the options are correct.

30) An agent is liable for losses to the principal resulting from the agent's: A) capital accumulation.

B) personal business.

C) profitability.

D) incompetence.

31) One who acts on behalf of a principal without being paid is called: A) a promisor.

B) a remainder agent.

C) a gratuitous agent.

D) None of the options are correct.

.

6

Chapter 19 32) An agent must _________ all the principal's reasonable and lawful orders and instructions

within the scope of the agency contract.

A) explain B) ratify C) authorize D) obey

33) An agent must keep accurate accounts of their transactions conducted as part of the: A) termination clause.

B) appointment letter.

C) agency agreement.

D) articles of incorporation.

34) If a person acts as an agent for more than one party with their knowledge, the agent is

entitled to receive compensation from: A) selected principals the agent contacted with.

B) all the principals the agent contracted with.

C) none of the principals the agent contracted with.

D) only the principals the agent contracted with during a certain period of time.

35) A principal must reimburse an agent for any loss or damage suffered by the agent in the

legitimate: A) ownership of property.

B) enforcement of rules.

C) performance of duties.

D) transfer of power.

36) If a third party knows of the agency and knows the identity of the principal, the agent cannot

be held personally liable as long as the agent acts within the scope of their _________ authority.

A) actual B) contracted C) principal D) ratified

.

7

Chapter 19 37) If the third party does not know the identity of the principal, the agent can be held personally

responsible to the: A) disclosed principal.

B) third party.

C) identified principal.

D) unidentified principal.

38) When the agent does not inform the third party that the agent is acting on behalf of another

person, the _________ is known as a(n) _________.

A) unidentified principal, foreign principal B) unidentified principal, undisclosed principal C) unauthorized principal, undisclosed principal D) unauthorized principal, foreign principal

39) A principal may not revoke an agency contract if the agent has an interest in the subject

matter of the agency in addition to the remuneration that they receive for services. Such a contract is called an irrevocable agency, which is also known as an: A) agency coupled with an interest.

B) agency by revocation.

C) agency by ratification.

D) apparent authority.

40) Agency is a type of contract and, like other contracts, may be terminated by: A) agreement.

B) performance.

C) operation of law.

D) All of the options are correct.

41) An agency contract is terminated by an act of the parties when the principal and the agent

have _________ termination.

A) reached a unilateral agreement on B) mutually agreed on C) voided D) continued

.

8

Chapter 19 42) If an agency exists “at will,” then the principal has the right to _________ the agency

agreement and _________ the agent for any reason.

A) revoke, arrest B) extend, arrest C) revoke, discharge D) None of the options are correct.

43) If an employee is required to perform duties for the employer that necessitate the exercise of

judgment and discretion and that result in the establishment of a contractual relationship between the employer and a third party, then the employee has the status of an agent even without a: A) joinder agreement.

B) deed of trust.

C) stock purchase agreement.

D) formal contract of agency.

44) An agency agreement brings about a relationship between a principal and a third party that

results in a contract, while an employee who is not also an agent has: A) similar powers.

B) no such rights or powers.

C) equal powers.

D) agency powers instilled at the time of an agreement.

45) The main difference between principal-agent and employer-employee relationships is an

employer's power to control the activities of a: A) non-employee agent.

B) non-agent employee.

C) principal.

D) third party.

.

9

Chapter 19 46) What is a contract of agency, and what is usually contained in a contract of agency

document?

47) When is an agency by operation of law created? Please give an example.

48) Describe the consequences of a failure on the part of the principal to give notice of the

termination of the agency to all third parties.

.

10

Chapter 19

Answer Key Test name: Chapter 19 1) TRUE 2) FALSE 3) FALSE 4) FALSE 5) FALSE 6) TRUE 7) FALSE 8) TRUE 9) A 10) C 11) B 12) D 13) A 14) B 15) A 16) D 17) B 18) D 19) A 20) C 21) B 22) A 23) B 24) A 25) A 26) A 27) D 28) A 29) D 30) D 31) C 32) D 33) C 34) B 35) C 36) A 37) B

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11

Chapter 19 38) B 39) A 40) D 41) B 42) C 43) D 44) B 45) B 46) Essay 47) Essay 48) Essay

.

12

Chapter 20

Student name:__________ 1) All businesses are generally structured as a corporation. ⊚ true ⊚ false

2) Dissolution of a partnership is governed by a partnership agreement (contract). ⊚ true ⊚ false

3) When a partner acts with either actual or apparent authority, all other partners are not liable

for that partner's acts. ⊚ true ⊚ false

4) A corporation drafts articles of incorporation that list the general powers of the company. ⊚ true ⊚ false

5) The major advantage of a corporation is the fact that the corporation is not required to pay

separate taxes for any year during which a profit is earned. ⊚ true ⊚ false

6) The duty of loyalty means that a director has a legal and ethical obligation to administer to

the affairs of the corporation with personal integrity, honesty, and candor. ⊚ true ⊚ false

7) The duty of care means that a director has no legal and ethical obligation to act diligently and

prudently in conducting the affairs of the corporation. ⊚ true ⊚ false

.

1

Chapter 20 8) Although limited liability companies provide all of the owners with limited liability, these

owners are not permitted to participate in the management of the business. ⊚ true ⊚ false

9) Many people in the United States have an entrepreneurial spirit that encourages them to

pursue the "American dream" of: A) owning and operating their own business.

B) having employment security.

C) having a leisurely life.

D) traveling throughout the world.

10) The sole proprietorship is an example of a business _________.

A) debt B) oral promise C) contract D) structure

11) There are several organizational forms available for a business structure, including: A) sole proprietorship.

B) partnership.

C) corporation.

D) All of the options are correct.

12) An advantage to a sole proprietorship is that the owner has _________ for the running of the

business.

A) limited authority B) some authority C) complete authority D) no authority

.

2

Chapter 20 13) The major disadvantage of a sole proprietorship is the fact that the owner of the

establishment has: A) limited liability.

B) unlimited liability.

C) no liability.

D) None of the options are correct.

14) The great majority of small businesses in the United States are organized as _________,

because they are very easy to form.

A) joint ventures B) sole proprietorships C) S corporations D) limited liability partnerships

15) All but one of the following organizational forms have limited liability. This exception is the: A) sole proprietorship.

B) corporation.

C) subchapter S corporation.

D) limited partnership.

16) A business owned and operated by one person is called a(n): A) limited liability company (LLC).

B) sole proprietorship.

C) quorum.

D) proxy corporation.

17) Generally, to form a _________, the entrepreneur merely must obtain a general business

license from their local municipality, allowing them to conduct business in the community.

A) sole proprietorship B) corporation C) quorum D) limited liability company

.

3

Chapter 20 18) When individuals become partners for only a short period of time, or for only a single

project, they are engaged in: A) commerce.

B) a joint venture.

C) limited liability.

D) duty of loyalty.

19) The time after dissolution of a partnership during which there is an orderly liquidation of the

partnership assets is known as a: A) winding-up period.

B) winding-down period.

C) cooling off period.

D) All of the options are correct.

20) In a partnership, each partner shares in the profits of the business as well as the _________ of

the business.

A) stock B) assets C) member units D) shareholder's equity

21) A business owned and operated by two or more persons is a: A) joint venture.

B) partnership.

C) quorum.

D) corporation.

22) A limited partner will be deemed by the courts to be a general partner if they: A) participate in the overall management of the business.

B) have no contact with the managers of the company.

C) have no involvement in the company besides receiving profit payments.

D) unintentionally violate the duty of care owed to the corporation.

.

4

Chapter 20 23) Dissolution of a partnership is governed by the partnership contract and usually occurs due to

any of the following EXCEPT: A) the death or disability of one of the partners.

B) the expulsion of one of the partners.

C) illegality of the partnership's business.

D) incorporation.

24) A(n) _________ of the partnership form of business is the fact that there may be times when

partners disagree on how the business should be run.

A) advantage B) convenience C) disadvantage D) virtue

25) The general set of laws which governs partnerships is called the: A) Uniform Commercial Code.

B) Uniform Partnership Act. C) Uniform Trust Act. D) Partnership Uniformity Act.

26) A business that is a separate legal entity is a(n): A) partnership.

B) sole proprietorship.

C) joint venture.

D) corporation.

27) Corporations are owned by _________ who purchase _________ in the corporation.

A) CEOs, interest B) shareholders, contracts C) shareholders, shares of stock D) CEOs, shares of stock

.

5

Chapter 20 28) The document that lists the general powers of a corporation is called the: A) articles of incorporation.

B) memorandum of association.

C) articles of entrepreneurship.

D) memorandum of hierarchy.

29) A corporation’s rules are usually spelled out in the company’s: A) B) C) D)

articles of incorporation. bylaws. proxy laws. statutory laws.

30) The law assigns responsibility for corporate obligations to shareholders: A) under most circumstances.

B) only under very unusual circumstances.

C) in all cases, regardless of the circumstances.

D) The law never assigns responsibility for corporate obligations to shareholders.

31) The major disadvantage of a corporation is the fact that the corporation is required to

_________ for any year during which a profit is earned.

A) terminate employees B) pay separate income taxes C) pay separate interest D) pay separate bonuses

32) The major advantage of a corporation is the fact of _________ to shareholders.

A) unlimited liability B) limited liability C) duty of care D) duty of loyalty

.

6

Chapter 20 33) The expense associated with forming and maintaining a company as a corporation serves as

a(n): A) B) C) D)

disadvantage. stepping-stone. accounting strategy. advantage.

34) A company must comply with _________, such as the restriction that there are a limited

number of shareholders, in order to qualify as a subchapter S corporation.

A) limited partnership rules B) tax regulations C) quorum rules D) fiduciary responsibility

35) Shareholders vote for _________ who are responsible for managing the overall strategy and

operations of the firm over the long term.

A) financiers B) coordinators C) directors D) administrators

36) In a corporation, directors and officers of the company in which they hold their positions

have a responsibility to the company, known as: A) dependability.

B) duty by proxy.

C) fiduciary responsibility.

D) shareholder responsibility.

37) A director has a legal and ethical obligation to act diligently and prudently in conducting the

affairs of the corporation. This is called the: A) duty of care.

B) psychological duty.

C) legal responsibility.

D) corporate pledge.

.

7

Chapter 20 38) The minimum number of shares necessary to be present at a meeting for a corporation in

order for action to be taken is known as a: A) proxy.

B) quorum.

C) vote threshold.

D) by-limit.

39) Which of the following organizational forms has in place a management team whose

members share in the overall control of the business?

A) Charitable organization B) Sole proprietorship C) Religious organization D) Limited liability company

40) A _________ provides all of the owners with limited liability.

A) licensing authority B) limited liability company C) proxy D) duty of care

41) The owners of a limited liability company frequently have difficulty in raising: A) losses.

B) profits.

C) insurance.

D) additional funds.

42) The limited liability company designation is recognized in _________ states.

A) 50 B) 41 C) 25 D) 2

.

8

Chapter 20 43) Organizational forms that are referred to as not-for-profits may include: A) limited liability corporations.

B) joint ventures.

C) charitable organizations.

D) industrial corporations.

44) Organizations that are referred to as not-for-profits may include: A) universities.

B) political parties.

C) labor unions.

D) All of the options are correct.

45) Many states have adopted laws that allow for profit corporations to elect to become: A) Benefit (or B) Corporations.

B) Social (or S) Corporations.

C) political entities.

D) joint ventures.

46) Identify two reasons why a partnership may be dissolved.

47) Discuss the disadvantages of using the corporate structure for a business.

.

9

Chapter 20 48) What is a limited liability company and what is a disadvantage of this business structure?

.

10

Chapter 20

Answer Key Test name: Chapter 20 1) FALSE 2) TRUE 3) FALSE 4) TRUE 5) FALSE 6) TRUE 7) FALSE 8) FALSE 9) A 10) D 11) D 12) C 13) B 14) B 15) A 16) B 17) A 18) B 19) A 20) B 21) B 22) A 23) D 24) C 25) B 26) D 27) C 28) A 29) B 30) B 31) B 32) B 33) A 34) B 35) C 36) C 37) A

.

11

Chapter 20 38) B 39) D 40) B 41) D 42) A 43) C 44) D 45) A 46) Essay 47) Essay

The major disadvantage of a corporation is the fact that the corporation is required to pay separate income taxes at a special corporate rate for any year during which a profit is earned. At the time profits are distributed to shareholders, these may be subject to an additional tax, depending on applicable tax regulations. Another major disadvantage of a corporation is the expense associated with forming and maintaining the company. Corporations are required to keep updated minutes of meetings, provide detailed financial statements to creditors and investors, and prepare complex tax returns and SEC filings.

48) Essay

.

12

Chapter 21

Student name:__________ 1) Insolvency never leads to default. ⊚ true ⊚ false

2) Bankruptcy filings may be made for the purpose of defrauding creditors. ⊚ true ⊚ false

3) Bankruptcy law is divided into chapters. ⊚ true ⊚ false

4) The most common type of bankruptcy filed by individuals and businesses is Chapter 11. ⊚ true ⊚ false

5) A secured debt is a loan for which a specific asset is used as collateral, or pledged. ⊚ true ⊚ false

6) Two types of actions by the debtor that are permitted under bankruptcy law are preferential

payments and fraudulent transfers. ⊚ true ⊚ false

7) An example of a debt that is discharged in bankruptcy is a student loan. ⊚ true ⊚ false

.

1

Chapter 21 8) The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 allows the

bankruptcy court to disallow a petition for a Chapter 7 bankruptcy if the individual filing for bankruptcy earns an income that is too high to meet the standards of the means test. ⊚ true ⊚ false

9) Under the provisions of Chapter 13 of the federal bankruptcy law, the debtor retains their

property but agrees to pay back all or a portion of their debts interest free over a period spanning from three to five years. ⊚ true ⊚ false

10) The purpose of Chapter 9 is to provide a farmer with a debt repayment plan rather than to

require the liquidation of municipal assets. ⊚ true ⊚ false

11) An individual or business that owes money is said to be: A) a creditor.

B) a debtor.

C) in bankruptcy.

D) a security interest.

12) A __________ is an individual or business to which money is owed.

A) creditor B) lender C) debtor D) All of the options are correct.

13) Insolvency occurs when: A) liabilities exceed assets.

B) assets equal liabilities.

C) assets exceed liabilities.

D) there are no liabilities.

.

2

Chapter 21 14) Bankruptcy is governed by __________ under __________ of the U.S. Constitution.

A) Congress, Article 1 B) Congress, Article 2 C) Congress, Article 7 D) state law, Article 1

15) A voluntary filing occurs when __________ file(s) a bankruptcy petition.

A) the debtor B) the bank C) a judge D) the police

16) An involuntary filing occurs when creditors: A) pressure the debtor to file.

B) force the debtor to file.

C) repossess the debtor’s collateral.

D) All of the options are correct.

17) The legal state that occurs when a debtor is insolvent, is in default, and is unable to fulfill

their obligations to pay back their creditors is known as: A) crediting.

B) liquidation.

C) bankruptcy.

D) None of the options are correct.

18) In 1978, Congress passed the Bankruptcy Code under: A) Title 10 of the U.S. Code.

B) Title 11 of the U.S. Code.

C) Title 15 of the U.S. Code.

D) Title 12 of the U.S. Code.

.

3

Chapter 21 19) Under a __________, the trustee collects the debtor's nonexempt property, sells it, and

dispenses the proceeds to the creditors.

A) discharged bankruptcy B) Chapter 7 bankruptcy C) Chapter 13 bankruptcy D) All of the options are correct.

20) Under Chapter 7 of the bankruptcy law, examples of exempt property under federal law

include all of the following EXCEPT: A) one motor vehicle.

B) vacation homes.

C) trade tools.

D) appliances.

21) A record of a person's bankruptcy may remain in their credit report for: A) up to 90 days.

B) up to seven years.

C) up to 10 years.

D) up to 20 years.

22) Examples of debts discharged under Chapter 7 bankruptcy include all of the following

EXCEPT: A) credit card bills.

B) medical bills.

C) student loans.

D) lawsuit judgments.

23) In general a debtor may not file for Chapter 7 bankruptcy if they have received a bankruptcy

discharge in the last: A) eight years.

B) six years.

C) five years.

D) three years.

.

4

Chapter 21 24) A contract that is entered into by the debtor that includes a preferential payment is: A) legal.

B) illegal.

C) frowned upon, but legal.

D) legal in some states.

25) Liquidation bankruptcy is another name for Chapter __________ bankruptcy.

A) 3 B) 5 C) 7 D) 13

26) Which act requires that a debtor who wishes to file under any chapter of the bankruptcy law

must, unless exempt, receive individual or group credit counseling from an approved, notfor-profit, individual or group budget or credit counseling agency by telephone or online?

A) The Bankruptcy Abuse Prevention and Consumer Protection Act B) The Chapter 17 Bankruptcy Act C) The Chapter 13 Bankruptcy Abuse Prevention Act D) None of the options are correct.

27) Counseling with a credit counseling agency must be performed by telephone or online within

__________ the bankruptcy filing.

A) 30 days after B) 90 days prior to C) 100 days after D) 180 days prior to

28) Bankruptcy law is divided into __________ , which is where they appear in the federal

bankruptcy law.

A) books B) sections C) chapters D) branches

.

5

Chapter 21 29) The Bankruptcy Abuse Prevention and Consumer Protection Act allows the bankruptcy court

to disallow a petition for a Chapter 7 bankruptcy if the individual filing for bankruptcy earns an income that is __________ to meet the standards of the means test.

A) too flexible B) too low C) too indefinite D) too high

30) The __________ uses a complex formula that measures an individual's income relative to the

median income of the people in the state where they reside.

A) insolvency test B) solvency test C) means test D) security interest test

31) In a __________ bankruptcy, the debtor proposes a reorganization plan in order to pay back

creditors over time.

A) Chapter 17 B) secured debt C) Chapter 11 D) All of the options are correct.

32) Because __________ debts are deemed to be sufficiently __________ , they are required to

be paid in full.

A) primary, important B) precedent, low-priority C) supporting, low-priority D) priority, important

33) __________ interests have priority over __________ interests.

A) Secured, unsecured B) Unsecured, secured C) Unperfected, perfected D) All of the options are correct.

.

6

Chapter 21 34) Under the provisions of __________ of the federal bankruptcy law, the debtor retains their

property but agrees to pay back all or a portion of their debts over a period spanning from __________ years.

A) Chapter 13, one to three B) Chapter 13, three to five C) Chapter 12, two to four D) Chapter 12, five to ten

35) Under Chapter 13, examples of priority debts include all of the following EXCEPT: A) certain tax obligations.

B) alimony and child support.

C) automobile loans.

D) wages owed to employees.

36) Chapter 13 bankruptcy involves a debtor retaining their property and paying back all or

portion of their debt: A) interest free.

B) at double interest.

C) on a graduating schedule.

D) at market value interest.

37) Chapter 13 bankruptcy is sometimes referred to as a __________ .

A) reorganization bankruptcy B) realignment bankruptcy C) recharging bankruptcy D) revision bankruptcy

38) Under Chapter 9 bankruptcy, a municipality is defined as all of the following types of entities

EXCEPT: A) a political subdivision.

B) a private agency.

C) an instrumentality of a state.

D) a public agency.

.

7

Chapter 21 39) Chapter 15 provides a framework for bankruptcy cases when __________ are involved.

A) municipalities B) foreign countries C) farmers and fishermen D) partnerships

40) Chapter 11 bankruptcy is mostly used by __________ .

A) corporations B) sole proprietorships C) individuals D) municipalities

41) The purpose of __________ bankruptcy is to promote __________ between U.S. courts and

foreign countries in bankruptcy cases.

A) Chapter 15, competition B) Chapter 15, cooperation C) Chapter 12, competition D) Chapter 12, litigation

42) A family farmer under a Chapter 12 bankruptcy can be all of the following EXCEPT a(n): A) individual.

B) corporation.

C) municipality.

D) partnership.

43) Chapter 12 bankruptcy was specifically created to adjust the debts of family farmers or

fishers who earn a(n) __________ income.

A) annual B) minimal C) bi-annual D) part-time

.

8

Chapter 21 44) Identify and define the two types of bankruptcy filings.

45) Define and give examples of secured debts.

46) Discuss the two types of actions that are prohibited under Chapter 7 of the bankruptcy law.

.

9

Chapter 21

Answer Key Test name: Chapter 21 1) FALSE 2) FALSE 3) TRUE 4) FALSE 5) TRUE 6) FALSE 7) FALSE 8) TRUE 9) TRUE 10) FALSE 11) B 12) A 13) A 14) A 15) A 16) A 17) C 18) B 19) B 20) B 21) C 22) C 23) A 24) B 25) C 26) A 27) D 28) C 29) D 30) C 31) C 32) D 33) A 34) B 35) C 36) A 37) A

.

10

Chapter 21 38) B 39) B 40) A 41) B 42) C 43) A 44) Essay 45) Essay 46) Essay

.

11

Chapter 22

Student name:__________ 1) The two basic types of business loans are promises to pay through notes and orders to pay

through checks and drafts. ⊚ true ⊚ false

2) Commercial paper must be handwritten. ⊚ true ⊚ false

3) An instrument payable in a foreign currency is non-negotiable. ⊚ true ⊚ false

4) When the amount of a check expressed in figures does not agree with the amount stated in

words, the amount expressed in words is considered the true one. ⊚ true ⊚ false

5) A certified check is an instrument where the bank has not promised to pay when it is

presented for payment, because the bank must receive funds from the drawer's institution before paying. ⊚ true ⊚ false

6) Most states have statutes making a person who issues a check drawn on a bank in which they

have no account guilty of the criminal offense of larceny. ⊚ true ⊚ false

.

1

Chapter 22 7) A person may postdate a check for self-protection when some act is to be completed by the

payee before the date of the check. ⊚ true ⊚ false

8) __________ is a term widely used in law to describe a number of legally binding and

commercially acceptable documents.

A) Commercial documentation B) Commercial paper C) Commercial instrument D) All of the options are correct.

9) An instrument with an unconditional written promise to pay, or pay to the order of another

party, a certain sum of money on demand or at a definite time is known as a: A) garnishee order.

B) stop-payment order.

C) negotiable instrument.

D) restraining order.

10) A __________ is a written note or letter in which one person promises to pay a certain

amount of money to another at a __________ time.

A) cashier's check, definite B) promissory note, definite C) certified check, indefinite D) demand draft, indefinite

11) Commercial paper differs from ordinary contracts because of the: A) inability to sue for breach of commercial paper.

B) ability to negotiate commercial paper.

C) validity of commercial paper.

D) presumption of consideration and assignability of commercial paper.

.

2

Chapter 22 12) The law presumes that commercial paper is always issued for __________ .

A) an amount of value B) no value C) negative value D) debt value

13) A __________ is a written order drawn on a bank by a depositor that requests the bank to pay

a __________ sum of money to the bearer of the instrument or to the order of a specified person.

A) price quotation, indefinite B) promissory note, indefinite C) check, definite D) loan, definite

14) An item of commercial paper containing the key words of negotiability, such as "pay to the

order of," or their equivalent, is a(n): A) price quotation.

B) order instrument.

C) grade instrument.

D) bill of lading.

15) The parties involved in a promissory note have particular names. The person who makes the

promise is called the: A) promisor.

B) payee.

C) maker.

D) promise-maker.

16) An unconditional written order to a person instructing the person to pay money to another,

third person is called a: A) check.

B) loan.

C) draft.

D) stock.

.

3

Chapter 22 17) Whoever is in possession of commercial paper is called the holder. The holder can be all of

the following, EXCEPT the: A) co-maker.

B) drawee.

C) drawer.

D) payee.

18) The person who draws or creates the check or draft is called the __________ . The person

who receives the money is called the __________ .

A) maker, payee B) drawer, payee C) promisor, holder D) payer, holder

19) There can be __________ holder(s) at a time.

A) only one B) two C) up to three D) three or more

20) The promise in a note, or the order in a check or draft, must be: A) conditional.

B) unconditional.

C) void.

D) estopped.

21) All of the following are essential to negotiable commercial paper EXCEPT the fact that it

must be: A) on forms provided by a bank.

B) payable to order, to bearer, or to cash.

C) in writing and signed by the maker or drawer.

D) payable on demand or at a definite time.

.

4

Chapter 22 22) To be negotiable under the Uniform Commercial Code (UCC), commercial paper must

conform to the requirements in UCC Section: A) 1-102.

B) 2-302(1).

C) 3-104(1).

D) 3-401.

23) An instrument should contain any of the following words of negotiability in order to make an

instrument negotiable EXCEPT the words: A) "payable to bearer."

B) "payable to the order of."

C) "payable to endorser."

D) "payable to cash."

24) The person who is expected to pay a draft or check must be named or otherwise indicated in

the instrument with reasonable certainty for the instrument to be considered: A) void.

B) unenforceable.

C) voidable.

D) negotiable.

25) Statements requiring that certain things be done or that specific events take place before

payment make the instrument a __________ rather than __________ .

A) contingent contract, a draft B) statutory contract, a draft C) specialty contract, commercial paper D) simple contract, commercial paper

26) Commercial paper may be __________ (dated previously) or __________ (dated ahead).

A) antedated, postdated B) antedated, mandated C) dictated, mandated D) postdated, antedated

.

5

Chapter 22 27) The failure to __________ commercial paper will __________ its negotiability.

A) organize, sometimes affect B) organize, affect C) number, strongly affect D) number, not affect

28) Any writing that includes the essential elements of negotiability is considered a valid check

when signed and delivered by the: A) drawer.

B) maker.

C) endorser.

D) payee.

29) A check presented __________ after its date is known as a stale check.

A) more than three months B) more than six months C) less than six months D) more than a year

30) Checks are always payable: A) on demand.

B) within 30 days.

C) within 90 days.

D) within one year.

31) A __________ provides a safe means of transferring money and serves as a receipt when

paid and canceled by the bank.

A) check B) non-negotiable note C) bond D) promissory note

.

6

Chapter 22 32) A __________ is a certified check issued in a denomination of __________ by certain banks,

travel agencies, and financial services companies.

A) promissory check, $20 or more B) traveler's check, $20 or more C) cashier's check, $50 or more D) explorer’s check, $50 or more

33) A __________ check is one that is dated __________ the date the check is written.

A) certified, after B) forged, later than C) postdated, later than D) postdated, before

34) If a drawer of a check has the bank certify it, they remain __________ for payment of the

check until the holder can reasonably present it for payment.

A) conditionally liable B) totally liable C) not liable D) speculatively liable

35) __________ is the act of fraudulently making or altering a note, check, draft, or some other

document, causing the financial loss of another.

A) Larceny B) Burglary C) Conversion D) Forgery

36) A cashier's check is drawn against the __________ funds.

A) bank’s B) payor’s C) teller’s D) None of the options are correct.

.

7

Chapter 22 37) Because it has the opportunity to inspect a check at the time of payment, the __________ is

liable if it pays a raised check, unless the drawer, through carelessness, wrote the check in such a way that it could easily be altered.

A) drawee B) maker C) payee D) bank

38) An instruction a depositor gives to their bank not to pay a particular check is known as a(n): A) endorsed order.

B) garnishee order.

C) stop-payment order.

D) temporary protective order.

39) Forged and raised checks are: A) legal.

B) illegal.

C) legal if signed by a judge.

D) sometimes legal.

40) Which act establishes the rights, responsibilities, and liabilities of consumers in dealings with

financial institutions?

A) None of the options are correct.

B) Electronic Funds Act of 1979 C) Electronic Funds Transfer Act of 1970 D) Electronic Funds Transfer Act of 1979

41) __________ refers to a variety of electronic applications for handling __________ .

A) Electronic funds transfer, money B) Electrical funds transfer, bonds C) Electrical funds transfer, instruments D) Electronic funds transfer, goods

.

8

Chapter 22 42) EFT systems offer a variety of convenient and useful applications, including: A) ATMs. B) point-of-sale systems.

C) direct deposit and withdrawal.

D) All of the options are correct.

43) The EFTA establishes the __________ of consumers in dealings with financial institutions.

A) rights B) responsibilities C) liabilities D) All of the options are correct.

44) A system which allows a consumer to transfer funds from a bank account to the merchant's

bank account to pay for merchandise purchased is known as a: A) point-of-sale system.

B) point-of-credit system.

C) pay-by-phone system.

D) buying facilitation system.

45) State the differences between commercial paper and an ordinary contract.

46) Describe a cashier's check, who can issue one, and to whom it can be made payable.

.

9

Chapter 22 47) Describe the rules and procedures for stopping payment on a check.

48) In recent years, a variety of applications have entered the market allowing users to digitally

transfer funds in a__________ network. Examples of these applications include Venmo, Google Pay, Apple Pay, and Zelle, among others.

A) peer-to-peer B) point-of-credit C) pay-by-phone D) buying facilitation

.

10

Chapter 22

Answer Key Test name: Chapter 22 1) FALSE 2) FALSE 3) FALSE 4) TRUE 5) FALSE 6) TRUE 7) TRUE 8) B 9) C 10) B 11) D 12) A 13) C 14) B 15) C 16) C 17) A 18) B 19) A 20) B 21) A 22) C 23) C 24) D 25) D 26) A 27) D 28) A 29) B 30) A 31) A 32) B 33) C 34) A 35) D 36) A 37) D

.

11

Chapter 22 38) C 39) B 40) D 41) A 42) D 43) D 44) A 45) Essay 46) Essay 47) Essay 48) A

.

12

Chapter 23

Student name:__________ 1) One of the characteristics of commercial paper is the difficulty with which it can be

transferred from one person to another. ⊚ true ⊚ false

2) It is not wise for a person concerned about a check being lost or stolen to use a blank

endorsement. ⊚ true ⊚ false

3) The use of a qualified endorsement does not affect the negotiability of an instrument. ⊚ true ⊚ false

4) An endorser of an instrument can be released from liability under certain circumstances. ⊚ true ⊚ false

5) If fraud was used to induce a person to sign a negotiable instrument, the injured person may

use this as a personal defense against any person other than the holder in due course. ⊚ true ⊚ false

6) There are no personal defenses for fraud related to the issuing of commercial paper. ⊚ true ⊚ false

7) The UCC allows for presentment of commercial paper to be made in person or by mail. ⊚ true ⊚ false

.

1

Chapter 23 8) Commercial paper can be presented for payment after business hours on the due date given

on the instrument. ⊚ true ⊚ false

9) The __________ of an instrument is the person who signs their name on it.

A) endorsee B) endorser C) endorsement D) signor

10) When the holder of commercial paper signs their name, with or without other words, on the

back of the instrument, this writing is referred to as a(n): A) acknowledgment.

B) incorporation.

C) receipt.

D) endorsement.

11) The __________ is the individual to whom an instrument is transferred.

A) endorsee B) endorser C) organizer D) incorporator

12) According to the Uniform Commercial Code (UCC), an instrument endorsed in blank is

payable to anyone who is in possession of it; it is called a: A) special endorsement.

B) blank instrument.

C) bearer instrument.

D) qualified instrument.

.

2

Chapter 23 13) When an endorsement is made on the instrument, it can be further negotiated only when it

has been endorsed by the specified person. Such an endorsement is a: A) special endorsement.

B) definite endorsement.

C) declarative endorsement.

D) corporate endorsement.

14) An endorsement in which the __________ specifies the person to whom the instrument is to

be paid is a __________ .

A) payee, blank endorsement B) payee, special endorsement C) payer, restrictive endorsement D) payee, qualified endorsement

15) A signature to which words have been added, __________ the further endorsement of the

instrument, is a __________ endorsement.

A) restricting, covenant B) allowing, restrictive C) restricting, restrictive D) allowing, detailed

16) The Uniform Commercial Code (UCC) specifically provides that the __________ of an

instrument may convert a blank endorsement into a full endorsement.

A) endorsee B) endorser C) holder D) signor

17) A qualified endorsement can be used together with a blank endorsement, or special

endorsement, by using phrases such as: A) "with recourse."

B) "without recourse."

C) "with special endorsement."

D) "with blank endorsement."

.

3

Chapter 23 18) A special endorsement is also known as a: A) liability endorsement.

B) full endorsement.

C) absolute endorsement.

D) partial endorsement.

19) An endorsement to which words have been added that limit the further endorsement of the

instrument, such as "for deposit only," is a: A) blank endorsement.

B) special endorsement.

C) restrictive endorsement.

D) qualified endorsement.

20) All of the following conditions release an endorser from liability EXCEPT: A) an invalid tender of payment by a prior party.

B) the release of a prior party's obligation or the release of the debtor.

C) the intentional cancellation of the endorser's signature by the holder.

D) any act that completes the negotiation of the instrument, such as payment.

21) The Uniform Commercial Code assumes there are __________ in every endorsement to

ensure the __________ of commercial paper.

A) warranties, negotiability B) disclaimers, profitability C) warranties, transparency D) disclaimers, clarity

22) The Uniform Commercial Code assumes that the endorser is the true owner of the paper. If

they found or stole the paper and transferred it to another by endorsement, the __________ is liable for any loss suffered by the __________ .

A) endorser, endorsee B) endorsee, endorser C) payee, payer D) None of the options are correct.

.

4

Chapter 23 23) A defense against payment of commercial paper that may be used against any party except a

holder in due course is known as a: A) rational defense.

B) personal defense.

C) real defense.

D) absolute defense.

24) UCC Section __________ ensures the negotiability of commercial paper by assuming certain

warranties in every endorsement.

A) 3-416 B) 3-417 C) 3-204 D) 3-402

25) The party who has taken commercial paper in good faith and for value, before maturity, and

without actual or constructive notice of any defects in the instrument is a(n): A) incorporator.

B) endorser of the instrument.

C) holder in due course.

D) drawer.

26) A “bona fide holder for value without notice” is another name for a(n): A) B) C) D)

holder in due course. endorsement. drawer in due course. bearer.

27) In order for a person to be a holder in due course of a negotiable instrument, the paper must

have been acquired for __________ consideration.

A) valuable B) mala fide C) premeditated D) contingent

.

5

Chapter 23 28) According to the UCC, if the __________ of overdue negotiable paper did not have notice or

knowledge that the commercial paper was overdue, they could be a holder in due course.

A) seller B) acceptor C) buyer D) proprietor

29) The term "bona fide" is a Latin term for __________ .

A) in good faith B) in consideration of C) in bad faith D) with evil intent

30) If a completed negotiable instrument comes into the possession of an immediate party (the

payee indicated on the instrument) before the maker or drawer has delivered it, then the: A) drawer only can collect on the instrument.

B) payee can collect on the instrument.

C) payer only can collect on the instrument.

D) payee cannot collect on the instrument.

31) A defense against payment of commercial paper that claims the instrument was void from the

beginning is known as: A) a real defense.

B) an actual defense.

C) a voided defense.

D) an instrumental defense.

32) All of the following are personal defenses against payment of commercial paper, EXCEPT: A) lack of consideration.

B) fraud, duress, and undue influence.

C) material alteration.

D) nondelivery of an executed instrument.

.

6

Chapter 23 33) Fraud in executing an instrument is a __________ defense, but fraud related to the

circumstances surrounding the issuing of a paper and not to the paper itself is a __________ defense.

A) special, real B) personal, real C) personal, special D) real, personal

34) In a __________ , the maker of a note or the drawer of a check or draft may deduct from the

amount demanded by an immediate party any amounts owed to them by the payee.

A) declarative claim B) commercial claim C) counterclaim D) special claim

35) When commercial paper on which the signature of the maker or drawer has been

__________ , the person liable is the endorser.

A) signed B) endorsed C) forged D) None of the options are correct.

36) Which Section of the UCC provides that, unless a person who takes an instrument has the

rights of a holder in due course, their claim for payment is subject to “all defenses of a party which would be available in an action on a simple contract”?

A) UCC 3-204 B) UCC 3-402 C) UCC 3-305 D) UCC 3-306

.

7

Chapter 23 37) An absolute defense is also known as a __________ defense.

A) complete B) real C) limited D) partial

38) Any change made to an instrument that affects the rights of the parties is called a

__________ .

A) declarative alteration B) material alteration C) respective alteration D) special alteration

39) Fraud in executing an instrument is a real, or absolute, defense, but fraud related to the

circumstances surrounding the issuing of a paper and not to the paper itself is a A) counterclaim.

B) setoff.

C) personal defense.

D) restrictive covenant.

40) An incompetent person who makes, signs, and delivers a negotiable instrument __________

held liable for its payment.

A) can be B) cannot be C) may be D) None of the options are correct.

41) Often, state statutes expressly declare that commercial paper given for gambling transactions

or at usurious rates of interest are: A) legal.

B) valid.

C) void.

D) voidable.

.

8

Chapter 23 42) Which Section of the UCC states that no distinction is made between lack of delivery of a

completed and an incomplete instrument?

A) UCC 3-204 B) UCC 3-402 C) UCC 3-306 D) UCC 3-307

43) A demand instrument, such as a note or check, must be presented for payment: A) within the date mentioned in the instrument.

B) within a reasonable time after the date of issue.

C) at any time after the instrument is issued.

D) immediately after the date of issue.

44) Any drawer or endorser to whom notice of dishonored commercial paper is not given is

relieved from liability, according to UCC Section: A) 3-305.

B) 3-306.

C) 3-503.

D) 3-504.

45) The holder of __________ commercial paper must give notice immediately to the drawer and

all endorsers in order to hold them liable on the instrument.

A) sullied B) dishonored C) discredited D) degraded

46) Briefly explain personal defenses against payment of commercial paper and list at least four

defenses.

.

9

Chapter 23 47) Describe the effect when the signature of the maker or drawer of commercial paper has been

forged.

48) When is commercial paper deemed dishonored?

.

10

Chapter 23

Answer Key Test name: Chapter 23 1) FALSE 2) TRUE 3) TRUE 4) TRUE 5) TRUE 6) FALSE 7) TRUE 8) FALSE 9) B 10) D 11) A 12) C 13) A 14) B 15) C 16) C 17) B 18) B 19) C 20) A 21) A 22) A 23) B 24) B 25) C 26) A 27) A 28) C 29) A 30) D 31) A 32) C 33) D 34) C 35) C 36) D 37) B

.

11

Chapter 23 38) B 39) C 40) B 41) C 42) C 43) B 44) C 45) B 46) Essay

Personal defenses against payment of commercial paper can be used against anyone except a holder in due course. Personal defenses include lack of consideration; fraud, duress, and undue influence; breach of warranty; nondelivery of a completed instrument; nondelivery of an incomplete instrument; payment before maturity; and counterclaim.

47) Essay 48) Essay

A negotiable instrument is considered dishonored if it is not accepted when presented, if it is not paid when present for payment at maturity, or if presentment is excused or waived and the instrument is past due and unpaid. The holder of dishonored commercial paper must give notice of the dishonor immediately to the drawer and to all endorsers in order to hold them liable on the instrument. Any drawer or endorser to whom such notice is not given is relieved from liability.

.

12

Chapter 24

Student name:__________ 1) Personal property, such as trees or shrubbery purchased at a nursery, never become real

property even after they are planted. ⊚ true ⊚ false

2) A person who finds property has a legal responsibility to make an effort to return the

property to its rightful owner. ⊚ true ⊚ false

3) In an area that is not open to the public, the owner of the property is presumed to possess

both the place itself and whatever it contains ⊚ true ⊚ false

4) In states that have enacted community property statutes, property acquired by either spouse

during a marriage does not belong to both parties. ⊚ true ⊚ false

5) Rights to land include the airspace above the land to an indefinite height, subject to the rights

of aircraft in flight that do not pose a hazard to persons or property on the land. ⊚ true ⊚ false

6) The right to extract minerals, such as oil or coal, from land is known as riparian rights. ⊚ true ⊚ false

.

1

Chapter 24 7) In the context of a life estate, if real property is transferred from A to B for B's lifetime, and B

dies, the property is then returned to A, if A is still alive, or to A's heirs. ⊚ true ⊚ false

8) For title to pass through adverse possession it needs to be proved that there was actual and

exclusive continuous possession or use of the property. ⊚ true ⊚ false

9) All of the following are considered tangible goods EXCEPT: A) automobiles.

B) furniture.

C) copyrights.

D) pets.

10) Rights to drill for oil on someone's land and copyrights of creative works are: A) special possessions.

B) tangible possessions.

C) inalienable possessions.

D) intangible possessions.

11) A patent is an example of __________ personal property.

A) real B) tangible C) intangible D) A patent is not legally considered property.

12) A car is an example of __________ personal property.

A) real B) tangible C) intangible D) A car is not legally considered property.

.

2

Chapter 24 13) Legally, property other than land is considered: A) personal property.

B) corporate property.

C) static property.

D) transient property.

14) __________ comprises land and everything attached to the land.

A) Real property B) Personal property C) Public property D) Transient property

15) Personal property, such as trees or shrubbery, becomes __________ when __________.

A) real property, planted B) intangible property, planted C) real property, bought D) tangible property, sold

16) Under common law, ownership of real property extended from the __________ to the highest

point __________.

A) center of the earth, on the land B) center of the earth, in the sky C) ground, in the sky D) ground, on the land

17) Under common law, a person with ownership of a piece of property also owned the

__________.

A) rights and profits to public transport B) rights to all public parks near the owned property C) property adjacent to the owned property D) minerals below the property

.

3

Chapter 24 18) The finder of lost property has __________ rights superior to everyone except the true

owner.

A) B) C) D)

exclusive ownership limited infinite

19) According to the courts, an object has been "mislaid" when it was __________ left in a

certain place and then forgotten by the owner.

A) intentionally B) unintentionally C) accidentally D) casually

20) A person who finds property has a legal responsibility to make __________ efforts to return

the property to its rightful owner.

A) reasonable B) unreasonable C) expensive D) herculean

21) The voluntary transfer of property by one person to another without consideration or

payment of any kind is a: A) gift.

B) nullity.

C) statutory transfer.

D) bilateral contract.

22) An object that has not been intentionally left in the custody of someone else and then

forgotten is considered __________, rather than __________.

A) lost, found B) lost, mislaid C) mislaid, lost D) mislaid, forgotten

.

4

Chapter 24 23) The saying “Finders keepers, losers weepers”: A) B) C) D)

is a legal term indicating transfer of ownership when something is lost. has some basis in the law. has no basis in the law.

None of the options are correct.

24) The right of an owner of property to any increase in the property is known as: A) secession.

B) accession.

C) property inter vivos.

D) succession.

25) In the context of ownership held in severalty, the word “several” means “__________.”

A) B) C) D)

many multiple separate None of the options are correct.

26) An individual who is giving a gift is known as a(n): A) incorporator.

B) beneficiary.

C) donor.

D) donee.

27) Ownership is held in __________ when all the rights of ownership in a particular piece of

property are held by one person.

A) tenancy B) severalty C) defiance D) accession

.

5

Chapter 24 28) A __________ exists when two or more persons own equal shares of property.

A) tenancy by the entirety B) community property C) tenancy in common D) joint tenancy

29) A form of joint ownership of property by spouses in which both have the right to the entire

property is a(n): A) life estate.

B) ownership by severalty.

C) co-ownership.

D) tenancy by the entirety.

30) In a tenancy in common, joint ownership __________ in equal interests.

A) must be B) cannot be C) does not have to be D) None of the options are correct.

31) __________ is a form of joint ownership of property by two or more persons in which the

ownership interest of any one of the owners can be sold, transferred or inherited.

A) Absolute tenancy B) Tenancy in common C) Tenancy by the entirety D) Community property

32) In cases of joint tenancy, the owners are said to have a(n) __________ interest.

A) total B) undivided C) complete D) partial

.

6

Chapter 24 33) A __________ has as a feature of its ownership type that the survivor(s) will inherit all the

ownership rights upon the death of the deceased co-owner.

A) life estate B) joint tenancy C) corporate tenancy D) tenancy in common

34) When items of personal property are added to land or to buildings in such a way that they

become a part of these, they are known as: A) units.

B) fixtures.

C) installations.

D) appliances.

35) A right or interest in land granted to a party to make beneficial use of the land owned by

another is a(n): A) accession.

B) precession.

C) easement.

D) subterranean right.

36) A __________ is a right to enter another person's land and remove some product of the land

or its natural resources.

A) profit B) riparian C) stock D) tenant

37) Rights to land include the airspace above the land __________, subject to the rights of

aircraft in flight that do not pose a hazard to persons or property on the land.

A) up to 300 feet B) up to 500 feet C) up to 1000 feet D) to an indefinite height

.

7

Chapter 24 38) The right to extract minerals __________ without altering the ownership of the land itself.

A) can be sold B) cannot be sold C) should not be sold D) None of the options are correct.

39) The owner of a freehold estate who holds the estate absolutely is said to hold it in: A) accession.

B) fee simple.

C) life estate.

D) easement.

40) A person who holds a freehold estate (ownership interest) only for their lifetime is said to

hold a(n) __________ in the property.

A) leasehold interest B) life estate C) fee simple D) indispensable interest

41) An estate in which a person owns the land for life or forever is known as a(n): A) freehold estate.

B) leasehold estate.

C) complete estate.

D) absolute estate.

42) What provides the holder with certain rights during the period covered by a lease?

A) Leasehold estate B) Accession estate C) Conversion estate D) Administrator's estate

.

8

Chapter 24 43) The transfer of real property is, in many ways, __________ the transfer of personal property.

A) less complex than B) more complex than C) equally as complex as D) None of the options are correct.

44) In a __________, the seller limits their warranty to those title problems that occurred during

the time the seller owned the property.

A) corporate deed B) special warranty deed C) quitclaim deed D) general warranty deed

45) Title to land can be acquired as a result of a person's use of land over a period of time

through __________.

A) a warranty deed B) a leasehold interest C) adhesion D) adverse possession

46) Briefly discuss the differences between "tenancy by the entirety" and "tenancy in common."

47) Briefly discuss the differences between a quitclaim deed and a warranty deed.

.

9

Chapter 24 48) Briefly describe how title to land can be transferred by adverse possession.

.

10

Chapter 24

Answer Key Test name: Chapter 24 1) FALSE 2) TRUE 3) TRUE 4) FALSE 5) TRUE 6) FALSE 7) TRUE 8) TRUE 9) C 10) D 11) C 12) B 13) A 14) A 15) A 16) B 17) D 18) B 19) A 20) A 21) A 22) B 23) C 24) B 25) C 26) C 27) B 28) D 29) D 30) C 31) B 32) B 33) B 34) B 35) C 36) A 37) D

.

11

Chapter 24 38) A 39) B 40) B 41) A 42) A 43) B 44) B 45) D 46) Essay

A tenancy by the entirety is a form of joint ownership of property by husband and wife in which both have the right to the entire property, and, upon the death of one, the other has title (the right of survivorship). A tenancy in common is a form of joint ownership of property by two or more persons. The ownership interest of any one of the owners can be sold, transferred, or inherited. In this type of joint ownership, the owners may own different, unequal interests, such as two-thirds and one-third.

47) Essay 48) Essay

.

12

Chapter 25

Student name:__________ 1) Taking clothes to a dry cleaner does not transfer possession or ownership of the clothes. ⊚ true ⊚ false

2) Actual ownership of goods is not necessary to create a bailment. ⊚ true ⊚ false

3) In a bailment for the sole benefit of a bailee, only the bailee gets the benefit. ⊚ true ⊚ false

4) A warehouser is responsible for goods left in storage. ⊚ true ⊚ false

5) A bailment is not created when a parking lot attendant takes control of a vehicle to park it. ⊚ true ⊚ false

6) A bailee's lien is a claim against the property of another as security for a debt. ⊚ true ⊚ false

7) In a common carrier bailment, the consignor, or shipper, turns over goods to a common

carrier and a mutual-benefit bailment is created that is terminated only when the common carrier delivers the goods to the government. ⊚ true ⊚ false

.

1

Chapter 25 8) A carrier never has a right to hold a shipment until payment is made. ⊚ true ⊚ false

9) A bailment is a special kind of contract that is widely used in: A) personal affairs only.

B) business and personal affairs.

C) business affairs only.

D) None of the options are correct.

10) A bailment is a special kind of __________.

A) warrant B) incorporation C) contract D) gift

11) In a bailment, taking clothes to a dry cleaner would transfer __________, but not

__________, of the clothes.

A) possession, ownership B) title, possession C) ownership, title D) ownership, possession

12) A __________ in which an owner of tangible personal property transfers the property to

another party while still retaining ownership of such property is known as a __________.

A) pledge, bailment B) transaction, pledge C) transaction, bailment D) transaction, lease

.

2

Chapter 25 13) In a bailment, the person who retains ownership and transfers possession is the __________,

and the person who receives the goods is the __________.

A) warehouser, bailee B) bailee, bailor C) bailor, bailee D) consignor, consignee

14) In general, all of the following are requirements for a bailment, EXCEPT that the: A) bailor must be in possession of goods.

B) bailee must intend to possess goods.

C) bailee must return identical goods.

D) actual ownership of goods is necessary.

15) A bailment allows an owner of personal property to transfer possession of it to another

individual for which of the following purposes?

A) Rental B) Transportation C) Storage D) All of the options are correct.

16) A motorist leaves an automobile at a service station for an oil change. This is an example of a

bailment for: A) rental.

B) security.

C) repair.

D) sale.

17) If a business hires a truck line or rail or air carrier to ship goods, this is an example of a

bailment for: A) sale.

B) rental.

C) storage.

D) transportation.

.

3

Chapter 25 18) To create a bailment, the bailee must __________ to __________.

A) intend, possess goods B) not intend, possess goods C) have ownership, possess goods D) desire, have ownership

19) If no time period is specified, then a bailment will end when the bailment __________ is

__________.

A) purpose, stated in the contract B) purpose, satisfied C) time period, determined by a court D) purpose, at least 90 days old

20) Anyone in possession of goods can create the bailment relationship and become a bailor,

including: A) a borrower.

B) a finder.

C) a thief.

D) All of the options are correct.

21) A bailor is a person who __________ and transfers possession of goods as part of a bailment.

A) retains ownership B) does not retain ownership C) transfers ownership D) None of the options are correct.

22) In general in a bailment, the bailee must return: A) goods of identical value.

B) similar goods.

C) the identical goods.

D) Any of these answers are correct.

.

4

Chapter 25 23) The law concerning bailments provides for certain rights and duties of both bailor and bailee,

depending on the: A) kind of bailment.

B) nature of the business.

C) amount of the transaction.

D) financial positions of the parties.

24) A bailment for the sole benefit of a bailee usually results in a: A) gifting transaction.

B) spring transaction.

C) declarative transaction.

D) borrowing/lending transaction.

25) A bailment for the sole benefit of a bailor requires the bailee to take __________ care in

taking care of the article.

A) slight B) partial C) no D) complete

26) In a __________, the bailor has the duty to warn the bailee of any defects in the property that

could cause harm.

A) bailment for the sole benefit of the bailee B) bailment for the sole benefit of the bailor C) mutual-benefit bailment D) constructive bailment

27) In a bailment for work and services, there are __________ legal relationships created.

A) two B) three C) four D) no

.

5

Chapter 25 28) There are instances in which goods are thrust upon a bailee who does not have any choice

about whether or not they wish to serve as bailee, which is known as a: A) mutual-benefit bailment.

B) constructive bailment.

C) bailment for the sole benefit of the bailee.

D) bailment for the sole benefit of the bailor.

29) An agreement in which a man borrows his friend's tuxedo is a bailment for the: A) sole benefit of the bailor.

B) sole benefit of the bailee.

C) benefit of the bailee's heirs.

D) benefit of both the parties.

30) An agreement in which a suitcase is left with a railroad station checkroom is a: A) bailment for the sole benefit of the bailee.

B) bailment for the sole benefit of the bailor.

C) mutual-benefit bailment.

D) constructive bailment.

31) Whenever one person turns over property to another with the understanding that certain work

is to be performed on the property, a __________ for work and services is created.

A) promise B) bailment C) gift D) mortgage

32) A bailee in a bailment for work and services is entitled to hold and, if necessary, sell the

property if the bailor does not pay for the services or work done. This provision of law is known as a(n): A) consignor's lien.

B) equitable lien.

C) bailee's lien.

D) bailor's lien.

.

6

Chapter 25 33) A guest whose stay is relatively uncertain is known as a(n): A) transient.

B) customer.

C) incorporator.

D) trespasser.

34) In a bailment for the __________ benefit of the bailee, the law generally expects the bailee to

exercise __________ care while in possession of the article.

A) sole, extraordinary B) mutual, reasonable C) sole, little D) mutual, absolute

35) A bailment in which both the bailee and bailor derive some __________, and, as a result,

each has rights and duties, is known as a __________ bailment.

A) benefit, sole B) profit, corporate C) benefit, mutual-benefit D) financial benefit, constructive

36) If a borrower leaves valuable goods with a lender until their loan is paid, this is known as: A) bailment for repair.

B) bailment for storage.

C) bailment for transportation.

D) security for a loan.

37) The contractual relationship in a bailment for work and services is concerned with the kind

and the quality of work __________ and the payment for services __________.

A) done, disaffirmed B) planned, assigned C) planned, performed D) done, performed

.

7

Chapter 25 38) Today, __________ limit a hotel's liability to that of a(n) __________.

A) state statutes, debtor B) state statutes, ordinary bailee C) federal laws, mortgagee D) federal laws, lessee

39) The __________ delivers the goods to the party designated by the shipper, known as the

__________.

A) warehouser, consignor B) consignor, consignee C) common carrier, trustee D) common carrier, consignee

40) An individual or firm in the business of transporting goods between certain points as allowed

by the various state commissions that regulate the carriers is known as a: A) business carrier.

B) government carrier.

C) public carrier.

D) common carrier.

41) A mutual-benefit bailment gives the carrier (the bailee) all of the following, EXCEPT: A) the right to determine and enforce reasonable rules and requirements concerning the

operation of its services.

B) the right to payment for services provided.

C) the right to refuse to accept goods for any reason.

D) the right to payment from either the consignor or consignee.

42) Withholding payment for transportation charges enables a carrier to hold goods on the basis

of a(n): A) B) C) D)

.

carrier's lien. warehouser's lien. proprietor's lien. equitable lien.

8

Chapter 25 43) The law requires that a common carrier must accept all shipments that it is authorized to: A) handle.

B) make a profit on.

C) sell.

D) lease.

44) The kind of bailment created when a friend inadvertently leaves behind an article of jewelry

in your home during a visit is a(n): A) adversarial bailment.

B) constructive bailment.

C) mutual-benefit bailment.

D) declarative bailment.

45) Uniform Commercial Code Section __________ provides that when goods are turned over to

a warehouse for storage, the warehouser will provide a receipt for the goods and will accept the responsibility for loss of, or damage to, the goods.

A) 1-107 B) 3-403 C) 5-113 D) 7-204

46) How is an agreement for a bailment created?

47) List the four different kinds of bailments.

.

9

Chapter 25 48) Explain mutual-benefit bailments.

.

10

Chapter 25

Answer Key Test name: Chapter 25 1) FALSE 2) TRUE 3) TRUE 4) TRUE 5) FALSE 6) TRUE 7) FALSE 8) FALSE 9) B 10) C 11) A 12) C 13) C 14) D 15) D 16) C 17) D 18) A 19) B 20) D 21) A 22) C 23) A 24) D 25) A 26) C 27) A 28) B 29) B 30) C 31) B 32) C 33) A 34) A 35) C 36) D 37) D

.

11

Chapter 25 38) B 39) D 40) D 41) C 42) A 43) A 44) B 45) D 46) Essay 47) Essay 48) Essay

.

12

Chapter 26

Student name:__________ 1) The person who agrees to pay for the use of real property is known as the tenant. ⊚ true ⊚ false

2) Since leases are not viewed as contracts, commercial leases are not subject to the Uniform

Commercial Code. ⊚ true ⊚ false

3) The rights and duties of the parties are usually stated in the lease. These rights may be

expanded or modified by relevant laws and regulations. ⊚ true ⊚ false

4) The law gives a tenant the right to make reasonable modifications to the leased property. ⊚ true ⊚ false

5) The landlord has an obligation to reduce losses that may result from a tenant's abandonment

of the premises. ⊚ true ⊚ false

6) Courts have not held that the landlord may be considered to be responsible for the actions of

a tenant who denied another tenant their right to quiet enjoyment. ⊚ true ⊚ false

.

1

Chapter 26 7) Most leases do not give a landlord the right to terminate the lease if the tenant fails to pay

rent or violates any other material lease provision. ⊚ true ⊚ false

8) When a person is injured on leased premises, the question of liability does not arise. ⊚ true ⊚ false

9) The owner of real property who gives up their right of possession is known as a(n): A) landlord.

B) bailor.

C) guarantor.

D) incorporator.

10) A license __________ a person the right of possession.

A) gives B) may give C) does not give D) All of the options are correct.

11) A condition included in a lease is also known as a: A) restriction.

B) curb.

C) qualification.

D) covenant.

12) The landlord-tenant relationship can be created by a(n): A) contingent contract.

B) express or an implied contract.

C) implied wish.

D) arbitration agreement.

.

2

Chapter 26 13) A(n) __________ is the document in which the terms of an agreement between a landlord

and tenant are expressed.

A) lease B) incorporation C) partnership agreement D) bylaw

14) A landlord may __________ if the tenant fails to respect the conditions specified.

A) cancel the lease B) ratify the lease C) arrest the tenant D) None of the options are correct.

15) A __________ is a person who agrees to pay for the use of __________ owned by another.

A) lessor, intellectual property B) lessee, real property C) lessee, patents D) lessee, codicils

16) The tenant can occupy a landlord's property only with the __________ of the __________.

A) consent, landlord B) consent, bailor C) approval, executor D) ratification, executor

17) Which act prohibits discrimination in housing on the basis of race, color, sex, familial status,

national origin, religion, or handicap?

A) Family and Medical Leave Act B) Fair Housing Act C) Fairness in Housing Act D) Fair Housing Rehabilitation Act

.

3

Chapter 26 18) The type of __________ interest a tenant has in real property can vary considerably

depending on the agreements between the parties and the provisions of the lease.

A) ownership B) liquid C) property D) possession

19) When a landlord promises to make certain repairs and to ensure the tenant’s quiet enjoyment,

that is known as a: A) requirement.

B) breach.

C) condition.

D) covenant.

20) A tenancy that exists when a tenant __________ extends tenancy beyond the agreed term is a

__________.

A) wrongfully, tenancy for years B) wrongfully, tenancy at sufferance C) rightfully, tenancy at sufferance D) wrongfully, periodic tenancy

21) In a __________, either the landlord or tenant must give the other party timely notice in

order to comply with applicable state laws.

A) tenancy for years B) periodic tenancy C) tenancy at sufferance D) tenancy at will

22) A __________ is somewhat open-ended since it is automatically renewed at the end of the

period unless the landlord or tenant gives notice of their intent to not renew the lease.

A) periodic covenant B) periodic tenancy C) tenancy at will D) tenancy at sufferance

.

4

Chapter 26 23) A possession interest in which no specific time of lease is agreed upon is a: A) periodic tenancy.

B) tenancy for years.

C) tenancy at will.

D) tenancy at sufferance.

24) A __________ is the most common type of possession interest.

A) periodic tenancy B) tenancy for years C) tenancy at will D) tenancy at sufferance

25) The landlord has the right to collect the agreed-upon rent as provided in the: A) sale deed.

B) quitclaim deed.

C) warranty.

D) lease agreement.

26) In most states, a tenant can collect their full security deposit back if the landlord does not

provide a written account of repair costs within __________ of the lease termination.

A) 30 days B) 60 days C) 90 days D) one year

27) Whether a tenant has the right to remove fixtures at the end of the lease depends largely on

whether removing them would damage the __________.

A) tenant’s interest B) landlord's interest C) landlord’s reputation D) tenant’s good standing

.

5

Chapter 26 28) If a landlord fails to make __________ to reduce their losses resulting from a tenant's

abandonment, the tenant is relieved of their obligation to pay the rent remaining under the lease.

A) every possible effort B) an extraordinary effort C) reasonable efforts D) None of the options are correct.

29) The landlord has the right to evict a tenant for the following reasons, EXCEPT: A) tenant's sexual orientation.

B) illegal use of the premises.

C) nonpayment of rent.

D) any material violations of the terms of the lease.

30) Most written leases provide the covenant of: A) profit.

B) livability.

C) safety.

D) quiet enjoyment.

31) If the landlord interferes with the tenant's right of possession by evicting them without a

court order of eviction, the tenant has the right to: A) sell.

B) sublease.

C) terminate the lease.

D) purchase the property.

32) A transfer of the tenant's interest for a part of the premises or for a part of the term of the

lease is known as a(n): A) abandonment.

B) constructive bailment.

C) sublease.

D) title transfer.

.

6

Chapter 26 33) An implied warranty of __________ is a landlord's promise that the premises have no defects

that would impair the health, safety, or well-being of the occupants.

A) habitability B) safety C) merchantability D) negligence

34) The law gives a tenant the right to make __________ modifications to the leased property in

order to make it suitable __________.

A) reasonable, for sale B) reasonable, to gift C) extraordinary, to sublet D) reasonable, for use

35) The __________ of possession of leased premises is known as abandonment.

A) involuntary surrender B) covenant C) voluntary surrender D) conditional surrender

36) The __________ has the right to possess the leased premises for the duration of the lease.

A) tenant B) landlord C) executor D) owner

37) An assignment occurs when tenants transfer __________ in property for the remaining term

of a lease.

A) None of the options are correct.

B) their entire interest C) some of their interest D) 1% or more of their interest

.

7

Chapter 26 38) The doctrine of __________ states that if a landlord violates the express or implied duty to

provide the tenant with quiet enjoyment, the tenant may __________ the premises.

A) actual eviction, squat on B) citizens’ eviction, abandon C) landlord neglect, squat on D) constructive eviction, abandon

39) The most common reason for termination of a lease is that the lease has __________,

whether the tenancy is periodic, for years, or at will.

A) expired B) been breached C) been sold to a third party D) been abandoned

40) If a lease is terminated due to it __________ then the landlord must return a security deposit

to the tenant if there was no appreciable damage to the property.

A) being breached B) expiring C) being sold to a third party D) being abandoned

41) If the tenant has abandoned the premises, they are not relieved of the obligation to pay the: A) interest on deposits.

B) agreed-upon rent.

C) maintenance charges.

D) insurance on property.

42) A termination by forfeiture gives the landlord the right to terminate the lease if the tenant

violates a __________ lease provision.

A) material B) constructive C) minimal D) minor

.

8

Chapter 26 43) For a leased building, the __________ will remain in control of common areas and will have

liability for injuries in those common areas.

A) tenant B) landlord C) incorporator D) state

44) The tenant is __________ for injuries occurring on their own leased premises.

A) responsible B) allowed to transfer responsibility to the landlord C) sometimes responsible D) never responsible

45) Distinguish between a lease and a license.

46) Explain a landlord's right to rent, regain possession, and to evict a tenant.

47) Define eviction and distinguish between actual and constructive eviction.

48) The person who agrees to pay for the use of real property is known as the tenant. ⊚ true ⊚ false

.

9

Chapter 26 49) Since leases are not viewed as contracts, commercial leases are not subject to the Uniform

Commercial Code. ⊚ true ⊚ false

50) The rights and duties of the parties are usually stated in the lease. These rights may be

expanded or modified by relevant laws and regulations. ⊚ true ⊚ false

51) The law gives a tenant the right to make reasonable modifications to the leased property. ⊚ true ⊚ false

52) The landlord has an obligation to reduce losses that may result from a tenant's abandonment

of the premises. ⊚ true ⊚ false

53) Courts have not held that the landlord may be considered to be responsible for the actions of

a tenant who denied another tenant their right to quiet enjoyment. ⊚ true ⊚ false

54) Most leases do not give a landlord the right to terminate the lease if the tenant fails to pay

rent or violates any other material lease provision. ⊚ true ⊚ false

55) When a person is injured on leased premises, the question of liability does not arise. ⊚ true ⊚ false

.

10

Chapter 26 56) The owner of real property who gives up their right of possession is known as a(n): A) landlord.

B) bailor.

C) guarantor.

D) incorporator.

57) A license __________ a person the right of possession.

A) gives B) may give C) does not give D) All of the options are correct.

58) A condition included in a lease is also known as a: A) restriction.

B) curb.

C) qualification.

D) covenant.

59) The landlord-tenant relationship can be created by a(n): A) contingent contract.

B) express or an implied contract.

C) implied wish.

D) arbitration agreement.

60) A(n) __________ is the document in which the terms of an agreement between a landlord

and tenant are expressed.

A) lease B) incorporation C) partnership agreement D) bylaw

.

11

Chapter 26 61) A landlord may __________ if the tenant fails to respect the conditions specified.

A) cancel the lease B) ratify the lease C) arrest the tenant D) None of the options are correct.

62) A __________ is a person who agrees to pay for the use of __________ owned by another.

A) lessor, intellectual property B) lessee, real property C) lessee, patents D) lessee, codicils

63) The tenant can occupy a landlord's property only with the __________ of the __________.

A) consent, landlord B) consent, bailor C) approval, executor D) ratification, executor

64) Which act prohibits discrimination in housing on the basis of race, color, sex, familial status,

national origin, religion, or handicap?

A) Family and Medical Leave Act B) Fair Housing Act C) Fairness in Housing Act D) Fair Housing Rehabilitation Act

65) The type of __________ interest a tenant has in real property can vary considerably

depending on the agreements between the parties and the provisions of the lease.

A) ownership B) liquid C) property D) possession

.

12

Chapter 26 66) When a landlord promises to make certain repairs and to ensure the tenant’s quiet enjoyment,

that is known as a: A) requirement.

B) breach.

C) condition.

D) covenant.

67) A tenancy that exists when a tenant __________ extends tenancy beyond the agreed term is a

__________.

A) wrongfully, tenancy for years B) wrongfully, tenancy at sufferance C) rightfully, tenancy at sufferance D) wrongfully, periodic tenancy

68) In a __________, either the landlord or tenant must give the other party timely notice in

order to comply with applicable state laws.

A) tenancy for years B) periodic tenancy C) tenancy at sufferance D) tenancy at will

69) A __________ is somewhat open-ended since it is automatically renewed at the end of the

period unless the landlord or tenant gives notice of their intent to not renew the lease.

A) periodic covenant B) periodic tenancy C) tenancy at will D) tenancy at sufferance

70) A possession interest in which no specific time of lease is agreed upon is a: A) periodic tenancy.

B) tenancy for years.

C) tenancy at will.

D) tenancy at sufferance.

.

13

Chapter 26 71) A __________ is the most common type of possession interest.

A) periodic tenancy B) tenancy for years C) tenancy at will D) tenancy at sufferance

72) The landlord has the right to collect the agreed-upon rent as provided in the: A) sale deed.

B) quitclaim deed.

C) warranty.

D) lease agreement.

73) In most states, a tenant can collect their full security deposit back if the landlord does not

provide a written account of repair costs within __________ of the lease termination.

A) 30 days B) 60 days C) 90 days D) one year

74) Whether a tenant has the right to remove fixtures at the end of the lease depends largely on

whether removing them would damage the __________.

A) tenant’s interest B) landlord's interest C) landlord’s reputation D) tenant’s good standing

75) If a landlord fails to make __________ to reduce their losses resulting from a tenant's

abandonment, the tenant is relieved of their obligation to pay the rent remaining under the lease.

A) every possible effort B) an extraordinary effort C) reasonable efforts D) None of the options are correct.

.

14

Chapter 26 76) The landlord has the right to evict a tenant for the following reasons, EXCEPT: A) tenant's sexual orientation.

B) illegal use of the premises.

C) nonpayment of rent.

D) any material violations of the terms of the lease.

77) Most written leases provide the covenant of: A) profit.

B) livability.

C) safety.

D) quiet enjoyment.

78) If the landlord interferes with the tenant's right of possession by evicting them without a

court order of eviction, the tenant has the right to: A) sell.

B) sublease.

C) terminate the lease.

D) purchase the property.

79) A transfer of the tenant's interest for a part of the premises or for a part of the term of the

lease is known as a(n): A) abandonment.

B) constructive bailment.

C) sublease.

D) title transfer.

80) An implied warranty of __________ is a landlord's promise that the premises have no defects

that would impair the health, safety, or well-being of the occupants.

A) habitability B) safety C) merchantability D) negligence

.

15

Chapter 26 81) The law gives a tenant the right to make __________ modifications to the leased property in

order to make it suitable __________.

A) reasonable, for sale B) reasonable, to gift C) extraordinary, to sublet D) reasonable, for use

82) The __________ of possession of leased premises is known as abandonment.

A) involuntary surrender B) covenant C) voluntary surrender D) conditional surrender

83) The __________ has the right to possess the leased premises for the duration of the lease.

A) tenant B) landlord C) executor D) owner

84) An assignment occurs when tenants transfer __________ in property for the remaining term

of a lease.

A) None of the options are correct.

B) their entire interest C) some of their interest D) 1% or more of their interest

85) The doctrine of __________ states that if a landlord violates the express or implied duty to

provide the tenant with quiet enjoyment, the tenant may __________ the premises.

A) actual eviction, squat on B) citizens’ eviction, abandon C) landlord neglect, squat on D) constructive eviction, abandon

.

16

Chapter 26 86) The most common reason for termination of a lease is that the lease has __________,

whether the tenancy is periodic, for years, or at will.

A) expired B) been breached C) been sold to a third party D) been abandoned

87) If a lease is terminated due to it __________ then the landlord must return a security deposit

to the tenant if there was no appreciable damage to the property.

A) being breached B) expiring C) being sold to a third party D) being abandoned

88) If the tenant has abandoned the premises, they are not relieved of the obligation to pay the: A) interest on deposits.

B) agreed-upon rent.

C) maintenance charges.

D) insurance on property.

89) A termination by forfeiture gives the landlord the right to terminate the lease if the tenant

violates a __________ lease provision.

A) material B) constructive C) minimal D) minor

90) For a leased building, the __________ will remain in control of common areas and will have

liability for injuries in those common areas.

A) tenant B) landlord C) incorporator D) state

.

17

Chapter 26 91) The tenant is __________ for injuries occurring on their own leased premises.

A) responsible B) allowed to transfer responsibility to the landlord C) sometimes responsible D) never responsible

92) Distinguish between a lease and a license.

93) Explain a landlord's right to rent, regain possession, and to evict a tenant.

94) Define eviction and distinguish between actual and constructive eviction.

.

18

Chapter 26

Answer Key Test name: Chapter 26 1) TRUE 2) FALSE 3) TRUE 4) TRUE 5) TRUE 6) FALSE 7) FALSE 8) FALSE 9) A 10) C 11) A 12) B 13) A 14) A 15) B 16) A 17) B 18) D 19) D 20) B 21) B 22) B 23) C 24) B 25) D 26) A 27) B 28) C 29) A 30) D 31) C 32) C 33) A 34) D 35) C 36) A 37) B

.

19

Chapter 26 38) D 39) A 40) B 41) B 42) A 43) B 44) A 45) Essay 46) Essay 47) Essay 48) TRUE 49) FALSE 50) TRUE 51) TRUE 52) TRUE 53) FALSE 54) FALSE 55) FALSE 56) A 57) C 58) A 59) B 60) A 61) A 62) B 63) A 64) B 65) D 66) D 67) B 68) B 69) B 70) C 71) B 72) D 73) A 74) B 75) C 76) A 77) D

.

20

Chapter 26 78) C 79) C 80) A 81) D 82) C 83) A 84) B 85) D 86) A 87) B 88) B 89) A 90) B 91) A 92) Essay 93) Essay 94) Essay

.

21

Chapter 27

Student name:__________ 1) When a person dies, arrangements will be made last, after all gifts and distributions, to pay

the deceased’s final expenses. ⊚ true ⊚ false

2) A gift of personal property left to someone is known as a bequest. ⊚ true ⊚ false

3) A will does not need to comply with legal requirements that are intended to ensure that the

wishes of the testator are met. ⊚ true ⊚ false

4) A tape-recorded will is not valid. ⊚ true ⊚ false

5) Incorporation describes the unreasonable pressure that might be applied to testators to change

their true wishes for the disposition of property. ⊚ true ⊚ false

6) Many wills include a statement that the testator is revoking all previous wills. Even without

such a statement, the most recent will, if valid, automatically revokes all prior wills made by the testator. ⊚ true ⊚ false

.

1

Chapter 27 7) If a person dies intestate leaving a spouse but no children, the surviving spouse usually

receives half of the entire estate. ⊚ true ⊚ false

8) A trustee must manage trust property according to the wishes of the settlor, who may be

deceased. ⊚ true ⊚ false

9) Much of early English law and tradition concerning wills and estates were intended to

maintain a feudal system in which all land belonged to the: A) peasants.

B) king.

C) businessmen.

D) priests.

10) The intention of a decedent as expressed in a will is known as: A) supplementary intent.

B) testamentary intent.

C) complimentary intent.

D) adversarial intent.

11) A decedent's __________ can be converted into __________ and applied to payment of

burial, medical, taxes, and legitimate debts.

A) investments, property B) cash, property C) property, cash D) property, bonds

.

2

Chapter 27 12) A __________ is a person's written declaration of how they wish property to be distributed

upon their death.

A) blueprint B) lease agreement C) will D) decedent

13) The term __________ refers to an individual that __________.

A) beneficiary, is deceased B) decedent, is deceased C) decedent, is still alive D) executor, has a claim to the contents of the will

14) If the __________ is deceased, declines to serve, or is lacking in capacity, or if the decedent

dies without making a will, the court will appoint a personal representative, known as a(n) __________.

A) executor, testator B) administrator, executor C) executor, administrator D) attorney, executor

15) A __________ is an individual who will receive gifts of personal or real property pursuant to

a will.

A) B) C) D)

decedent beneficiary testator settlor

16) A person who makes a will is known as a(n): A) administrator.

B) testator.

C) executor.

D) trustee.

.

3

Chapter 27 17) The __________ court is responsible for supervising the operation of a will.

A) criminal B) drug C) probate D) veterans

18) A gift of money through a will is known as a: A) devise.

B) living trust.

C) codicil.

D) legacy.

19) A legacy or bequest can be __________ when a will provides for the disposition of the

balance of the estate.

A) ademption B) devise C) intestate D) residuary

20) A gift of real property by __________ is known as a __________.

A) donation, devise B) donation, living trust C) will, codicil D) will, devise

21) A will that is __________ is a __________ will.

A) not handwritten, residuary B) not handwritten, holographic C) completely handwritten, residuary D) completely handwritten, holographic

.

4

Chapter 27 22) __________ requires that a testator must be of sound mind and __________.

A) Testamentary capacity, body B) Testamentary capacity, legal age C) Ademption, legal age D) Probate court, body

23) A formal, printed will must be signed by the __________ and witnessed.

A) testator B) probate court C) judge D) administrator

24) A formal printed will must be signed by the testator and: A) executed.

B) witnessed.

C) registered with the court.

D) supplemented.

25) If it can be established that the testator lacked testamentary capacity, the will is __________.

A) void B) voidable C) valid D) enforceable

26) Any alterations to a will, such as erasures, words crossed out, or handwritten insertions,

usually constitute __________ of the will.

A) valid modifications B) invalid modifications C) acceptable modifications D) legal agreements

.

5

Chapter 27 27) Changes in a will can be made in a separate document known as a: A) revocation.

B) revision.

C) codicil.

D) trust.

28) Revocations by __________ can include those that result from marriage or remarriage of the

testator, divorce or annulment of a marriage, and the birth or adoption of children after the will was made, all of which can change the disposition of gifts.

A) operation of law B) amendments of a will C) restrictive covenants D) arbitration agreements

29) A(n) __________ is prepared to revoke, alter, or revise a will.

A) alteration B) negotiation C) trust D) codicil

30) A will may have __________ codicils.

A) as many as three B) as many as ten C) as many as five D) unlimited

31) If no surviving heirs or ancestors of the deceased can be located, the decedent's property

__________.

A) passes to a charitable trust B) passes to the state C) is given to an executor to sell D) is given to creditors

.

6

Chapter 27 32) When a person dies without a will, or had a will that failed to meet the requirements of the

law, that person is said to have died: A) without heirs.

B) without distribution.

C) intestate.

D) testate.

33) Laws regarding intestate succession come from __________ law.

A) state B) federal C) international D) county

34) If a person dies without a will, generally the surviving spouse and children will receive: A) 1/4 share of the property.

B) half of the property.

C) 3/4 share of the property.

D) the entire estate of the deceased.

35) A trust is a device or mechanism that permits personal or real property to be held by one

party, the __________, for the benefit of another, the __________.

A) trustee, beneficiary B) beneficiary, executor C) executor, beneficiary D) trustee, state

36) A __________ can only be made when a person is __________.

A) living trust, deceased B) living trust, still alive C) duty-of-care trust, deceased D) holographic will, deceased

.

7

Chapter 27 37) An inter vivos trust is another name for a: A) testamentary trust.

B) living trust.

C) personal trust.

D) constructive trust.

38) The responsibility of the __________ is that of a(n) __________.

A) executor, trustee B) executor, fiduciary C) trustee, fiduciary D) trustee, beneficiary

39) Like all other fiduciaries, a trustee has a duty __________ and a duty __________.

A) to bargain, to negotiate B) to be fair, to be polite C) of loyalty, of care D) None of the options are correct.

40) People who establish a trust while they are __________ are known as settlors.

A) still alive B) insolvent C) bankrupt D) All of the options are correct.

41) A living trust, also known as a(n) __________, is established while the person, known as the

settlor, who wishes to set up the trust is still alive.

A) holographic will B) inter vivos trust C) holographic trust D) corporate trust

.

8

Chapter 27 42) A __________ is created by operation of a will.

A) settlor’s trust B) living trust C) testamentary trust D) revised trust

43) A trustee may purchase securities that are of very low risk and that appear on a document

referred to as a(n): A) illegal list.

B) black list.

C) foreclosure list.

D) legal list.

44) One of the benefits of a trust is that it allows the legal title of property to be separated from

the benefits of: A) partnership.

B) incorporation.

C) ownership.

D) enjoyment.

45) Appointment as a __________ should not be accepted unless one has the temperament,

knowledge, and skills necessary to minimize the risks inherent in this position.

A) lessor B) trustee C) warrantor D) mortgagor

46) What are the requirements of a valid will?

.

9

Chapter 27 47) What is testamentary capacity, and what is the result if it can be established that such was

lacking?

48) Distinguish between a testamentary trust and a living trust.

.

10

Chapter 27

Answer Key Test name: Chapter 27 1) FALSE 2) TRUE 3) FALSE 4) TRUE 5) FALSE 6) TRUE 7) FALSE 8) TRUE 9) B 10) B 11) C 12) C 13) B 14) C 15) B 16) B 17) C 18) D 19) D 20) D 21) D 22) B 23) A 24) B 25) A 26) B 27) C 28) A 29) D 30) D 31) B 32) C 33) A 34) D 35) A 36) B 37) B

.

11

Chapter 27 38) C 39) C 40) A 41) B 42) C 43) D 44) C 45) B 46) Essay

The requirements for a valid will vary by state but often include that the will be written, dated, signed, and witnessed. The testator also must have testamentary capacity and be free from undue influence. The requirements for testamentary capacity are that the testator be of legal age and of sound mind when the will is created.

47) Essay

Just as contracts require competent parties, the law relating to wills requires testamentary capacity; that is, a testator must be of sound mind and legal age. There is some variation among the states as to the minimum age. While the testator's age is something that can be determined easily, a person's mental capacity is not so readily provable. It is essential that the testator be of sound mind when the will is made, even though, as often happens, mental capacity may deteriorate with the passing years. From a legal perspective, a testator is considered of sound mind if he or she is adequately rational to understand the act of making a will, realize the nature and disposition of his or her property, and recognize his or her heirs. If it can be established that the testator lacked testamentary capacity, the will is void.

48) Essay

There are two main types of trusts: a testamentary trust and a living trust. A testamentary trust is created by a will. It becomes effective only upon the death of the testator. The names of the parties—beneficiaries and trustee—are specified in the will. A living trust (also known as an inter vivos trust) is established while the person, known as the settlor, who wishes to set up the trust is still alive. The settlor transfers the legal title to the property to the trust to be held for the benefit of either a beneficiary or the settlor themself, possibly providing tax advantages to the settlor.

.

12

Chapter 28

Student name:__________ 1) Intellectual property is not protected through the use of trade secrets, trademarks, copyrights,

and patents. ⊚ true ⊚ false

2) A program with a complex accounting and budgeting program, which is highly specialized

and not intended for wide distribution, would be considered a trade secret and potentially protected against a competitor copying it. ⊚ true ⊚ false

3) A trademark protects creators of literary, creative, or artistic works. ⊚ true ⊚ false

4) Most firms that have registered trademarks spend considerable amounts of money to

research, design, register, and advertise their trademarks. ⊚ true ⊚ false

5) A copyright is a unique identifier that serves as an address for a web page. ⊚ true ⊚ false

6) Patents are issued by the United States Patent and Trademark Office. ⊚ true ⊚ false

.

1

Chapter 28 7) Since many computer programs are designed to do certain tasks electronically that have

previously been done mechanically, it is not difficult to satisfy the novelty and nonobviousness requirements for a patent. ⊚ true ⊚ false

8) A form of personal property, which includes knowledge, ways of doing things, and

expressions of ideas, is known as: A) mixed property.

B) tangible property.

C) real property.

D) intellectual property.

9) __________ is protected through the use of trade secrets, trademarks, copyrights, and

patents.

A) Real property B) Personal property C) Intellectual property D) Corporate property

10) __________ property is also referred to as __________.

A) Intellectual, economic capital B) Intellectual, intellectual capital C) Cash, testamentary property D) Liquid, real property

11) An agreement in which the employee agrees not to work in __________ employment is

known as a __________ covenant.

A) similar, debt B) similar, silent C) different, restrictive D) similar, restrictive

.

2

Chapter 28 12) The most important factor in determining if a covenant is enforceable is whether the

covenant is: A) mollified.

B) reasonable.

C) ratified.

D) endorsed.

13) A(n) __________ is specialized knowledge associated with a __________ business.

A) easement, general B) incorporation, particular C) trade secret, particular D) copyright, particular

14) “__________” refers to the name and __________ of a firm.

A) B) C) D)

Goodwill, good reputation Copyright, good reputation Trademark, monetary value Goodwill, monetary value

15) The contract for the sale of a business usually includes a(n) __________, similar to the

restrictive covenant placed in an employment contract.

A) promise of profit agreement B) nondisclosure agreement C) service level agreement D) agreement not to compete

16) An agreement in which the seller agrees not to begin or operate a similar business within a

certain geographic area, or within a specified period of time, is known as a(n): A) service-level agreement.

B) agreement not to compete.

C) arbitration agreement.

D) nondisclosure agreement.

.

3

Chapter 28 17) If a program, such as a complex accounting and budgeting program, is highly specialized and

not intended for wide distribution, it would likely be considered a(n) __________.

A) trade secret B) patent C) antitrust exemption D) trademark

18) There is no set time limit for __________.

A) patents B) trade secrets C) copyrights D) trademarks

19) Producers of computer software have an incentive to treat their creations as trade secrets

because there is __________ on the protection available for trade secrets.

A) a set time limit B) no set time limit C) sometimes a set time limit D) None of the options are correct.

20) Symbols used to identify services, as distinguished from goods, are called: A) copyright marks.

B) service marks.

C) industry marks.

D) marks of industry.

21) Trademark registrations are issued by the U.S. Patent and Trademark Office of the

Department of: A) Justice.

B) Labor.

C) Commerce.

D) State.

.

4

Chapter 28 22) In an effort to protect firms from the theft of trade secrets, the __________ was passed.

A) Economic Espionage Act of 1984 B) Economic Espionage Act of 1996 C) Antitrust Act of 1996 D) Trademark Act of 1990

23) A trademark, according to the __________, is "any word, name, symbol, or device or

combination thereof adopted and used by a manufacturer or merchant to identify his (or her) goods and distinguish them from goods manufactured or sold by others."

A) Trade Secrets Act of 1963 B) Lanham Trade Secrets Act of 1947 C) Lanham Trademark Act of 1947 D) Lanham Trademark Act of 1963

24) A trademark registration is issued for a renewable period of __________ years.

A) 5 B) 10 C) 20 D) 50

25) Many trademarks that were once the proud possessions of particular companies have been

lost in this way. Examples of these former trademarks include all of the following EXCEPT: A) escalator.

B) kerosene.

C) Zoloft.

D) aspirin.

26) The trademark law also protects other such distinguishing identifiers as: A) trade characters.

B) brand names.

C) trade names.

D) All of the options are correct.

.

5

Chapter 28 27) A distinctive, nonfunctional feature which distinguishes a merchant's or manufacturer's goods

or services from those of another is known as __________.

A) a trademark B) trade dress C) a design patent D) a copyright

28) The owner of a trademark loses rights to it "when any course of conduct of the registrant,

including acts of omission or commission, causes the mark to lose its significance as an indication of origin" under: A) company policy.

B) federal law.

C) state law.

D) restrictive covenant.

29) Registering or using another person's or company's domain name in bad faith for the purpose

of earning a profit is referred to as: A) larceny.

B) cybersquatting.

C) plagiarizing.

D) domain copying.

30) A __________ is a unique identifier that serves as an address for a __________.

A) trademark, web page B) patent, web page C) domain name, web page D) domain name, trade secret

31) The law of __________ applies to the ownership of __________.

A) trademarks, domain names B) infringement, fair use materials C) the land, domain names D) real property, domain names

.

6

Chapter 28 32) Under the current copyright law, a created work is protected for __________ plus

__________.

A) the lifetime of the creator, 70 years B) the lifetime of the creator, 30 days C) the lifetime of the creator, 50 years D) the lifetime of the patent owner, 90 days

33) What is the term for copying without permission items that are protected under the law?

A) Breach B) Assault C) Infringement D) All of the options are correct.

34) Which of the following is not subject to the doctrine of fair use?

A) Profit B) Education C) Criticism D) Research

35) Computer programs and computer games may be copyrighted: A) under special circumstances.

B) under no circumstances.

C) rarely.

D) under existing law.

36) An individual who copies another's works without permission may be found liable for: A) fair use.

B) infringement.

C) breach of agreement not to compete.

D) breach of trade secret.

.

7

Chapter 28 37) Pursuant to the __________, a computer program is a "set of statements or instructions to be

used directly or indirectly in a computer in order to bring about a certain act."

A) Computer Software Copyright Act of 1990 B) Digital Media Copyright Act of 1980 C) Computer Software Copyright Act of 1980 D) Internet and Software Act of 1990

38) A(n) __________ test is used to determine whether an ordinary reasonable observer

comparing two works would have to conclude that the work being questioned was copied from the other.

A) goodwill B) fair use C) substantial similarity D) infringement

39) Pursuant to the Computer Software Copyright Act, it is not an infringement if the owner of a

computer program makes: A) a single copy.

B) three copies or fewer.

C) five copies or fewer.

D) ten copies or fewer.

40) A patent is a(n) __________, government-granted protection that lasts for __________.

A) invalid, 20 years B) valid, 20 years C) valid, 90 days D) valid, the lifetime of the creator plus 70 years

41) Anyone who manufactures or sells, without permission, a product that has been patented by

another can be charged with: A) fraud.

B) infringement.

C) misrepresentation.

D) breach of contract.

.

8

Chapter 28 42) The Patent and Trademark Office would probably grant a patent if the invention is a device,

useful, novel, and: A) nonobvious.

B) obsolete.

C) authorized.

D) general.

43) The invention must be a device is a term that may include: A) physical devices.

B) a design.

C) a process.

D) All of the options are correct.

44) A __________ combines some of the characteristics of both patents and copyrights.

A) style patent B) design patent C) blueprint patent D) pattern patent

45) Design patents are granted for a period: A) less than 20 years.

B) from 20 to 30 years.

C) from 30 to 40 years.

D) from 40 to 50 years.

46) Define restrictive covenants and explain when they are enforceable.

.

9

Chapter 28 47) What is a trademark, and for how long can one be registered?

48) Describe the purpose of design patents and the length of time for which they are granted.

.

10

Chapter 28

Answer Key Test name: Chapter 28 1) FALSE 2) TRUE 3) FALSE 4) TRUE 5) FALSE 6) TRUE 7) FALSE 8) D 9) C 10) B 11) D 12) B 13) C 14) A 15) D 16) B 17) A 18) B 19) B 20) B 21) C 22) B 23) C 24) B 25) C 26) D 27) B 28) B 29) B 30) C 31) A 32) A 33) C 34) A 35) D 36) B 37) C

.

11

Chapter 28 38) C 39) A 40) B 41) B 42) A 43) D 44) B 45) A 46) Essay 47) Essay 48) Essay

.

12

Chapter 29

Student name:__________ 1) There are federal laws prohibiting the use of cookies when gathering information regarding

adults. ⊚ true ⊚ false

2) If an employer promises not to read the employee's email messages, courts in all states have

ruled that the promise creates a reasonable expectation of privacy. ⊚ true ⊚ false

3) It is not a crime under the ECPA to disclose to a third party the contents of stored computer

information that has been obtained without permission. ⊚ true ⊚ false

4) Federal criminal statutes are used to prosecute computer crimes. ⊚ true ⊚ false

5) The rules relating to legal purpose and competent parties in contract law apply to agreements

made in the form of wagers placed online. ⊚ true ⊚ false

6) The rules of defamation vary depending on whether one is or is not a public figure. ⊚ true ⊚ false

.

1

Chapter 29 7) Spam is desirable because it can drain an ISP's resources, strain network bandwidth, and clog

a user's email folders. ⊚ true ⊚ false

8) From a legal standpoint, it is not allowable for a seller to solicit via email. ⊚ true ⊚ false

9) The rapid advances in technology being experienced today make it difficult for people to

maintain online anonymity or distance between themselves and powerful: A) sales persons.

B) profits.

C) interests.

D) departments.

10) How many distinct rights of privacy are generally recognized in the United States?

A) Two B) Three C) Four D) Nine

11) Consumers who believe that their right to privacy is being violated by the _________ of

software can complain to the _________.

A) embedding, Federal Tort Curbing Agency B) stealing, Administration and Trade Commission C) embedding, Federal Trade Commission D) embezzling, Agency Against Unfair Trade Practices

.

2

Chapter 29 12) Which act makes it a federal crime to monitor email during real time (when it is being sent or

received)?

A) Email Communications Privacy Act B) Electronic Communications Privacy Act C) Electronic Funds Transfer Act D) Computer Fraud and Abuse Act

13) Online marketers of products and services have quickly recognized that learning about

consumers' online behavior presents a real opportunity to increase their: A) capital.

B) sales.

C) forces.

D) departments.

14) A file that is imbedded on the hard drive of a computer, often without a person's knowledge,

that collects and stores information about the user and their behavior, including the websites that have been visited, is known as a: A) spoof.

B) cookie.

C) crunch.

D) froth.

15) The process in which a legitimate website is reproduced in order to fool users into thinking

that they are connected to a trusted site is known as: A) phishing.

B) spoofing.

C) crunching.

D) frothing.

16) The ECPA grants an Internet service provider (ISP) the right to _________ email messages

without the subscriber's consent.

A) monitor B) screen C) block D) redirect

.

3

Chapter 29 17) The Supreme Court has upheld that there is a(n) _________ right to privacy.

A) international B) constitutional C) corporate D) prisoner's

18) A type of computer crime is _________ access to computer data.

A) unauthorized B) authorized C) permissible D) accidental

19) A bank employee who programs the bank's computer to make deductions from one or several

accounts, and to deposit the funds to an account set up and controlled by the employee, could be _________ for _________ even though they had not touched actual currency.

A) prosecuted, counterfeiting B) arrested, assault C) prosecuted, embezzlement D) prosecuted, battery

20) Unauthorized access to computers invites violations of which of the following rights?

A) Invasion of privacy B) Unauthorized use of the computer itself C) Manipulation of financial, medical, and other records D) All of the options are correct.

21) A person who gains unauthorized access to computers, either for mischief or with criminal

intent, is called a(n): A) imposter.

B) achiever.

C) hacker.

D) incorporator.

.

4

Chapter 29 22) Instructions hidden in software with the potential to cause significant damage to both

hardware and software is a(n): A) façade.

B) addendum.

C) corruption.

D) virus.

23) Viruses are typically spread by being attached to a(n) _________.

A) email B) fax C) phone call D) text

24) Transferring funds from one bank account to another, changing students' grades in college

computer files, and crediting accounts for purchases made are instances of _________ use of computers.

A) legal B) lawful C) unauthorized D) All of the options are correct.

25) The Computer Fraud and Abuse Act (CFAA) at times expands the: A) Electronic Funds Transfer Act. B) Electronic Communications Privacy Act. C) Electronic Privacy Act. D) None of the options are correct.

26) The laws governing online gambling vary from state to state, and most states have pending

regulations that would _________ how and when such gambling may take place.

A) severely restrict B) slightly expand C) slightly restrict D) greatly expand

.

5

Chapter 29 27) The ECPA states that individuals may not gain access to a(n) _________ without permission.

A) fund transfer system B) cyberspace privacy system C) electronic communication system D) antivirus organization

28) Under the _________, the individual must act _________ in order to commit a crime.

A) EFTA, accidently B) ECPA, negligently C) ECPA, intentionally D) EFTA, criminally

29) Even if a person's intent is _________, they may be prosecuted for a federal crime under the

_________.

A) good, Computer Fraud and Abuse Act B) good, Electronic Communications Privacy Act C) bad, CAN-SPAM Act D) bad, Electronic Funds Transfer Act

30) The _________ is a _________ statute that makes it an offense to use any device that is part

of an electronic transfer mechanism to steal money, goods, or services or to alter data, interrupt wire transmissions, or use stolen codes or passwords, when the purpose of such activity is to obtain something of value unlawfully.

A) ECPA, federal B) ECPA, state C) EFTA, federal D) EFTA, state

31) A problematic issue is how to regulate _________, where consumer protection laws

generally do not apply.

A) gambling B) offshore gambling C) online shopping D) spyware

.

6

Chapter 29 32) The Electronic Communications Privacy Act (ECPA) is a _________ law.

A) federal B) state C) local D) dead

33) Federal and state laws make most forms of gambling: A) legal.

B) permissible.

C) illegal.

D) beneficial.

34) Federal legislation disallows most, but not all, kinds of online: A) monitoring.

B) surfing.

C) gambling.

D) screening.

35) Speech that harms a person's reputation is referred to as: A) defamation.

B) obscene statements.

C) reflective speech.

D) deception.

36) Defamatory statements include: A) slander only.

B) libel only.

C) slander and libel.

D) None of the options are correct.

.

7

Chapter 29 37) _________ emotional distress can result when the objective is to cause another person to

sustain severe anxiety.

A) Accidental infliction of B) Intentional infliction of C) Defamation of D) None of the options are correct.

38) It is also important to note that the rules of libel vary depending on where the libelous

statements are _________.

A) spoken B) recorded C) printed D) sung

39) _________ emails sent for commercial purposes are popularly referred to as _________.

A) Unsolicited, spam B) Solicited, cookies C) Unsolicited, cookies D) Unsolicited, spyware

40) Many experts argue that the problem with the legal definition of obscenity is that it is too: A) specific.

B) fixed.

C) express.

D) vague.

41) When a person is defamed in cyberspace, often that person is not able to determine the

identity of the individual who made the defamatory statements. When individuals learn that someone has posted an untruth about them, especially when such untruth harms them professionally, they often attempt to hold their _________ liable.

A) boss B) Internet Service Provider C) government D) computer manufacturer

.

8

Chapter 29 42) Sometimes pictures or words that are contained on websites are alleged to be obscene. These

pictures and words are legally obscene if they: A) lack serious literary, scientific, artistic, or political value when taken as a whole.

B) depict sexual conduct in a manner that is patently offensive under contemporary community standards.

C) appeal to the prurient interest.

D) All of these options are correct.

43) A federal statute passed to regulate websites that contain obscene material or child

pornography has now been ruled _________ by the courts because it violates due process of law.

A) unconstitutional B) ultra vires C) ambiguous D) unnecessary

44) _________ is defined as something that is created to _________ a consumer who acts

reasonably.

A) Deceptive advertising, mislead B) Corporate advertising, mislead C) Sponsored advertising, mislead D) Punitive advertising, punish

45) The _________ is the agency responsible for ensuring that advertising in the United States is

_________.

A) Securities and Exchange Commission (SEC), truthful B) Federal Trade Commission (FTC), truthful C) Federal Reserve, profitable D) Equal Employment Opportunity Commission (EEOC), sincere

.

9

Chapter 29 46) Bryan, an employee of Anderson Company, regularly placed orders for raw materials with

Sasha, an employee of Kleinman Glass Corporation. Bryan sent an email to Sasha through his work email account, asking her to go out to dinner with him. Bryan's immediate supervisor at Anderson Company read the email. What consequences will Bryan have to face for his act?

47) Do Internet service providers have the legal right to monitor their subscribers' email without

consent, and what steps do these ISPs take to protect themselves in this process?

48) Identify and describe the three major areas that the Computer Fraud and Abuse Act (CFAA)

covers.

.

10

Chapter 29

Answer Key Test name: Chapter 29 1) FALSE 2) FALSE 3) FALSE 4) TRUE 5) TRUE 6) TRUE 7) FALSE 8) FALSE 9) C 10) A 11) C 12) B 13) B 14) B 15) B 16) A 17) B 18) A 19) C 20) D 21) C 22) D 23) A 24) C 25) B 26) A 27) C 28) C 29) A 30) C 31) B 32) A 33) C 34) C 35) A 36) C 37) B

.

11

Chapter 29 38) C 39) A 40) D 41) B 42) D 43) A 44) A 45) B 46) Essay 47) Essay 48) Essay

.

12

Chapter 30

Student name:__________ 1) Social media refers to communication in means that is not in an online format. ⊚ true ⊚ false

2) Employers have no legal reason for needing access to an employees' social media accounts. ⊚ true ⊚ false

3) Employers are not allowed to use social media to make employment decisions, like hiring

decisions. ⊚ true ⊚ false

4) Any social media used as evidence in a trial must be authenticated prior to it being used. ⊚ true ⊚ false

5) Larceny is the term for when threatening or embarrassing messages or images are posted

online. ⊚ true ⊚ false

6) Homicide is the harming of reputation by communication of a false statement. ⊚ true ⊚ false

7) The Equal Credit Opportunity Act (ECOA) is a state law that allows lenders to discriminate

in offering credit. ⊚ true ⊚ false

.

1

Chapter 30 8) If a lender uses social media to make a credit decision, then it must ensure under federal law

that the use of social media does not have a discriminatory impact. ⊚ true ⊚ false

9) Individuals who post on social media may be held _________ responsible for defamation,

libel, invasion of privacy, and fraud.

A) morally B) socially C) legally D) None of the options are correct.

10) Social media refers to _________ in which large groups of people interact while creating,

sharing, and exchanging information, ideas, and personal messages.

A) physical spaces B) robot technology C) enclosed spaces D) online technology

11) The laws surrounding social media are _________ those affecting other forms of public

communications media, including television, radio, mass emails, and websites.

A) different from B) essentially the opposite of C) essentially identical to D) None of the options are correct.

12) The _________ forbids employers having a policy on social media that will not allow

employees to share information about wages, benefits, and working conditions.

A) Equal Credit Opportunity Act B) National Labor Relations Act C) Fair Credit Reporting Act D) None of the options are correct.

.

2

Chapter 30 13) The _________ has/have recognized the role of social media as evidence in trial.

A) Federal Rules of Civil Procedure B) Fair Credit Reporting Act C) National Labor Relations Act D) Title VII

14) An employer may need to monitor social media posts by employees in order to protect the

company’s: A) contracts.

B) evidence.

C) trade secrets.

D) real property.

15) Concerted action is protected by Section seven of the _________.

A) United States Civil Rights Act B) National Labor Relations Act C) Clean Air Act D) Affordable Care Act

16) Protecting _________ may give an employer justification to monitor an employees'

_________.

A) intellectual property, social media B) intellectual property, checking account C) real property, retirement investments D) real property, family's school transcripts

17) Employers may _________ for the harassing behavior of employees in the workplace, which

can take place in social media.

A) be liable B) never be held liable C) transfer liability D) None of the options are correct.

.

3

Chapter 30 18) _________ is explicitly protected by the NLRA and allows employees to share information

about wages, benefits, and working conditions.

A) Concerted action B) Social media use C) Cyberstalking D) Impersonation

19) Employers can use social media to make employment decisions, including: A) initial employment decisions.

B) decisions related to employee discipline.

C) decisions related to employee termination.

D) All of the options are correct.

20) Winn Incorporated is seeking a new sales manager and compares one applicant’s resumé

provided to the firm as part of that applicant’s application to information provided by the same applicant’s LinkedIn social media site profile. When the information does not correspond, Winn Incorporated decides not to hire the applicant. This is: A) an illegal use of social media.

B) a legal use of social media.

C) a mistake that could lead to fines.

D) None of the options are correct.

21) Whether or not social media is admissible in a civil trial depends on whether the social media

activity: A) is defamatory or not.

B) can prove or disprove a fact or elements of the case.

C) displays morally wrong behavior.

D) All of the options are correct.

.

4

Chapter 30 22) Currently, there is no federal protection prohibiting employees being forced to give access to

their _________ for employment monitoring.

A) social media accounts B) checking account C) credit background D) All of the options are correct.

23) Evidence used in civil trails must _________ in order to be allowed by the court.

A) show profitability for the company B) meet certain standards C) have been in the public domain D) be helpful to both plaintiff and defendant

24) Any use of social media activity as _________ in a trial must be authenticated and must

originate from a specific, identifiable account with proof of authorship.

A) evidence B) public relations C) marketing D) pleadings

25) If cyberstalking creates a hostile workplace, then a(n) _________ may be liable for the

action.

A) B) C) D)

court state employer third party beneficiary

26) Both _________ and individuals can be victims of cyberstalking.

A) the court B) the state C) third party beneficiaries D) businesses

.

5

Chapter 30 27) Cyberstalking is also referred to as: A) username squatting.

B) cyberbullying.

C) e-bullying.

D) arbitration.

28) Social media lends itself to _________, which is where an individual takes another

individual's online information to impersonate that individual.

A) battery B) assault C) homicide D) identity theft

29) For businesses, cyberstalking by employees or others related to the business may create

_________ for that business, particularly if the cyberstalking creates a hostile work environment.

A) indirect liability B) a covenant C) a breach D) vicarious liability

30) Defamation requires that the statement be presented as: A) an opinion.

B) a guess.

C) a fact.

D) a song.

31) The Anti-Cyber Squatting Consumer Protection Act also applies to _________.

A) physical spaces B) usernames C) chatrooms D) All of the options are correct.

.

6

Chapter 30 32) _________ is the harming of reputation by communication of a false statement.

A) Defamation B) Homicide C) Hacking D) Larceny

33) Registration of username that is similar to or the same as an existing entity in order to gain

profit is known as: A) fair use.

B) intellectual property infringement.

C) battery.

D) username squatting.

34) Intellectual property includes all of the following EXCEPT: A) trade secrets.

B) trademarks.

C) copyrights.

D) real estate.

35) Intellectual property _________ is the _________ use of intellectual property.

A) breach, authorized B) breach, unauthorized C) infringement, authorized D) infringement, unauthorized

36) Both persons and _________ can be defamed.

A) the state B) businesses C) the court D) pets

.

7

Chapter 30 37) While a consumer may give their opinion without recourse for deception, the _________ has

held that employees of a company posting information or reviews related to their employer's products or services must disclose their status.

A) Internet Authority Commission (IAC) B) Equal Employment Opportunity Commission (EEOC) C) Federal Trade Commission (FTC) D) Facebook Commission (FC)

38) A(n) _________ is a mathematical formula.

A) theorem B) algorithm C) motion D) law

39) The Equal Credit Opportunity Act (ECOA) is a _________ law.

A) county B) city C) state D) federal

40) According to the ECOA, a lender may not discriminate against all of the following EXCEPT: A) age.

B) gender.

C) wealth.

D) race.

41) In August 2015, the social media company Facebook secured a patent for a product that

would use social media networks to determine _________ of users.

A) the morals B) creditworthiness C) the shopping behaviors D) None of the options are correct.

.

8

Chapter 30 42) The sale and purchase of securities are regulated at the _________ and _________ level.

A) federal, state B) county, state C) city, state D) federal, local

43) Federal and state security laws require accurate disclosures to _________.

A) third party beneficiaries B) investors C) independent marketers D) foreign governments

44) Lenddo is a company that has developed an algorithm for _________ assessments of

consumers through data collected on social media.

A) profitability B) net worth C) retirement D) credit

45) Both Facebook and Lenddo have developed systems that will predict if a consumer will

_________ a loan.

A) purchase B) profit by C) repay D) order

46) Explain how the fair use of intellectual property through social media has created concern for

businesses.

.

9

Chapter 30 47) Explain how an employer could be liable for fan clubs as part of a marketing campaign.

48) Explain how the Equal Credit Opportunity Act (ECOA) makes lending decisions based on

social media difficult.

.

10

Chapter 30

Answer Key Test name: Chapter 30 1) FALSE 2) FALSE 3) FALSE 4) TRUE 5) FALSE 6) FALSE 7) FALSE 8) TRUE 9) C 10) D 11) C 12) B 13) A 14) C 15) B 16) A 17) A 18) A 19) D 20) B 21) B 22) A 23) B 24) A 25) C 26) D 27) B 28) D 29) D 30) C 31) B 32) A 33) D 34) D 35) D 36) B 37) C

.

11

Chapter 30 38) B 39) D 40) C 41) B 42) A 43) B 44) D 45) C 46) Essay 47) Essay

Fan clubs could create an improper affiliation with the company and hurt the company in actions on social media that the company cannot control.

48) Essay

The Equal Credit Opportunity Act (ECOA) is a federal law that prohibits any lender from discriminating in offering credit, and the law is enforced in part by comparing lending activity in a community with the demographic characteristics of that community. Thus, if a lender's credit decisions based on data from social media has discriminatory impact, a lender will be in violation of the ECOA. Businesses will need to consider if the use of social media in their credit lending decision making creates a discriminatory impact.

.

12

Chapter 31

Student name:__________ 1) Firms that conduct business on the web are not subject to the same legal restrictions as are

the traditional brick-and-mortar firms. ⊚ true ⊚ false

2) It is not a mandate under the Securities Exchange Act of 1934 for companies to periodically

release important business information to the public and to investors. ⊚ true ⊚ false

3) The Equal Employment Opportunity Commission (EEOC) ensures that prospective investors

have access to full and correct information about the company's securities they are interested in purchasing. ⊚ true ⊚ false

4) It is important to note that trading in the stock of the firm by company officials is called

insider trading, and insider trading is always illegal. ⊚ true ⊚ false

5) Pursuant to the Electronic Signatures in Global and National Commerce Act (ESIGN) of

2000, electronic contracts containing electronic signatures are just as enforceable as those that are printed on paper. ⊚ true ⊚ false

6) It is expensive to proceed against a defendant in a court case; a person who is the victim of a

breach of contract will frequently not seek to have the dispute resolved using alternative means since ADR tends to be more expensive than court. ⊚ true ⊚ false

.

1

Chapter 31 7) In 2018, the Supreme Court of the United States ruled that states could impose sales tax on

Internet sales. ⊚ true ⊚ false

8) The Securities Act of 1933 covers the sale of _________ (stock, bonds, and other forms of

investments) in the _________.

A) securities, primary market B) securities, labor market C) securities, secondary market D) real property, primary market

9) The _________ provides that issuers of securities must register the securities with the

_________.

A) Securities Act, U.S. Copyright Commission B) Securities Act, Securities and Exchange Commission C) Dodd-Frank Wall Street Reform and Consumer Protection Act, Department of Labor D) Dodd-Frank Wall Street Reform and Consumer Protection Act, Federal Trade Commission

10) In 1992, the SEC created a computerized system, known as the _________.

A) Electronic Data Collecting, Examining, and Recover system B) Electronic Data Collecting, Analysis, and Retrieval system C) Electronic Data Gathering, Analysis, and Retrieval system D) Email Data Gathering, Analysis, and Retrieval system

11) _________ occurs when an investor who owns shares of a company's stock posts notices

online–in chat rooms, on web pages, on blogs, and elsewhere–that indicate that the value of the stock will increase.

A) Cyber squatting B) Arbitration C) Touting D) Insider trading

.

2

Chapter 31 12) _________ is a(n) _________ activity in which a person who has confidential information

about a particular company purchases shares of the company's stock with the intention of selling these shares for a higher price when the information is released to the general public.

A) Touting, legal B) Arbitration, illegal C) Insider trading, illegal D) Mediation, legal

13) Using _________ for personal gain is considered _________.

A) insider information, an act of forgery B) insider information, an honest approach to trading C) insider information, a manipulative and deceptive practice D) publicly available information, a manipulative and deceptive practice

14) Firms that do business online face the same _________ as businesses that do not sell online.

A) regulation B) profit margins C) marketing budgets D) capitalization

15) Companies started taking the Internet seriously as an important new means of doing business

in the: A) B) C) D)

1970s.

1980s.

1990s. early 2000s.

16) Under the _________, the issuing company must provide prospective investors with a

prospectus.

A) Digital Millennium Copyright Act of 1998 B) Securities Act of 1933 C) Electronic Signatures in Global and National Commerce Act of 2000 D) None of the options are correct.

.

3

Chapter 31 17) The web, or cyberspace, can be considered a place under the: A) Digital Millennium Copyright Act of 1998.

B) Securities Exchange Act of 1934.

C) Electronic Signatures in Global and National Commerce Act of 2000.

D) Internet Tax Freedom Act.

18) The Securities and Exchange Commission acts to make certain that investors do not violate

the Commission's _________ rules.

A) anti-touting B) anti-gambling C) anti-communication D) All of the options are correct.

19) A document that provides relevant and important information about the company, its

businesses, and its prospects is known as: A) a memorandum of association.

B) articles of association.

C) letters of incorporation.

D) a prospectus.

20) The Securities Exchange Act of 1934 covers the trading of securities in the _________,

defined as the place where one member of the public sells securities to another member of the public.

A) secondary market B) international market C) consumer market D) labor market

21) The Securities and Exchange Commission is a(n) _________ agency.

A) federal B) state C) city D) county

.

4

Chapter 31 22) The Digital Millennium Copyright Act (DMCA) requires ISPs to accommodate and not

interfere in the protection of _________ works.

A) profitable B) copyrighted C) patented D) trademarked

23) The federal Digital Millennium Copyright Act of 1998 (DMCA) provides that Internet

Service Providers are not liable for copyright infringements if upon proper notification of claimed infringement they _________ access to the material.

A) permit B) block C) facilitate D) expedite

24) The Digital Millennium Copyright Act (DMCA) of 1998 provides that ISPs are _________

for copyright violations.

A) liable B) not liable if certain requirements are met C) sometimes liable D) None of the options are correct.

25) The legal issue associated with people trading and downloading music and other forms of

entertainment from the web is: A) patent infringement.

B) copyright infringement.

C) insider trading.

D) All of the options are correct.

26) The Digital Millennium Copyright Act was passed in what year?

A) 1998 B) 2000 C) 2002 D) 2007

.

5

Chapter 31 27) The _________ requires that ISPs accommodate, and do not interfere with, the identification

or protection of copyrighted works.

A) The Digital Millennium Copyright Act B) Securities Act C) Electronic Signatures in Global and National Commerce Act D) Internet Tax Freedom Act

28) ISPs are not liable for copyright infringements by their subscribers if they adopt and make

_________ effort to implement a policy of terminating, in appropriate circumstances, the accounts of subscribers who are repeat infringers.

A) any B) an extraordinary C) a reasonable D) Any of these answers.

29) Frequently, offers on websites include a button that must be clicked by the user with their

mouse to indicate acceptance; clicking the button denotes that the offer has been: A) accepted.

B) rejected.

C) processed.

D) None of the options are correct.

30) The _________ stipulates that electronic contracts containing electronic signatures are just as

enforceable as those printed on paper.

A) The Digital Millennium Copyright Act B) Securities Act C) Electronic Signatures in Global and National Commerce Act D) Internet Tax Freedom Act

31) In documents pertaining to wills, codicils, and related testamentary papers, _________ does

not apply to electronic _________.

A) ESIGN, transaction details B) the DMCA, symbols C) ESIGN, signatures D) the DMCA, witnesses

.

6

Chapter 31 32) In contract law, it is the _________ that determines how an offer may be _________.

A) state, accepted B) offeror, accepted C) offeree, accepted D) court, rejected

33) If the website visitor has had an ample opportunity to read the terms of an agreement, and if

those terms are not unreasonable, a(n): A) void contract exists.

B) voidable contract exists.

C) unenforceable contract exists.

D) valid contract exists.

34) A system in which contract disputes and other disagreements are resolved by using means

other than a lawsuit is known as: A) environmental dispute resolution.

B) alternative dispute resolution.

C) employment dispute resolution.

D) Internet dispute resolution.

35) All of the following are advantages of alternative dispute resolution systems, EXCEPT: A) speedy disposal.

B) privacy.

C) finality.

D) publicity.

36) Means of alternative dispute resolution include _________ and _________.

A) personal jurisdiction, touting B) counseling, analysis C) preliminary injunctions, prohibitory injunctions D) mediation, arbitration

.

7

Chapter 31 37) Arbitration is when a neutral third party decides a case as if they were a _________.

A) lawyer B) counselor C) judge and jury D) stranger

38) In _________, the Supreme Court of the United States ruled that states could impose sales

tax on Internet sales.

A) 2018 B) 1998 C) 2006 D) 2015

39) In regard to Internet sales tax, the _________ pays the sales tax.

A) seller B) state C) Internet D) buyer

40) In regard to Internet sales tax, the seller typically turns tax proceeds over to _________.

A) the buyer B) the state C) themselves D) None of these options are correct.

41) In 1998, an act was passed by Congress that established a moratorium on taxing ISPs on the

services they provide to computer users. This act was called the: A) Digital Millennium Copyright Act. B) Securities Exchange Act. C) Internet Tax Freedom Act. D) Statute of Frauds.

.

8

Chapter 31 42) A period of time during which no state may levy sales taxes on Internet Service Providers is

known as a(n): A) tallage.

B) scutage.

C) ad valorem tax.

D) moratorium.

43) List the five key settings in which the law applies to conducting business on the web.

44) Describe the Digital Millennium Copyright Act.

.

9

Chapter 31

Answer Key Test name: Chapter 31 1) FALSE 2) FALSE 3) FALSE 4) FALSE 5) TRUE 6) FALSE 7) TRUE 8) A 9) B 10) C 11) C 12) C 13) C 14) A 15) C 16) B 17) B 18) A 19) D 20) A 21) A 22) B 23) B 24) B 25) B 26) A 27) A 28) C 29) A 30) C 31) C 32) B 33) D 34) B 35) D 36) D 37) C

.

10

Chapter 31 38) A 39) D 40) B 41) C 42) D 43) Essay 44) Essay

.

11

Chapter 32

Student name:__________ 1) An employer does not, under the law, have to pay an employee the agreed-upon wage for

their services. ⊚ true ⊚ false

2) The employer is not personally liable for injuries to third parties for intentional or negligent

torts of their employees if they were committed outside the ordinary scope of their employment. ⊚ true ⊚ false

3) Nothing distinguishes an independent contractor from an employee. ⊚ true ⊚ false

4) An employer is not responsible for an employee's torts committed within the scope of

employment. ⊚ true ⊚ false

5) According to the doctrine of employment at will, only the employer, and not the employee,

may choose to terminate the employment relationship at any time. ⊚ true ⊚ false

6) In some states, the provisions contained in an employee handbook are considered a contract

between the employer and the employee. ⊚ true ⊚ false

.

1

Chapter 32 7) Information on leaves of absence, jury duty, military leave, and leaves for marriage or

religious purposes are part of what should be in an employee handbook. ⊚ true ⊚ false

8) Employers need to exercise care when asked to provide references for employees who are

currently working for them or who have worked for them in the past. ⊚ true ⊚ false

9) The employer owes several duties to their employee. These duties include: A) providing paid health insurance to the employee and their family.

B) providing a minimum of two weeks paid vacation.

C) providing a one hour paid lunch break.

D) providing a sanitary place to work.

10) Under workers' compensation laws, any employee who is injured in the course of

employment is permitted to recover compensation for the injury: A) only if the injury was due to the employer's gross negligence or intentional act.

B) unless the injury was due to the employee's gross negligence or intentional act.

C) regardless of whether the injury was due to the employee's gross negligence or intentional act.

D) unless the injury was due to the employer's gross negligence or intentional act.

11) It is the employee's duty to obey their employer's _________ orders concerning the

employment.

A) illegal B) lawful C) unsafe D) illicit

.

2

Chapter 32 12) A legal doctrine that means “let the master answer” is also known as: A) B) C) D)

employment at will. a posteriori. respondeat superior.

None of the options are correct.

13) An employer is liable to third parties for injuries caused by an employee, whether the acts are

willful or negligent, so long as the acts were committed by the employee: A) while the employee was off duty.

B) within the ordinary course of employment.

C) while the employee was on break.

D) None of the options are correct.

14) Under the law, an employer must provide an employee a(n) _________ work environment.

A) air conditioned B) enclosed C) safe D) All of the options are correct.

15) The acts of an employee committed while performing their work duties are considered the

acts of: A) B) C) D)

the employee. the employer. the manager.

None of the options are correct.

16) _________ are not under the direct control of the person who hires them.

A) Employees B) Employees hired by third parties C) Independent contractors D) All of the options are correct.

.

3

Chapter 32 17) It is important to recognize the importance of employee and independent contractor

distinctions because, in order to apply the applicable law, a court first needs to determine whether or not the employer-employee relationship _________.

A) has ceased B) has been ratified C) actually existed D) has been voided

18) Independent contractors may include: A) freelance writers and photographers.

B) private-duty nurses.

C) plumbers.

D) All of the options are correct.

19) The IRS publishes a test that is used to help determine whether someone is: A) hirable.

B) insolvent.

C) an employee or an independent contractor.

D) a liability.

20) A(n) _________ retains complete control over the methods employed to obtain completion of

a job.

A) B) C) D)

employee independent contractor executors respondeat superior

21) Independent contractors receive which tax form?

A) W-2 B) 1099 C) 1040 D) 1098

.

4

Chapter 32 22) One factor in the Internal Revenue Service's factors test for determining whether a worker

fits the status of an employee or an independent contractor is how the work: A) looks.

B) is performed.

C) turns out.

D) None of the options are correct.

23) A person or firm that performs services for another is known as a(n): A) incorporator.

B) independent contractor.

C) principal.

D) seller.

24) An employer is _________ for an employee's torts committed within the scope of

employment.

A) not responsible B) rewarded C) responsible D) ostracized

25) The individual to whom a W-2 tax form is provided is: A) the employer.

B) the principal.

C) the testator.

D) the employee.

26) If a business misclassifies its workers as independent contractors, then the _________ can

impose a significant penalty on them.

A) Internal Revenue Service (IRS) B) Equal Employment Opportunity Commission (EEOC) C) Housing and Urban Development (HUD) D) Federal Reserve

.

5

Chapter 32 27) It is illegal to terminate an employee for reasons that amount to: A) illegal discrimination.

B) worker productivity.

C) company profitability.

D) a difference of opinion.

28) The doctrine of employment at will means an employer may terminate an employee's

employment at any time for: A) a good reason.

B) a bad reason.

C) no reason at all.

D) All of the options are correct.

29) The doctrine of employment at will has been eroded by: A) federal, state, and local statutes.

B) public policy.

C) court decisions.

D) All of the options are correct.

30) An early exception to the doctrine of employment at will was: A) jury duty service.

B) active duty in the military.

C) whistleblowing.

D) All of the options are correct.

31) _________ is the term for reporting the employer's criminal acts to government authorities.

A) Incorporation B) Whistleblowing C) Litigating D) Mediating

.

6

Chapter 32 32) A contract that specifies that the employer agrees to pay, and the employee agrees to work,

for a specified period of time at a specified salary is known as a(n): A) wagering agreement.

B) employment contract.

C) special needs agreement.

D) independent contract.

33) The U.S. Supreme Court has ruled that arbitration clauses in employment contracts are

enforceable provided the following conditions are met EXCEPT: A) the employee has signed the employment contract.

B) the employee has a reasonable time to file a claim.

C) the employee has the right to be represented by an attorney.

D) the employee has the right to appoint the arbitrator.

34) In a standard employment contract, the employer promises to _________.

A) pay the employee for work performed B) consider paying the employee based on the effectiveness of their work C) not fire the employee if the company is unprofitable D) pay a raise every quarter

35) There are many instances in which an employer and employee enter into a formal, written

employment contract that specifies that the employer agrees to pay, and the employee agrees to work, for a specified period of time at a specified salary. These contracts frequently have clauses related to: A) maintaining confidentiality with respect to trade secrets.

B) maintaining confidentiality with respect to restrictive covenants.

C) agreements to arbitrate in the event of a dispute between the parties.

D) All of the options are correct.

36) A(n) _________ typically contains information related to the history of the company,

including its mission and philosophy.

A) employment contract B) employee handbook C) respondeat superior D) None of the options are correct.

.

7

Chapter 32 37) The termination procedures of a company typically include exit interviews and the

requirement that employees must return: A) account statements.

B) salary statements.

C) all company property.

D) appointment letters.

38) Chu, a retired magazine editor, was engaged by Fifth National Bank to write and edit a

monthly employee newsletter. She often spent time in the offices of the bank interviewing various staff members but was paid a flat fee for each issue of the newsletter. Chu is: A) an employee.

B) an independent contractor.

C) a part-time employee.

D) None of the options are correct.

39) An employee handbook typically contains which of the following?

A) The company’s mission B) The company’s philosophy C) The history of the company D) All of the options are correct.

40) A company's tobacco policy for their employees would typically be found in the _________.

A) employee handbook B) articles of incorporation C) corporation bylaws D) articles of organization

41) A negative reference by an employer about current or former employees can give rise to

lawsuits including for: A) invasion of privacy.

B) defamation.

C) negligent misrepresentation.

D) All of the options are correct.

.

8

Chapter 32 42) A _________ employee has the right to sue their employer for defamation.

A) current B) former C) current or former D) None of the options are correct.

43) An employer can safely disclose information about a current or former employee in the

following areas EXCEPT for areas related to the employee's: A) prior employment and educational history.

B) character as it relates to the job.

C) religious affiliation.

D) performance abilities.

44) Disclosing personal, irrelevant information about a former employee amounts to: A) defamation.

B) invasion of privacy.

C) negligence.

D) employment at will.

45) The _________ is a law that sets standards for the minimum age an employee can be and the

minimum rate that an employee must be paid.

A) Fair Labor Standards Act (FLSA) B) Equal Employment Opportunity Act (EEOA) C) Family Medical Leave Act (FMLA) D) Defense of Marriage Act (DOMA)

46) Describe independent contractors and their legal relationships with those who hire them.

.

9

Chapter 32 47) Explain the concept and purpose of the Internal Revenue Service test.

48) What is an employee handbook and what do they typically contain?

49) Describe the Fair Labor Standards Act of 1938 (FLSA), and to whom this law applies.

.

10

Chapter 32

Answer Key Test name: Chapter 32 1) FALSE 2) TRUE 3) FALSE 4) FALSE 5) FALSE 6) TRUE 7) TRUE 8) TRUE 9) D 10) B 11) B 12) C 13) B 14) C 15) B 16) C 17) C 18) D 19) C 20) B 21) B 22) B 23) B 24) C 25) D 26) A 27) A 28) D 29) D 30) D 31) B 32) B 33) D 34) A 35) D 36) B 37) C

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11

Chapter 32 38) B 39) D 40) A 41) D 42) C 43) C 44) B 45) A 46) Essay

An independent contractor is a person or firm that performs services for another. Examples of independent contractors include freelance writers and photographers, private-duty nurses, painters, and plumbers. Independent contractors are not under the direct control of the person who engages them. It is important to distinguish between employees and independent contractors because employees usually cannot sue their employers for on-the-job injuries, whereas independent contractors can sue the person with whom they made the contract. An employer is responsible for an employee's torts committed within the scope of employment; the person who engages an independent contractor, on the other hand, is generally not responsible for the independent contractor's torts.

47) Essay

The Internal Revenue Service (IRS) publishes a kind of test that is used to aid individuals in determining whether a worker fits the status of an employee or an independent contractor. This test includes items such as who provides instruction, training, and tools; who sets hours; who determines where the work is performed and the sequence of work; and how payment is made to the worker. This explicit IRS test aids businesses and individuals in distinguishing employees from independent contractors. Understanding this distinction affects how an individual pays federal income taxes, Social Security taxes, and Medicare taxes. It also determines whether the individual receives a W-2, a tax form provided to employees, or a 1099, a tax form provided to independent contractors.

48) Essay 49) Essay

The Fair Labor Standards Act of 1938 (FLSA) is a law that sets standards for the minimum age an employee can be, the minimum wages an employee can earn, and the rate at which an employee is paid if they work more than a certain number of hours in a given workweek.

Currently, the overtime pay rate for employees who work more than 40 hours in a workweek is one and a half times their regular wages. Many industries are covered by FLSA; however, four categories of employees are excluded from coverage: executives, professional employees, outside sales associates, and administrative employees. Independent contractors are not covered by the provisions of the FLSA.

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12

Chapter 33

Student name:__________ 1) The fact that an employee is prohibited from suing their employer for a work-related injury

or illness will preclude the employee from suing a third party. ⊚ true ⊚ false

2) The Federal Trade Commission inspects workplaces to be certain that these worksites

comply with safety and health standards. ⊚ true ⊚ false

3) No states have laws making it illegal to discriminate on the basis of age against persons who

are over the age of 21. ⊚ true ⊚ false

4) Even if an employer incorrectly believes that an employee has a covered disability, the

employee is protected from discriminatory practices. ⊚ true ⊚ false

5) Same-sex harassment is considered illegal. ⊚ true ⊚ false

6) An effective sexual harassment program is one that is orally communicated to the employees. ⊚ true ⊚ false

.

1

Chapter 33 7) During the negotiation process, a union has the right to ensure that the employer bargains in

good faith. ⊚ true ⊚ false

8) In the event a collective bargaining agreement is not reached between an employer and a

union, the union has no right to call a strike. ⊚ true ⊚ false

9) A type of insurance that allows employees to recover damages for work-related injuries and

illnesses without having to prove negligence on the part of the employer is known as: A) personal injury.

B) provident fund.

C) workers' compensation.

D) worker illness.

10) Workers' compensation provides that damages may be recovered for work-related injuries

by: A) B) C) D)

employees. employers. beneficiaries. trustees.

11) If an employee has agreed to a workers' compensation scheme, then the employee may not

file a lawsuit against their employer for negligence because workers' compensation is the: A) exceptional remedy.

B) preventive remedy.

C) unavoidable remedy.

D) exclusive remedy.

.

2

Chapter 33 12) Many employers have employee assistance programs in place that provide opportunities for

counseling and: A) tuition assistance.

B) stress reduction.

C) promotions.

D) appraisal.

13) The Occupational Safety and Health Act was passed to promote _________ in the workplace.

A) anti-sexual harassment procedures B) employee assistance programs C) anti-discrimination policies D) safety and health

14) Employees may still _________ their employers if it was the employer's _________ conduct

that caused the injury or illness.

A) sue, intentional B) sue, malicious C) arrest, grossly negligent D) complain about, malicious

15) The _________ requires that companies maintain records of employee work-related

accidents and sicknesses and post data regarding these _________.

A) Occupational Safety and Health Administration, every month B) Equal Employment Opportunity Commission, every February C) Occupational Safety and Health Administration, every February D) Equal Employment Opportunity Commission, every three months

16) The _________ was passed in _________.

A) Occupational Safety and Health Act, 1945 B) Occupational Safety and Health Act, 1970 C) Equal Pay Act, 1983 D) Equal Pay Act, 2004

.

3

Chapter 33 17) As a response to OSHA standards, companies are paying greater attention to the developing

science of ergonomics, which deals with designing workplaces to promote safety and: A) health.

B) wealth.

C) personal development.

D) economic conditions.

18) Numerous federal and state laws protect employees from accidents and sicknesses that are

job-related. The most important of these federal statutes is the: A) Civil Rights Act of 1991.

B) Occupational Safety and Health Act of 1970.

C) Age Discrimination in Employment Act of 1967.

D) Family and Medical Leave Act of 1993.

19) If an employer's intentional or grossly negligent conduct caused an employee injury or

illness, the employee may _________ the employer.

A) arrest B) appeal to C) sue D) lock out

20) The U.S. Supreme Court has ruled that Title VII protection based on gender includes

protection based on: A) race.

B) creed.

C) sexual orientation.

D) national origin.

21) Persons considered disabled under the Americans with Disabilities Act would include

individuals who: A) All of the options are correct.

B) are sight impaired.

C) are hearing impaired.

D) use a wheelchair.

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4

Chapter 33 22) _________ is a form of _________ on the basis of sex and is illegal under federal law.

A) Sexual harassment, libel B) Sexual harassment, slander C) Sexual orientation, discrimination D) Sexual harassment, discrimination

23) If a case of sexual harassment winds up in court, an employer can attempt to defend against

the lawsuit by demonstrating that there was a(n) _________ sexual harassment program in use.

A) effective B) ineffective C) drafted D) unionized

24) It is illegal throughout the employment process, including outreach, hiring, job classification,

salary, promotions, benefits, discipline, layoffs, and termination, to discriminate against employees who are members of a: A) social economic class.

B) unprotected class.

C) protected class.

D) fraternity or sorority.

25) The _________ statute designed to protect individuals from illegal employment

discrimination based on sex, race, color, religion, and national origin is known as the _________.

A) state, Occupational Safety and Health Act of 1970 B) federal, Age Discrimination in Employment Act of 1967 C) state, Civil Rights Act of 1964 D) federal, Civil Rights Act of 1964

26) Discrimination in employment is covered by the _________ under the _________.

A) Family and Medical Leave Act, Title V B) Civil Rights Act of 1964, Title VII C) Civil Rights Act of 1964, Title VIII D) Family and Medical Leave Act, Title IX

.

5

Chapter 33 27) Several states have laws making it _________ to discriminate on the basis of age against

persons who are over the age of _________.

A) illegal, 18 B) legal, 21 C) illegal, 21 D) legal, 25

28) The ADA defines disability as a _________ impairment that substantially limits one or more

of the major activities of life.

A) physical or mental B) physical C) mental D) None of the options are correct.

29) Persons protected under the Americans with Disabilities Act include those with: A) cancer.

B) diabetes.

C) alcoholism.

D) All of the options are correct.

30) Persons who suffer from diseases such as AIDS, epilepsy, manic depression, or

schizophrenia are protected under the: A) Occupational Safety and Health Act of 1970.

B) Americans with Disabilities Act of 1990.

C) Health Insurance Portability and Accountability Act of 1996.

D) Genetic Information Act of 1989.

31) The Americans with Disabilities Act (ADA) of 1990 protects persons who are _________

disabled but who have a record of a(n) _________.

A) not currently, covered disability B) not currently, physical disability C) currently, undisclosed disability D) currently, hidden disability

.

6

Chapter 33 32) The _________ was the first federal statute to address discrimination against women in the

workplace.

A) Civil Rights Act of 1964 B) Equal Pay Act C) Civil Rights Act of 1991 D) Pregnancy Discrimination Act

33) The _________ is designed to protect _________ from illegal discrimination in employment

on the basis of disability.

A) Americans with Disabilities Act, corporations B) Americans with Disabilities Act, individuals C) Family and Medical Leave Act of 1993, states D) Family and Medical Leave Act of 1993, corporations

34) The _________ is a federal statute designed to protect individuals from illegal discrimination

on the basis of _________.

A) Pregnancy Discrimination Act of 1978, pregnancy B) Federal Pregnancy Enforcement Act of 1993, weight C) Health Insurance Portability and Accountability Act of 1996, weight D) Americans with Disabilities Act of 1990, marital status

35) At times, under federal and state law, companies must maintain and report detailed records to

demonstrate that their employment practices are nondiscriminatory. These reports are referred to as: A) affirmative action plans.

B) federal action plans.

C) legal insurance plans.

D) antidiscrimination plans.

36) The protected class created pursuant to the Age Discrimination in Employment Act is

persons: A) who are minors.

B) over the age of 40.

C) who are spouses of employees.

D) who are decedents of ex-employees.

.

7

Chapter 33 37) The Civil Rights Act of 1991 is a federal statute that provides _________ to an employee

who can prove that they were a victim of discrimination.

A) remedies B) housing C) wages D) an attorney

38) A union has the right to negotiate a contract with the employer that covers all terms and

conditions of employment. This is known as a(n) _________.

A) agreement not to compete B) agreement to compete C) arbitration agreement D) collective bargaining agreement

39) Under federal law, employees have the right to bargain: A) immediately.

B) collectively.

C) individually.

D) All of the options are correct.

40) A federal agency responsible for administering laws relating to labor unions is the: A) National Labor Retaliation Board.

B) National Labor Relations Board.

C) State Labor Relations Board.

D) National Law Regulation Board.

41) Under federal law, employees are not prohibited from _________ a labor union.

A) forming B) joining C) assisting D) All of the options are correct.

.

8

Chapter 33 42) At times, employees may engage in _________, that is, a strike without the union's consent,

or a slowdown, wherein employees report to work but intentionally decrease their productivity.

A) a secondary boycott B) featherbedding C) a wildcat strike D) a lockout

43) A _________ is a union tactic where employees report to work, but intentionally decrease

their productivity.

A) secondary boycott B) corporate strike C) wildcat strike D) slowdown

44) The _________ is a federal statute that provides eligible employees with the right to take up

to 12 weeks of unpaid leave for personal medical reasons or to care for a child, spouse, or parent.

A) Pregnancy Discrimination Act of 1978 B) Family and Medical Leave Act of 1993 C) Health Insurance Portability and Accountability Act of 1996 D) Americans with Disabilities Act of 1990

45) _________ provides financial stability, in the form of unemployment compensation, to

eligible employees who lose their jobs.

A) Unemployment insurance B) E&O insurance C) D&O insurance D) Malpractice insurance

.

9

Chapter 33 46) Explain the purpose of the Occupational Safety and Health Act and two of its important

provisions.

47) Explain the Civil Rights Act of 1964 and describe how it relates to the Equal Employment

Opportunity Commission.

48) State and describe at least three rights of an employer as it pertains to labor unions and its

employees.

49) Describe the Family Medical Leave Act of 1993 (FMLA) and who is covered by it.

.

10

Chapter 33

Answer Key Test name: Chapter 33 1) FALSE 2) FALSE 3) FALSE 4) TRUE 5) TRUE 6) FALSE 7) TRUE 8) FALSE 9) C 10) A 11) D 12) B 13) D 14) A 15) C 16) B 17) A 18) B 19) C 20) C 21) A 22) D 23) A 24) C 25) D 26) B 27) C 28) A 29) D 30) B 31) A 32) B 33) B 34) A 35) A 36) B 37) A

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11

Chapter 33 38) D 39) B 40) B 41) D 42) C 43) D 44) B 45) A 46) Essay 47) Essay 48) Essay 49) Essay

.

12

Chapter 34

Student name:__________ 1) A breach of warranty lawsuit is based upon contract law. ⊚ true ⊚ false

2) A product specification is an abnormality or a condition that was not intended and that makes

a product more dangerous than necessary. ⊚ true ⊚ false

3) In a product liability case, retailers, wholesalers, and manufacturers of component parts in the

distribution channel can be liable for a product related injury. ⊚ true ⊚ false

4) Under traditional tort law, it is often not very difficult for injured parties to prove negligence. ⊚ true ⊚ false

5) A pharmaceutical company earns most of its drug-related profits after the time that the patent

for the drug is effective. ⊚ true ⊚ false

6) Advertising of drugs is legal, so long as detailed information about the drug being advertised

is not disclosed. ⊚ true ⊚ false

.

1

Chapter 34 7) The federal agency responsible for the safety of consumer products sold in the United States

is the Securities and Exchange Commission (SEC). ⊚ true ⊚ false

8) The NHTSA is not responsible for the safety of automobiles, but instead it focuses on

controlling automobile emissions. ⊚ true ⊚ false

9) In a product liability lawsuit, _________ is/are often difficult to prove because the plaintiff

usually needs the opinions of expert witnesses who can evaluate whether the defendant negligently manufactured or sold the product.

A) damages B) duty C) breach D) proximate cause

10) Many purchasers or users of products, or even third parties, who sustain injury or property

loss as a direct result of using the product file a civil lawsuit based on _________ law.

A) contract B) tort C) criminal D) None of the options are correct.

11) The liability of a manufacturer or seller for injury to purchasers, users, and third parties is

known as _________ liability.

A) product B) customer care C) seller D) purchase

.

2

Chapter 34 12) Which of the following are the elements that a plaintiff must prove in order to be successful

in establishing the defendant's negligence in a product liability lawsuit?

A) Breach B) Damages C) Duty D) All of the options are correct.

13) A _________ case is a _________ lawsuit.

A) product liability, civil B) product liability, criminal C) product flaw, patent prosecution D) product liability, copyright infringement

14) Manufacturers and sellers have a duty to advise purchasers and users of _________ in a

product.

A) malfunctions B) glitches C) abnormalities D) dangers inherent

15) All of the following create the basis for product liability claims against manufacturers and

sellers, EXCEPT: A) guarantee.

B) failure to warn.

C) product flaw.

D) design defect.

16) A _________ in a product that creates a hazardous condition that causes injury is a

_________.

A) fault, malfunction B) defect, proximate cause C) bug, product flaw D) fault, design defect

.

3

Chapter 34 17) A _________ is a(n) _________ or a condition that was not intended and that makes a

product more dangerous than it would have been had it been as intended.

A) malfunction, flaw B) design defect, flaw C) product flaw, abnormality D) bug, defect

18) In a product liability case, the most obvious target of an injured party is the: A) manufacturer.

B) licensor.

C) purchaser.

D) dealer.

19) In the event of a _________, the entities who are particularly vulnerable when the product

manufacturer is insolvent or is a corporation that has been dissolved or is unreachable are the _________.

A) product liability, retailers B) product liability, managers C) failure to warn, purchasers D) failure to warn, designers

20) Liability without the necessity of proving fault is: A) tortuous liability.

B) strict liability.

C) business liability.

D) vicarious liability.

21) Under traditional _________ law, the injured party must prove that the manufacturer was

_________ in producing a product.

A) tort, criminally intent B) tort, negligent C) criminal, ignorant D) contract, negligent

.

4

Chapter 34 22) In some states, _________ applies only to products that are inherently dangerous.

A) strict liability B) product liability C) negligence D) None of the options are correct.

23) Inherently dangerous products include all of the following items EXCEPT: A) firearms.

B) fireworks.

C) knives.

D) hats.

24) Despite the advent of strict liability, there is considerable activity to curb abuses of the

system in various state legislatures with a view toward: A) manufacturing reform.

B) tort reform.

C) liability reform.

D) product reform.

25) A consequence of strict liability is that companies are sometimes hesitant to introduce new or

innovative products because of the fear of liability _________.

A) harassment B) lawsuits C) threats D) breaches

26) Governments reduce unreasonable risk of injury and death associated with consumer

products by all of the following, except: A) restricting advertising on television and radio.

B) developing voluntary and mandatory standards.

C) providing safety information to the public.

D) pursuing recalls of dangerous products.

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5

Chapter 34 27) A reduction in unreasonable risk of injury and death associated with consumer products can

be achieved by governments' providing safety information to the public or developing _________ standards.

A) voluntary and mandatory B) randomized C) arbitrary D) systematic

28) The federal and state governments enact numerous statutes and rules to reduce _________

risks of injury and death associated with consumer products.

A) reasonable B) unreasonable C) normal D) All of the options are correct.

29) Federal and state governments will also pursue _________ of dangerous products.

A) censorship B) recalls C) arrests D) deconstruction

30) The Food and Drug Administration (FDA) requires all drugs to be thoroughly tested.

Pharmaceutical companies subject drugs to how many phases of testing?

A) One B) Two C) Three D) Four

31) During the testing of drugs, the phase in which a small number of people are tested to

determine safety and dosage, and to identify side effects that result from taking the drug, is known as Phase: A) I. B) II. C) III. D) V.

.

6

Chapter 34 32) For a drug to be approved, it is estimated that it costs a pharmaceutical company

approximately _________ and _________ years for the process to unfold.

A) $500 million, 10 B) $600 million, 10 C) $700 million, 12 D) $800 million, 12

33) The _________ is the federal agency responsible for the safety of food and drugs sold in the

United States.

A) Food and Drug Administration B) Consumer Product Safety Commission C) National Highway Traffic Safety Administration D) All of the options are correct.

34) The process of FDA approval has come under some criticism in recent years, as concerns

over the costs and length of time for obtaining approval of prescription drugs have _________.

A) increased B) decreased C) remained about the same D) stagnated

35) During the testing of drugs, the phase in which the safety and effectiveness of the drug are

evaluated in trials involving a great number of people is: A) Phase I. B) Phase III. C) Phase II. D) Phase IV.

36) A pharmaceutical company earns most of its profits from its drugs at the time during which

the drug is: A) protected by its patent.

B) registered as a trademark.

C) licensed as a copyright.

D) reasonably priced.

.

7

Chapter 34 37) After the patent expires, other companies may produce alternative versions of the drug,

referred to as: A) generics.

B) placebos.

C) embargoes.

D) superfunds.

38) The Food and Drug Administration (FDA) is a(n) _________ agency.

A) state B) federal C) United Nations D) city

39) Hazardous household cleaners and substances have restrictions imposed on them by the: A) Food and Drug Administration Commission.

B) Federal Trade Commission.

C) Federal Administrative Commission.

D) Consumer Product Safety Commission.

40) Consumer products with restrictions imposed on them by the Consumer Product Safety

Commission include all of the following, EXCEPT: A) paint.

B) services.

C) children's toys.

D) radiation-emitting products.

41) In a Master Settlement Agreement, the major cigarette manufacturers in the United States

agreed not to engage in: A) certain types of advertising strategies.

B) consumer product safety strategies.

C) federal administrative strategies.

D) producing strategies.

.

8

Chapter 34 42) Federal law does not allow the advertising of cigarettes and other tobacco products on: A) television and radio.

B) television only.

C) radio only.

D) any advertisements.

43) In 1997, the major cigarette manufacturers in the United States entered into a contract, which

was referred to as the: A) Master Settlement Agreement.

B) Vicarious Liability Agreement.

C) Consumer Product Safety Agreement.

D) Federal Administrative Agreement.

44) _________ regulations require disclosure of tar and nicotine levels on cigarette packages.

A) Master Settlement Agreement B) Food and Drug Administration C) Federal Trade Commission D) Consumer Product Safety Commission

45) The federal agency responsible for the safety of automobiles sold in the United States is the: A) Food and Drug Administration Commission.

B) Consumer Product Safety Commission.

C) Federal Administrative Commission.

D) National Highway Traffic Safety Administration.

46) Distinguish among product flaw, failure to warn, and design defect in product liability

lawsuits.

.

9

Chapter 34 47) Explain the legal reasoning behind the concept of strict liability.

48) Describe the purpose of the Food and Drug Administration (FDA).

.

10

Chapter 34

Answer Key Test name: Chapter 34 1) TRUE 2) FALSE 3) TRUE 4) FALSE 5) FALSE 6) FALSE 7) FALSE 8) FALSE 9) C 10) B 11) A 12) D 13) A 14) D 15) A 16) D 17) C 18) A 19) A 20) B 21) B 22) A 23) D 24) B 25) B 26) A 27) A 28) B 29) B 30) D 31) A 32) C 33) A 34) A 35) B 36) A 37) A

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11

Chapter 34 38) B 39) D 40) B 41) A 42) A 43) A 44) C 45) D 46) Essay 47) Essay 48) Essay

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12

Chapter 35

Student name:__________ 1) The distinction that developed between malpractice and other forms of negligence in part

stems from the fact that the performance of certain professionals is known as a "practice", and the people served are referred to as "patients" or "clients" rather than customers. ⊚ true ⊚ false

2) The malpractice of a physician always causes injury or loss to third parties. ⊚ true ⊚ false

3) When the client relies on the financial planner's recommendations and suffers a loss, the

financial planner can be sued for negligence, depending on certain circumstances. ⊚ true ⊚ false

4) If the attorney is in a specialized practice, such as real estate, family law, or immigration law,

it is the performance of other attorneys engaged in similar practice by which the attorney will be judged. ⊚ true ⊚ false

5) An attorney is never liable to a client, even if the attorney fails to exercise due care in

handling a client's affairs. ⊚ true ⊚ false

6) Malpractice can never occur from insurance agents and brokers. ⊚ true ⊚ false

.

1

Chapter 35 7) When an agent or broker fails to recommend appropriate insurance and the buyer suffers a

financial loss that could have been prevented or lessened, the agent or broker can be charged with negligence. ⊚ true ⊚ false

8) Most professional groups do not conduct workshops and training sessions to help members

of the profession reduce the risks that lead to negligent actions. ⊚ true ⊚ false

9) Professionals generally are members of state and national _________ societies, such as bar

associations or medical societies.

A) organizational B) professional C) insurance D) commitment

10) All _________ are liable for their negligence or their failure to meet their contractual

obligations.

A) competent parties B) incompetent parties C) parties D) inadequate parties

11) While everyone is subject to a lawsuit for negligence, suits by injured or damaged parties

charging negligence frequently target: A) customers.

B) government.

C) manufacturers.

D) professionals.

.

2

Chapter 35 12) A _________ is an example of a professional who is licensed by a state for their specialized

knowledge and skill.

A) waitress B) financial planner C) construction worker D) secretary

13) A professional's improper or immoral conduct in the performance of their duties through

carelessness or lack of knowledge amounts to: A) ignorance.

B) malpractice.

C) negligence.

D) nuisance.

14) In law, _________ is treated as a type of _________.

A) malpractice, criminal offense B) misrepresentation, copyright infringement C) malpractice, negligence D) loss of consortium, copyright infringement

15) A claim of negligence must generally prove four elements, including: A) duty.

B) breach.

C) proximate cause.

D) All of the options are correct.

16) In a malpractice lawsuit, the plaintiff must show that the professional defendant's act or

failure to act _________ caused the injury or loss. This element of malpractice is called _________.

A) directly, proximate cause B) indirectly, proximate cause C) directly, undue hardship D) indirectly, negligence

.

3

Chapter 35 17) In a malpractice lawsuit, the professional owes their client, as well as all third parties who are

foreseeably impacted by the professional's work, a _________ to either perform an action or not to perform an action.

A) duty B) contract C) gesture D) promise

18) The distinction that developed between malpractice and other forms of negligence in part

stems from the fact that the performance of certain professionals is known as a(n): A) performance.

B) behavior.

C) practice.

D) employment.

19) It is _________ for the plaintiff to show that the defendant owed the plaintiff a duty to either

perform an action or not perform an action.

A) optional B) a requirement C) never required D) None of the options are correct.

20) Pharmacists who dispense drugs other than those specifically prescribed by authorized

professionals can be charged with _________ if the incorrectly dispensed drugs cause injury to the legal user.

A) misrepresentation B) malpractice C) perjury D) libel

.

4

Chapter 35 21) Both architects and engineers are subject to lawsuits for _________ if their work results in

injury to parties with whom they have contracted or to third parties.

A) negligence B) malpractice C) perjury D) libel

22) An attorney is liable to a client if the attorney fails to exercise _________ in handling a

client's affairs.

A) due care B) extra care C) extraordinary care D) professional care

23) Typically, architects and engineers are licensed by _________ and need to pass various

examinations.

A) local governments B) states C) the federal government D) None of the options are correct.

24) Directors and officers of corporations have been successfully sued for breach of their duty of

_________ and duty of _________, resulting from negligence, error, or omissions.

A) congeniality, care B) kindness, care C) loyalty, care D) loyalty, discretion

25) A _________ can be liable for failing to inform a patient of the risks involved in a particular

surgery.

A) pharmacist B) chemist C) physician D) chaplain

.

5

Chapter 35 26) The malpractice of a physician does not cause injury or loss to third parties, except when the

patient _________ because of the physician's negligence.

A) is temporarily disabled B) is hurt C) breaks a bone D) dies or is permanently disabled

27) Which of the following professionals has the legal responsibility to inform the possible

victim and the appropriate authorities when they learn from a patient that the patient intends to do harm to another?

A) A social worker B) A psychiatrist C) A psychologist D) All of the options are correct.

28) It has been held that when, as a result of their _________, an accountant fails to discover or

conceals evidence that a client's employee has been embezzling funds, an accountant is liable to their _________.

A) negligence, agent B) misrepresentation, company C) negligence, client D) fraud, partner

29) When the client relies on a financial planner's recommendations and suffers _________, the

financial planner can be sued for negligence.

A) a loss B) battery C) misrepresentation D) churning

.

6

Chapter 35 30) A lawsuit against the financial planner's intentional or negligent _________ or nondisclosure

of a material fact relating to an investment is brought for _________.

A) injury, churning B) misstatement, unsuitability C) misstatement, misrepresentation D) injury, unsuitability

31) A _________ who designs devices or installations of a complex nature, such as bridges and

power-generating stations, is called a(n) _________.

A) professional, architect B) professional, engineer C) expert, designer D) expert, executive

32) The engineering profession includes a number of specialties, including: A) mechanical.

B) electrical.

C) civil engineering.

D) All of the options are correct.

33) When a financial planner exceeds their authority as agreed to by contract between the

financial planner and the client, it is known as: A) unauthorized trading.

B) unsuitability.

C) fraud.

D) churning.

34) Buyers of insurance look to _________ to recommend appropriate coverage.

A) other buyers B) CEOs C) brokers D) executives

.

7

Chapter 35 35) If an insurance agent fails to recommend appropriate amounts of coverage, it amounts to: A) churning.

B) unauthorized trading.

C) libel.

D) malpractice.

36) Which of the following professionals are NOT subject to lawsuits for negligence when they

fail to perform according to the standards expected of them?

A) Travel agents B) Licensed teachers C) Janitors D) Licensed accountants

37) A person who dispenses drugs other than those specifically prescribed by authorized

professionals such as physicians can be charged with malpractice if the incorrectly dispensed drugs cause injury to the legal user. Such a person is known as a: A) janitor.

B) teacher.

C) painter.

D) pharmacist.

38) A profession in which practitioners attempt to advise their clients, who can be either

individuals or businesses, on the best ways to manage their financial affairs is known as: A) financial planning.

B) corporate structuring.

C) market planning.

D) strategic planning.

39) The financial planner's unreasonably excessive buying or selling of securities to generate

commissions is known as: A) churning.

B) negligence.

C) misrepresentation.

D) fraud.

.

8

Chapter 35 40) A lawsuit against the financial planner's deliberate obstruction of the client's desire to transfer

one or more accounts to another professional is brought for _________ transfer of account problems.

A) assault B) battery C) negligent D) approved

41) An attorney can be found liable for malpractice if they fail to act in a timely fashion in filing

claims or bringing suit before the _________ expires.

A) statute of limitations B) statute of corporations C) statute of governance D) limitation of pleadings

42) Insurance agents and insurance brokers are deemed to possess superior knowledge of

insurance and to have the ability to use their expertise to protect buyers against various kinds of: A) bad relationships.

B) battery.

C) losses.

D) assault.

43) Many states require continuing education for certain professionals in order for the individuals

in the professions to retain their: A) standards B) licenses.

C) accommodations.

D) acquaintances.

.

9

Chapter 35 44) Most professionals carry _________ insurance to protect against the possibility of being

liable for a negligent professional act.

A) liability B) travel C) accidental D) property

45) Continuing education for professionals like real estate agents or attorneys is regulated by the

_________ government.

A) federal B) state C) city D) county

46) Discuss any two elements of malpractice.

47) Discuss the liability of attorneys in professional malpractice.

48) Explain how professionals protect themselves against the losses that might result from being

found liable for malpractice or negligence.

.

10

Chapter 35

Answer Key Test name: Chapter 35 1) TRUE 2) FALSE 3) TRUE 4) TRUE 5) FALSE 6) FALSE 7) TRUE 8) FALSE 9) B 10) A 11) D 12) B 13) B 14) C 15) D 16) A 17) A 18) C 19) B 20) B 21) A 22) A 23) B 24) C 25) C 26) D 27) D 28) C 29) A 30) C 31) B 32) D 33) A 34) C 35) D 36) C 37) D

.

11

Chapter 35 38) A 39) A 40) C 41) A 42) C 43) B 44) A 45) B 46) Essay 47) Essay 48) Essay

.

12

Chapter 36

Student name:__________ 1) International law includes the study of organizations that regulate child custody and

marriage. ⊚ true ⊚ false

2) A transnational institution's purpose is to maintain legal and economic order in trade. ⊚ true ⊚ false

3) The Federal Trade Commission (FTC) is responsible for overseeing the implementation of all

multinational trade agreements negotiated now or in the future. ⊚ true ⊚ false

4) In order to promote trade, the United States, Cuba, and Mexico have agreed to follow the

rules of the North American Free Trade Agreement (NAFTA). ⊚ true ⊚ false

5) Companies that conduct business in several countries face the challenge of having to comply

with a variety of legal systems that sometimes conflict with one another. ⊚ true ⊚ false

6) Domestication occurs when a foreign company is mandated to have at least partial ownership

by local citizens or companies. ⊚ true ⊚ false

.

1

Chapter 36 7) Confiscation involves a host country purchasing the assets of a foreign company. ⊚ true ⊚ false

8) Copyrights are a statutory privilege granted by a nation to inventors for a fixed period of

years to exclude all others from manufacturing, using, or selling a patented product without permission from the inventor. ⊚ true ⊚ false

9) The increasing volume of international trade and tourism, the globalization of the

marketplace, the growing incidence of multinational business organizations, and cultural exchanges have given rise to the need for: A) domestic law.

B) international law.

C) trade union law.

D) national security law.

10) A major obstacle to conducting business internationally is: A) cultural differences.

B) disparate legal systems.

C) fluctuating exchange rates.

D) All of the options are correct.

11) The use of _________ as the language of international business is increasing.

A) French B) Spanish C) German D) English

.

2

Chapter 36 12) In modern times, customary practices and _________ are the major sources of international

law which are recognized in the Statute of the International Court of Justice.

A) morals B) treaties C) tariffs D) boycotts

13) In modern times, customary practices and treaties are the major sources of international law

and these are recognized in the: A) Statute of the European Court of Justice.

B) Charter of the Constitution of Armenia.

C) International Labour Organization.

D) Statute of the International Court of Justice.

14) International law is the broad study of: A) the legal systems of major countries.

B) treaties.

C) tariffs and nontariff trade barriers.

D) All of the options are correct.

15) The philosophy of _________ international law controlling trade and commerce in a peaceful

way came to be known as _________.

A) Greek, Max Greco B) Greek, Greek law C) Roman, Pax Romana D) Roman, Roman Philosophy

16) According to the U.S. Constitution, _________ of senators must vote to ratify a treaty

negotiated by the President to make it law.

A) 1/3 B) 1/2 C) 1/4 D) 2/3

.

3

Chapter 36 17) A major legal principle involved in international law is the doctrine of _________, which

holds that the courts of one country should refrain from deciding cases involving the acts of persons from another country.

A) comity B) borders C) res judicata D) estoppel

18) The doctrine of comity is: A) required.

B) discretionary.

C) prohibited.

D) non licet.

19) Trade among nations remains a vital ingredient to the economic health of the world's

population. While countries are sovereign and create and interpret their own sets of laws, the goal is that trade be governed by: A) nongovernmental organizations.

B) transnational institutions.

C) trade unions.

D) militaries.

20) An example of the kind of interconnection among the members of the EU is the inauguration

of the: A) B) C) D)

dollar. nickel. euro. pound.

21) The commission or organization that is responsible for overseeing the implementation of all

multinational trade agreements negotiated now or in the future is known as the: A) North American Free Trade Organization.

B) World Trade Organization.

C) General Agreement on Tariffs and Trade.

D) International Monetary Fund.

.

4

Chapter 36 22) The organization with responsibility to maintain a stable environment for the economies and

the currencies of its members is the: A) World Trade Organization.

B) North American Free Trade Agreement.

C) General Agreement on Tariffs and Trade.

D) International Monetary Fund.

23) The monetary currency of the European Union is the: A) pound.

B) euro.

C) krone.

D) dollar.

24) The United States-Mexico-Canada Agreement (USMCA) is a membership of the United

States, Canada, and _________.

A) Mexico B) Cuba C) Brazil D) Costa Rica

25) The World Bank works closely with the _________ to ensure that developing countries have

access to funds in order to stimulate their economies.

A) World Trade Organization B) International Monetary Fund C) United States-Mexico-Canada Agreement D) World Intellectual Property Organization

26) In 1993, _________ countries in Europe formed what is expected to eventually become

"Euroland," an economic and political integration of the members into one entity.

A) 10 B) 12 C) 15 D) 18

.

5

Chapter 36 27) The purpose of a _________ is to maintain legal and economic order in trade.

A) doctrine of comity B) World Bank C) transnational institution D) quota system

28) In _________, an international agreement entered into by a multitude of nations was called

the _________.

A) 1947, World Trade Organization B) 1947, General Agreement on Tariffs and Trade C) 1967, North American Free Trade Agreement D) 1967, International Monetary Fund Agreement

29) The organization created in _________ to provide relief to countries suffering from the

ravages of World War II was the _________.

A) 1944, World Bank B) 1944, International Monetary Fund C) 1945, World Trade Organization D) 1945, General Agreement on Tariffs and Trade

30) _________ is the act of a host country taking title to all of the assets of a foreign company

while compensating the owners of the foreign company for the taking.

A) Capitalization B) Domestication C) Expropriation D) Expatriation

31) Many American companies doing business internationally face the challenge of adapting to

local: A) B) C) D)

.

food. news. customs and practices. trade sanctions.

6

Chapter 36 32) At times, citizens of a particular country refuse to _________ made by businesses located in

other countries. This action, whether supported by the government or not, is referred to as a _________.

A) purchase goods, confiscation B) purchase goods, boycott C) sell goods, domestication D) sell goods, localization

33) At times a country will impose a(n) _________, a form of tax, or other restrictions, on

imports or exports to attain economic results, such as protecting domestic industries or facilitating the production of certain crops.

A) embargo B) due C) charge D) tariff

34) Countries that enact laws prohibiting trade with specific countries are said to be using trade

sanctions, sometimes referred to as: A) boycotts.

B) churnings.

C) embargoes.

D) tariffs.

35) When the host country mandates that at least partial ownership of the foreign company be

sold to local citizens or companies prior to the foreign company's conducting business within the host country's borders, then: A) expropriation occurs.

B) domestication occurs.

C) confiscation occurs.

D) localization occurs.

.

7

Chapter 36 36) The United States requires that foreign companies doing business in the U.S. must comply

with all _________ laws.

A) U.S. B) EU C) Canadian D) Mexican

37) A federal statute designed to provide executives of American companies with rules and

restrictions relating to paying persons in foreign countries to expedite business in these foreign nations is the: A) Civil Rights Act. B) Foreign Corrupt Practices Act. C) Intellectual Property and Real Act. D) Trade Union Act.

38) When did the United States pass the Foreign Corrupt Practices Act? A) 1965 B) 1971 C) 1977 D) 1985

39) In some countries outside of the United States, it is perfectly acceptable that there will be

payments made to individuals in order to secure their business. In the United States, however, this type of activity amounts to _________, which is both illegal and ethically unacceptable.

A) fraud B) boycott C) bribery D) comity

.

8

Chapter 36 40) The _________ makes it clear that in order to violate the law the payment must be made

_________.

A) Foreign Corrupt Practices Act, corruptly B) Foreign Corrupt Practices Act, in good faith C) General Agreement on Tariffs and Trade, in good faith D) General Agreement on Tariffs and Trade, in the U.S.

41) Intellectual property includes: A) trademarks.

B) copyrights.

C) patents.

D) All of the options are correct.

42) The _________ is a specialized agency of the United Nations and an international

organization that administers numerous treaties concerning protection of intellectual property rights.

A) World Intellectual Property Organization B) International Monetary Fund C) World Trade Organization D) World Bank

43) The work of authors or creators of literary, artistic, or musical works and computer programs

are protected by: A) copyrights.

B) patents.

C) trademarks.

D) embargoes.

44) A statutory privilege granted by a nation to inventors for a fixed period of years to exclude

all others from manufacturing, using, or selling a product without permission from the inventor is a: A) copyright.

B) trademark.

C) patent.

D) grant.

.

9

Chapter 36 45) A _________ is a valuable tool used by a business to identify its products.

A) trademark B) copyright C) patent D) sign

46) What is the doctrine of comity?

47) Describe copyrights, patents, and trademarks.

48) In general, what is the attitude of business executives toward the Foreign Corrupt Practices

Act?

.

10

Chapter 36

Answer Key Test name: Chapter 36 1) FALSE 2) TRUE 3) FALSE 4) FALSE 5) TRUE 6) TRUE 7) FALSE 8) FALSE 9) B 10) D 11) D 12) B 13) D 14) D 15) C 16) D 17) A 18) B 19) B 20) C 21) B 22) D 23) B 24) A 25) B 26) B 27) C 28) B 29) A 30) C 31) C 32) B 33) D 34) C 35) B 36) A 37) B

.

11

Chapter 36 38) C 39) C 40) A 41) D 42) A 43) A 44) C 45) A 46) Essay 47) Essay 48) Essay

.

12

Chapter 37

Student name:__________ 1) In the United States, environmental regulation is not a distinct area of the law but is

considered a minor part of contract law. ⊚ true ⊚ false

2) In 1970 Congress created the Federal Trade Commission (FTC), which has the responsibility

of regulating business activities as these relate to the environment. ⊚ true ⊚ false

3) The exclusive purpose of the Clean Water Act of 1972 is to set minimum standards for water

purity. ⊚ true ⊚ false

4) Negligence is the violation of a municipal ordinance that allows the government to prosecute

a defendant. ⊚ true ⊚ false

5) Battery is the unauthorized entry onto another person's property. ⊚ true ⊚ false

6) The use of a pesticide does not cause insects to become immune to chemical compounds

contained in the pesticide. ⊚ true ⊚ false

.

1

Chapter 37 7) The United States does not have any large forests or wetlands that have great aesthetic and

economic value. ⊚ true ⊚ false

8) There has been a growing recognition that economic interests are causing the gradual

destruction of the rain forests. ⊚ true ⊚ false

9) Early federal statutes dealing with environmental issues concerned themselves primarily with

_________ and _________.

A) conservation of forests, wetlands B) indigenous peoples, ethics C) conservation of forests, wildlife D) indigenous peoples, culture

10) The first _________ was celebrated in _________.

A) Earth Day, 1945 B) Arbor Day, 1963 C) Earth Day, 1970 D) Arbor Day, 1994

11) Policymakers struggle to balance the interests of _________ and the _________.

A) business, environment B) business, stockholders C) environment, government D) environment, public

.

2

Chapter 37 12) In an effort to ensure that the federal government itself does not contribute to the destruction

of the environment, Congress passed the: A) Clean Air Act of 1970.

B) National Environmental Policy Act of 1970.

C) Clean Water Act of 1970.

D) Clean Water Act of 1972.

13) The National Environmental Policy Act (NEPA) was passed in _________.

A) 1952 B) 1970 C) 1989 D) 2006

14) The _________ requires that any project with significant federal involvement must have an

approved _________.

A) Clean Air Act of 1970, authorized statement of law.

B) Clean Air Act of 1970, clean water protection statement.

C) National Environmental Policy Act of 1970, primary standards statement.

D) National Environmental Policy Act of 1970, environmental impact statement.

15) The _________ issues guidelines for EISs. A) National Environmental Policy Act B) Environmental Protection Agency C) Council on Environmental Quality D) Council on Environmental Equality

16) In _________, Congress created the _________, which has the responsibility of regulating

business activities as these relate to the environment.

A) 1970, Environmental Protection Agency B) 1970, Environmental Impact Statement C) 1981, Comprehensive Environmental Response D) 1981, Superfund

.

3

Chapter 37 17) The Environmental Protection Agency (EPA) is tasked with _________.

A) improving living conditions in an urban environment B) protecting employees from discrimination C) protecting consumers from commercial fraud D) conducting environmental research

18) Important federal legislation aimed at protecting the environment includes the Clean Air Act,

the Clean Water Act, and the Comprehensive Environmental Response, Compensation, and Liability Act, also known as (the): A) Superfund.

B) Environmental Impact Statement.

C) Primary Standard Statement.

D) Environmental Protection Act.

19) Superfund created a _________ to help allay costs in addressing environmentally scarred

_________.

A) Hazardous Materials Trust Fund, ozone B) Hazardous Materials Trust Fund, animals C) Hazardous Substance Trust Fund, trees D) Hazardous Substance Trust Fund, land

20) Pursuant to the Clean Air Act, “primary standards” protect: A) B) C) D)

human life and health. animal life and vegetation. ocean life. businesses.

21) Pollution caused by factories and other production facilities is known as: A) noise pollution.

B) mobile pollution.

C) stationary pollution.

D) city pollution.

.

4

Chapter 37 22) Pollution caused by automobiles, trains, airplanes, and so forth is called: A) stationary pollution.

B) mobile pollution.

C) auto pollution.

D) trans pollution.

23) Superfund regulates the dumping of waste: A) onto land.

B) into water.

C) into dumpsters.

D) into swamps.

24) The Clean Water Act of 1972 set minimum standards for water purity in a manner similar to

the Clean Air Act. Included in such standards is: A) "fishable and drinkable."

B) "fishable and swimmable."

C) "drinkable and swimmable."

D) "drinkable and boatable."

25) A public nuisance is created when the nuisance impacts _________.

A) public property B) personal property C) intellectual property D) private property

26) Most states recognize a cause of action for particle trespass, accepting the theory that

businesses are trespassing on another person's property with their: A) pollution particles.

B) ideas.

C) dreams.

D) pesticides.

.

5

Chapter 37 27) A _________ nuisance is created when the nuisance affects public property, such as a

navigable river or a state park.

A) private B) public C) corporate D) profitable

28) Noise pollution can: A) affect an individual's ability to hear.

B) cause mood swings.

C) allegedly injure fetuses.

D) All of the options are correct.

29) There are no federal laws currently addressing: A) recycling.

B) waste dumping.

C) e-waste.

D) None of the options are correct.

30) Sulfur emissions cause pollutants to be discharged into the atmosphere, resulting in

_________.

A) acid rain B) tornadoes C) hurricanes D) All of the options are correct.

31) Forest fires that are started by an act of nature are allowed to continue to burn so long as the

fire does not threaten human life and: A) personal property.

B) ecological balance.

C) public parkland.

D) animal life.

.

6

Chapter 37 32) _________ is a tort that allows a plaintiff to bring a lawsuit against a defendant under state

law for causing personal injury or _________.

A) Defamation, homicide B) Negligence, mental illness C) Negligence, property damage D) Defamation, public injury

33) Several states have passed statutes and the _________ has drafted rules relating to recycling

_________.

A) Toxic Substance Control Agency, e-waste B) Environmental Protection Agency, cathode ray tubes C) Equal Employment Opportunity Commission, cathode ray tubes D) Federal Trade Commission, e-waste

34) The continued use of _________ often causes insects to become _________ to the chemical

compounds.

A) minerals, immune B) a pesticide, immune C) polluted water, addicted D) nitrogen, addicted

35) Acid rain is bad for: A) forests and crops.

B) fish.

C) paint finishes on automobiles.

D) All of the options are correct.

36) Numerous municipalities require that businesses and homeowners recycle: A) paper.

B) glass.

C) metal.

D) All of the options are correct.

.

7

Chapter 37 37) Many scientists believe that the increased burning of fossil fuels has loaded the atmosphere

with heat-trapping carbon dioxide creating global warming, a condition known as (the): A) greenhouse effect.

B) superfund.

C) red tide.

D) acid rain.

38) Deforestation alters the distribution and circulation of water, which in turn can lead to all of

the following situations EXCEPT: A) drought.

B) avalanche.

C) flooding.

D) soil erosion.

39) It is now recognized that the release of _________ into the air has created damage to the

_________.

A) carbon monoxide, ozone layer B) carbon dioxide, greenhouse C) sulfuriticarbons, land D) chlorofluorocarbons, ozone layer

40) There has been a growing recognition that economic interests are causing the gradual

destruction of the rain forests found in: A) wastelands.

B) cold climates.

C) everglades.

D) tropical climates.

41) A hole in the ozone layer is most manifest over the: A) North Pole.

B) Equator.

C) Bermuda Triangle.

D) South Pole.

.

8

Chapter 37 42) The Environmental Protection Agency is charged with the responsibility of selecting

appropriate sites for and types of waste that may be discarded into the oceans by (the): A) international organizations.

B) U.S. organizations.

C) European Union.

D) United Nations.

43) The _________ is charged with the responsibility of selecting appropriate sites and types of

waste that may be discarded into the oceans by U.S. organizations.

A) Environmental Protection Agency B) Environmental Policy Agency C) Environmental Preservation Agency D) Environmental Preservation Society

44) Environmentalists have recently turned their attention to the increased amount of "space

junk" that is: A) orbiting the planet.

B) depleting the ozone layer.

C) falling on the earth.

D) polluting the earth.

45) It is estimated that since the year 1600 approximately _________ animal species have

become extinct.

A) 115 B) 200 C) 260 D) 310

46) Discuss objectives of the Comprehensive Environmental Response, Compensation, and

Liability Act (CERCLA) and how it relates to Superfund.

.

9

Chapter 37 47) Define nuisance and describe its two categories.

48) Describe the greenhouse effect and discuss how it can impact the environment.

.

10

Chapter 37

Answer Key Test name: Chapter 37 1) FALSE 2) FALSE 3) TRUE 4) FALSE 5) FALSE 6) FALSE 7) FALSE 8) TRUE 9) C 10) C 11) A 12) B 13) B 14) D 15) C 16) A 17) D 18) A 19) D 20) A 21) C 22) B 23) A 24) B 25) A 26) A 27) B 28) D 29) C 30) A 31) A 32) C 33) B 34) B 35) D 36) D 37) A

.

11

Chapter 37 38) B 39) D 40) D 41) D 42) B 43) A 44) A 45) C 46) Essay 47) Essay 48) Essay

.

12

Chapter 38

Student name:__________ 1) Health care laws are comprised of only federal law. ⊚ true ⊚ false

2) Insurance policies follow the standard principles of contract law. ⊚ true ⊚ false

3) When executing an advance directive, an individual does not need to demonstrate that they

are competent since competence is assumed. ⊚ true ⊚ false

4) The two most commonly used advance directives are the charitable trust and the revocable

trust for health care. ⊚ true ⊚ false

5) Community-based insurance covers medical issues after a major medical insurance benefit

has been exhausted. ⊚ true ⊚ false

6) The Fair Labor Standards Act (FLSA) provides employees and their families who lose

employment health benefits the right to elect to continue group health benefits provided by their group health plan for specified limited periods of time. ⊚ true ⊚ false

.

1

Chapter 38 7) The Patient Protection and Affordable Care Act (PPACA) has centered on allowing

individuals access to health insurance that is made affordable either by government subsidies or by tax credits to reduce the financial burden of paying health insurance premiums. ⊚ true ⊚ false

8) When an individual or an employer procures an insurance policy covering costs associated

with medical treatments, a(n) _________ is created.

A) health insurance exchange B) contract C) health maintenance organization D) advance directive

9) Medical malpractice is grounded in _________ law.

A) tort B) criminal C) patent D) intellectual property

10) Health care law is defined by _________ statutes, rules, regulations, and judicial decisions.

A) federal B) state C) local D) All of the options are correct.

11) When a _________ consults with a _________, the two parties are entering into a contract.

A) patient, physician B) patient, health insurance agent C) doctor, colleague D) patient, health maintenance organization

.

2

Chapter 38 12) There are numerous agencies that oversee and administer to the manner in which health care

is delivered by its providers. This area of law is known as: A) executive law.

B) administrative law.

C) insurance law.

D) agency law.

13) When a physician or other health care provider acts _________, the patient may sue for the

tort of _________.

A) maliciously, adhesion B) negligently, malpractice C) negligently, battery D) maliciously, duress

14) Administrative agencies at what level oversee and administer the manner in which health

care is delivered by its providers, and the ways in which health care services are covered by insurers?

A) Federal B) State C) Local D) All of the options are correct.

15) States have enacted statutes that enforce _________, documents that express the wishes of

individuals regarding their health care in the event that they become incapacitated.

A) indirect directives B) advance directives C) prior directives D) priority directives

.

3

Chapter 38 16) A(n) _________ only takes effect when the individual becomes incapable of making health

care decisions which, in some states, must be confirmed by at least two licensed medical officials.

A) advance directive B) indirect directive C) prior directive D) priority directive

17) An individual must demonstrate that they are _________ when signing an advance directive.

A) competent B) terminal C) incompetent D) insolvent

18) _________ law controls how a living will and durable power of attorney are used.

A) Federal B) State C) City D) County

19) An advance directive expires: A) in 30 days.

B) in 10 years.

C) in 15 years.

D) An advance directive does not expire.

20) An advance directive only takes effect when the individual becomes _________ which, in

some states, must be confirmed by at least _________ licensed physician(s).

A) incapable of making treatment decisions, one B) incapable of making treatment decisions, two C) incapable of speaking, one D) incapable of writing, three

.

4

Chapter 38 21) A _________ is a document in which a person directs their physician to forgo certain

extraordinary medical procedures if, for example, the person is dying or permanently unconscious.

A) terminal will B) dying will C) living will D) final wish

22) Emergency medical personnel are _________ to honor _________.

A) permitted, deductibles B) not permitted, advance directives C) required, advance directives D) trained, deductibles

23) The two most commonly used advance directives are _________ and _________.

A) physicians, deductibles B) annuities, life insurance C) disability insurance, health insurance D) the living will, the durable power of attorney

24) A type of _________ health insurance policy that covers serious illnesses and lengthy

hospitalizations is a _________.

A) umbrella, major medical health insurance policy B) umbrella, health maintenance organization C) corporate, community-based health insurance policy D) corporate, Medicaid policy

25) An organization that provides health insurance by _________ with specific doctors,

hospitals, and other health care providers is known as a _________.

A) coordinating services, health maintenance organization B) coordinating services, Medicare organization C) cancelling services, major medical insurer D) creating services, community-based insurer

.

5

Chapter 38 26) A federal program that pays for specified health care expenses for individuals who are 65

years of age or older is known as _________.

A) Medicaid B) Medicare C) the Affordable Care Act D) the Health Insurance Portability and Accountability Act

27) A federal health care program for certain individuals and families with low incomes is known

as _________.

A) Medicaid B) Medicare C) the Affordable Care Act D) the Health Insurance Portability and Accountability Act

28) A(n) _________ is a set amount of money for which the patient is responsible as part of

medical insurance coverage.

A) cross-charge B) overage C) deductible D) fine

29) Insurance coverage that provides supplementary income to make up for lost wages due to an

illness or accident that prevents an employee from working at their regular employment is known as: A) Medicaid.

B) disability insurance.

C) a health maintenance organization (HMO).

D) family plans.

.

6

Chapter 38 30) _________ and their _________ who lose employment health benefits have the right to elect

to continue group health benefits provided by their group health plan for specified limited periods of time under COBRA. A) Employees, friends B) Employees, families C) Independent contractors, families D) CEOs, friends

31) A relatively _________ insurance that covers employees' beneficiaries in the event of loss of

life is known as _________.

A) expensive, group life insurance B) inexpensive, group life insurance C) expensive, cafeteria plan D) inexpensive, COBRA

32) Arrangements where employers allocate a(n) _________ amount of money for each of its

employees, who then select the particular benefit or package of benefits that best suits their individual needs, is known as a(n) _________.

A) unspecified, family plan B) specific, cafeteria plan C) unlimited, COBRA D) specific, HMO

33) At times, _________ coverage extends to other events, such as critical or terminal illnesses.

A) individual life insurance B) group life insurance C) single-payer life insurance D) government life insurance

.

7

Chapter 38 34) The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA): A) provides employees, under certain circumstances, with the right to continue group

health benefits provided by their employer.

B) provides permanent coverage for health benefits.

C) provides the general public with the right to purchase health benefits.

D) requires employers to pay at least 80 percent of the health care premiums of its employees.

35) Under the Patient Protection and Affordable Care Act, all individuals, unless covered by an

employer- or government-sponsored insurance coverage, must _________.

A) maintain a living will B) maintain minimal essential health insurance coverage C) maintain a durable power of attorney D) maintain life insurance

36) A federal statute that provides an individual with rights over their health information and

establishes limits on who is permitted to view and receive health information is the _________.

A) Health Insurance Portability and Accountability Act of 1996 (HIPAA) B) Patient Protection and Affordable Care Act C) Occupational Safety and Health Act of 1970 D) Consolidated Omnibus Budget Reconciliation Act of 1985

37) Under the _________, a patient's medical information may be shared without patients'

authorization for the purpose of _________.

A) Health Insurance Portability and Accountability Act of 1996, public notice B) Health Insurance Portability and Accountability Act of 1996, treatment C) Consolidated Omnibus Budget Reconciliation Act of 1985, education D) Consolidated Omnibus Budget Reconciliation Act of 1985, treatment

.

8

Chapter 38 38) The _________ is a statute that provides an individual with rights over their health

information.

A) Health Insurance Portability and Accountability Act of 1995 B) Consolidated Omnibus Budget Reconciliation Act of 1985 C) Health Insurance Portability and Accountability Act of 1996 D) Consolidated Omnibus Budget Reconciliation Act of 1986

39) Under HIPAA, a patient's medical information can be shared with: A) no one.

B) anyone.

C) certain non-family members.

D) certain insurance salespeople.

40) Individuals who believe their HIPAA rights were violated may file complaints with: A) their health provider, their insurance company, or the federal government.

B) their health provider only.

C) their insurance company only.

D) the federal government only.

41) The Health Insurance Portability and Accountability Act of 1996 (HIPAA) is a _________

law.

A) B) C) D)

federal state county city

42) What are the six types of health-related insurance benefits typically available to employees?

.

9

Chapter 38 43) What are the major provisions of the privacy rule in the Health Insurance Portability and

Accountability Act of 1996?

44) What are the different types of medical insurance that are commonly available to individuals

and employers?

.

10

Chapter 38

Answer Key Test name: Chapter 38 1) FALSE 2) TRUE 3) FALSE 4) FALSE 5) FALSE 6) FALSE 7) TRUE 8) B 9) A 10) D 11) A 12) B 13) B 14) D 15) B 16) A 17) A 18) B 19) D 20) B 21) C 22) B 23) D 24) A 25) A 26) B 27) A 28) C 29) B 30) B 31) B 32) B 33) B 34) A 35) B 36) A 37) B

.

11

Chapter 38 38) C 39) C 40) A 41) A 42) Essay 43) Essay 44) Essay

.

12