Advanced Business Law
Final Test Solutions
Course Introduction
Advanced Business Law delves into complex legal principles and frameworks that govern modern business operations. This course explores topics such as corporate governance, mergers and acquisitions, securities regulation, intellectual property rights, antitrust laws, and international business transactions. Students will analyze landmark cases, assess the legal risks associated with business decisions, and develop strategies for compliance and dispute resolution in a global marketplace. Emphasis is placed on statutory interpretation, contract negotiation, ethical considerations, and the evolving regulatory landscape impacting businesses domestically and internationally.
Recommended Textbook Business Law Text and Cases 13th Edition by ClarksonMiller
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51 Chapters
2140 Verified Questions
2140 Flashcards
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Page 2
Chapter 1: Law and Legal Reasoning
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Sample Questions
Q1) Operational Processes, Inc., appeals a decision against it, in favor of Precision Manufacturing Corporation, from a lower court to a higher court. Operational Processes is
A) the appellant.
B) the appellee.
C) the defendant.
D) the respondent.
Answer: A
Q2) The U.S. Constitution is the basis of all law in the United States.
A)True
B)False
Answer: True
Q3) A provision in the California state constitution conflicts with a provision in the U.S. Constitution. If challenged
A) neither provision will be enforced.
B) the provisions will be balanced to reach a compromise.
C) the state provision, not the U.S. Constitution, will be enforced.
D) the U.S. Constitution, not the state provision, will be enforced.
Answer: D
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Page 3
Chapter 2: Courts and Alternative Dispute Resolution
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Sample Questions
Q1) Service Employees International Union and Timberline Products, Inc., have their dis?pute resolved in arbitration. The arbitrator arbitrates issues that the parties did not agree to submit to arbitration. This is a ground for a court to
A) none of the choices.
B) review the merits of the dispute.
C) review the sufficiency of the evidence.
D) set aside the award.
Answer: D
Q2) Delia files a suit against Eduardo in a Florida state court over the ownership of a boat docked in a Florida harbor. Both Delia and Eduardo are residents of Georgia. Eduardo could ask for a change of venue on the ground that Georgia
A) has a sufficient stake in the matter.
B) has jurisdiction.
C) has sufficient minimum contacts with the parties.
D) is a more convenient location to hold the trial.
Answer: D
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4
Chapter 3: Court Procedures
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Sample Questions
Q1) The litigation process has three phases: filing, answering, and appealing.
A)True
B)False
Answer: False
Q2) Procedural law does not have a significant impact on a person's ability to pursue a legal claim.
A)True
B)False
Answer: False
Q3) Refer to Fact Pattern 3-B1. If Enzo files a motion to dismiss, he is asserting that
A) Destiny did not state a claim for which relief can be granted.
B) Destiny's statement of the facts is not true.
C) Destiny's statement of the law is not true.
D) Enzo suffered greater harm than Destiny.
Answer: A
Q4) It is guaranteed that any judgment will be enforceable.
A)True
B)False Answer: False
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Chapter 4: Business and the Constitution
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Sample Questions
Q1) Keralyn creates a Web site to post threatening messages about celebrities. The First Amendment protects such speech
A) all of the time.
B) none of the time.
C) only if it is noncommercial.
D) only if it is symbolic.
Q2) A statute enacted by the Arizona state legislature to regulate trucking affects interstate commerce. In evaluating this statute, the courts will balance the burden that it imposes on interstate commerce against
A) the courts' authority to determine that a law is unconstitutional.
B) the purpose of interstate commerce.
C) the state's interest in regulating the matter.
D) the statute's impact on noneconomic activity.
Q3) Savers Mart, Inc., distributes its merchandise on an inter?state basis. Under the commerce clause, Congress has the power to regulate
A) any commercial activity in the United States.
B) only activities that are in intrastate commerce.
C) only activities that are in local commerce.
D) none of the choices.
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Page 6
Chapter 5: Business Ethics
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Sample Questions
Q1) Digital Analytics, Inc., considers the impact of its corporate decisions on various groups and often acts in the interest of a group that has a greater stake in a decision than Digital's shareholders. This approach is most likely to attract potential employees who are
A) investors focused on short-term profits.
B) older professionals.
C) information technology specialists.
D) recent college graduates.
Q2) The study of business ethics is concerned with the purposes of a business and how that business achieves those purposes.
A)True
B)False
Q3) Acting in good faith gives a business firm a better chance of defending its actions in court.
A)True
B)False
Q4) An action may be legal but not ethical.
A)True
B)False
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Chapter 6: Torts
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Sample Questions
Q1) Specifically targeting the customers of a competitor is always a legitimate business practice.
A)True
B)False
Q2) There are three broad classifications of torts: intentional torts, unintentional torts, and accidental torts..
A)True
B)False
Q3) Negligence per se may occur if an individual violates a statute or an ordinance providing for a criminal penalty and the violation causes another to be injured.
A)True
B)False
Q4) Cook's Pantry Appliances, a retail store, must use reasonable care on its premises to warn its patrons of
A) all risks.
B) hidden risks.
C) obvious risks.
D) no risks.
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Chapter 7: Strict Liability and Strict Liability
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Sample Questions
Q1) Because many products cannot be made entirely safe for all uses, sellers or lessors are liable only for products that are unreasonably dangerous.
A)True
B)False
Q2) The brakes on a train owned by Rolling Stock Railway Inc. malfunction. The train rolls towards main?te?nance workers on the tracks. Everyone gets out of the way except Sid, who wants to show off. The train hits Sid, who sues Train Components, Inc., the brakes' manufacturer. Train Components can raise the defense of
A) a component-part manufacturer.
B) assumption of risk.
C) privity.
D) product misuse.
Q3) A manufacturing defect is a departure from a product unit's design specifications that results in products that are physically flawed.
A)True
B)False
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Chapter 8: Intellectual Property Rights
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Sample Questions
Q1) More than two hundred years ago, the Declaration of Independence recognized the importance of protecting creative works.
A)True
B)False
Q2) Gold & Sweet Company bottles and sells maple syrup from its plant in Vermont. On the labels is a logo that states "100% Genuine New England Maple Syrup Certified by the Northeast Maple Syrup Harvesters Association." This logo is
A) a certification mark.
B) none of the choices.
C) a service mark.
D) trade dress.
Q3) In 2014, Kelly writes Like the Wind, a novel about marathoners and ultramarathoners. Kelly does not register the work with the appropriate government office. Under federal copyright law, Kelly's work is protected
A) for ten years.
B) for twenty years.
C) for the life of the author plus seventy years.
D) forever.
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Chapter 9: Internet Law, Social Media, and Privacy
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Sample Questions
Q1) InfoFree Inc., makes and sells devices and services for the circumvention of encryption software and other technological antipiracy protection. Under the Digital Millennium Copyright Act, this is
A) a violation of copyright law.
B) prohibited but not a violation of copyright law.
C) a "fair use" exception to the provisions of the act.
D) permitted for reconsideration every three years.
Q2) Ralph founds Signify Inc. to make and sell products bearing the names of Tau Kappa Epsilon (TKE) and other fraternities and sororities. Among other venues, Signify sells its products online through Web sites that incorporate the fraternities' and sororities' names and abbreviations into the URLs-for example, "tkestuff.com"-without their permission. On what basis might the fraternities and sororities maintain a successful suit against Ralph and Signify? How might this dispute have been avoided?
Q3) In some states, an unsolicited e-mail must include a toll-free phone number that the recipient can use to ask the sender to send no more unsolicited e-mail.
A)True
B)False
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11
Chapter 10: Criminal Law and Cyber Crime
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Sample Questions
Q1) Leslie commits an act via e-mail against Money Investment Company, a business in New York, where the act is a cyber crime. Leslie resides in Ohio, where the act is not a crime. Prosecution of Leslie in New York involves questions of A) jurisdiction.
B) malware.
C) phishing.
D) service-based hacking.
Q2) Ajay sells "Bulk Up" steroids over the Internet. He is arrested and charged with the sale of a controlled substance. This is cyber crime, which is A) a new category of crime that is not related to older types of crime.
B) a crime that occurs in the virtual community of the Internet.
C) a crime that is less real than the same crime in the physical world.
D) no crime.
Q3) Corporate officers and directors may be held criminally liable for the actions of employees under their supervision.
A)True
B)False
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12
Chapter 11: Nature and Terminology
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Sample Questions
Q1) Informal contracts include all contracts other than formal contracts.
A)True
B)False
Q2) On behalf of Meadow's Edge Golf Course & Club, Norton signs and returns a letter from Oralee, referring to her services as a resident golf pro and their price. When Norton attempts to complete the deal, however, Oralee re?fuses, claiming that they have no con?tract. Norton claims that they do. What standard determines whether these parties have a contract?
Q3) Gilbert promises to buy Hadley's iPod for $75. Hadley is A) an offeree.
B) an offeror.
C) a promisee.
D) a promisor.
Q4) Lark promises to buy Mac's used textbook for $60. Lark is
A) an offeror.
B) an offeree.
C) a promisee.
D) a promisor.
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Chapter 12: Agreement in Traditional and E-Contracts
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Sample Questions
Q1) Contracting parties cannot opt out of the terms of the UETA.
A)True
B)False
Q2) An offer must be practical to be effective.
A)True
B)False
Q3) Deb buys a song through eSongs, an online music vendor. Before completing the purchase and downloading the song, Deb must review a provision stating that she will not make and sell copies of the song and is required to click "I agree." This provision is A) a browse-wrap term.
B) a click-on agreement.
C) a shrink-wrap agreement.
D) none of the choices.
Q4) If an offer does not specify a time for acceptance, the offer terminates at the end of a reasonable time.
A)True
B)False
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Chapter 13: Consideration
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Sample Questions
Q1) A promise to do what one already has a legal duty to do constitutes legally sufficient consideration.
A)True
B)False
Q2) While sailboarding, Jolene is injured when Kilroy carelessly crosses her path. Kilroy's insurance company offers Jolene $50,000 to release Kilroy from liability, and she accepts. Later, she learns that her injuries are more serious than she realized. The release is
A) enforceable.
B) unenforceable because Jolene's injuries are unforeseeably difficult.
C) unenforceable because Kilroy has a preexisting duty to pay.
D) unenforceable because the release is an illusory promise.
Q3) Industrial Engineering, Inc., promises to give stock options to Jasmine for processes she has already designed for the firm. This promise is enforceable
A) because it is a new contract.
B) because it is an illusory promise.
C) because it is supported by past consideration.
D) under no circumstances.
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Chapter 14: Capacity and Legality
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Sample Questions
Q1) Lucy, a minor, disaffirms a contract for necessaries without returning the goods. To Manny's Food Mart, the seller, Lucy is required to pay
A) nothing.
B) the reasonable value of the goods.
C) the sales price of the goods.
D) the ultimate worth of the goods.
Q2) If the illegal part of a bargain has not yet been performed, the party rendering performance must fulfill the contract before seeking damages.
A)True
B)False
Q3) Geri is a minor. Without her parents' knowledge, she signs a contract to buy an airline ticket to Hawaii for spring break. Geri's parents are liable for A) the entire price of the ticket.
B) no part of the price of the ticket.
C) up to half of the price of the ticket.
D) up to two-thirds of the price of the ticket.
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16
Chapter 15: Mistakes, Fraud, and Voluntary Consent
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Sample Questions
Q1) Refer to Fact Pattern 15-B2. The parties' belief about the adjacency of the property is
A) a bilateral mistake.
B) a fraudulent misrepresentation.
C) a unilateral mistake.
D) unconscionable.
Q2) Garth owns two all-terrain vehicles (ATVs), worth $1,000 and $500, re?spec?tively.
Helen agrees to buy "Garth's ATV" for $750. Garth believes, in good faith, that he is selling the $500 ATV. Helen believes, in good faith, that she is buying the $1,000 ATV. In this situation
A) Garth is entitled to $750 for the $500 ATV.
B) Helen is entitled to the $1,000 ATV for $750.
C) Helen must buy both ATVs for $1,500.
D) there is no contract.
Q3) To recover for fraud, a plaintiff must be twenty-one or more years of age.
A)True
B)False
Q4) A unilateral mistake is a mistake made by both parties to a contract.
A)True
B)False
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Chapter 16: The Writing Requirement and Electronic Records
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Sample Questions
Q1) A primary obligation is a promise to pay another's debt only if that party fails to pay.
A)True
B)False
Q2) The Convention on Contracts for the International Sale of Goods incorporates the UCC's Statute of Frauds provision.
A)True
B)False
Q3) Oral evidence of otherwise clear terms in a contract can be introduced at a trial to contradict those terms.
A)True
B)False
Q4) A contract that can, by its own terms, be performed within one year from the day after the contract is formed must be in writing to be enforceable under the Statute of Frauds.
A)True
B)False
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Page 18
Chapter 17: Third Party Rights
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Sample Questions
Q1) Mai is a third party beneficiary under a contract between Novia and Otis. Novia and Otis can modify or rescind their contract without Mai's consent
A) at any time.
B) at no time.
C) after Mai's rights have vested.
D) before Mai's rights have vested.
Q2) Richly Merchandise, Inc., contracts with Stand-Rite Contractors to build a store. Stand-Rite assigns the contract to Town Builders, which has a poor record of completing projects. Richly could most successfully argue that the con?tract cannot be assigned because
A) Richly did not consent to the assignment.
B) Richly did not receive adequate consideration for the assignment.
C) an assignment will significantly increase the risk of nonperformance.
D) Town Builders was not an original party to the deal.
Q3) The rights of a third party bene?ficiary under a contract vest if the third party brings a lawsuit on the promise.
A)True
B)False
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Chapter 18: Performance and Discharge in Traditional
E-Contracts
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Sample Questions
Q1) A contractual obligation may not be discharged through novation. A)True
B)False
Q2) A party who in good faith performs substantially all of the terms of a contract can enforce the contract against the other party.
A)True
B)False
Q3) Any breach entitles the nonbreaching party to sue for damages.
A)True
B)False
Q4) Refer to Fact Pattern 18-B1. Noelle's refusal to make further payments is most likely A) a material breach.
B) complete performance.
C) excused by Moses's failure to timely install the ventilation system.
D) substantial, but not complete, performance.
Q5) Anything less than complete performance is a material breach of contract. A)True
B)False
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Chapter 19: Breach of Contract and Remedies
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Sample Questions
Q1) Refer to Fact Pattern 19-B1. If Belle Vista breaches the contract, Ambrose's remedy would most likely be
A) a certain ratio of the amount that Ambrose expected to invest in the project.
B) a percentage of Belle Vista's unrealized profit.
C) the difference between the land's contract and market prices.
D) specific performance.
Q2) Nonny agrees to buy a unique collection of Olympics memorabilia for $7,000 from Piper and sends $1,500 as a down payment. When Nonny sends Piper the rest of the price, she refuses to ship the collection. Nonny should seek
A) damages.
B) quasi-contractual recovery.
C) rescission.
D) specific performance.
Q3) A liquidated damages provision specifies that a certain amount is to be paid in the event of a future default or breach of contract.
A)True
B)False
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Chapter 20: Formation of Sales and Lease Contracts
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Sample Questions
Q1) Stop n' Gas Convenience Stores, Inc., is an East Coast-based firm that does business throughout the United States. With respect to this circumstance, the UCC has been adopted by, and applies in,
A) all of the states, in whole or in part.
B) only the states on the Atlantic and Pacific coasts.
C) none of the states, to date.
D) only the lower forty-eight states-not Alaska or Hawaii.
Q2) Under the UCC, the meaning of any agreement must be interpreted in light of commercial practices.
A)True
B)False
Q3) Great Gear, Inc., enters into a contract to sell sports clothing and equipment to Healthways Workout store, which in turn sells a pair of bike shorts to Ilene, a consumer. In comparison to standards that apply to consumers, the UCC imposes on merchants
A) less strict legal standards.
B) special business standards.
C) stricter ethical standards.
D) the same overall standards.
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Chapter 21: Title, Risk, and Insurable Interest
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Sample Questions
Q1) Brett boards her horse Charley at Dallas's Equestrian Stables. Brett sells the horse to Flem and tells Dallas, "I sold Charley to Flem." Dallas says, "Okay." That night, Charley is kicked in the head by another horse and dies. Who suffers the loss?
Q2) Quaff n' Quench Café buys twenty-five crates of oranges from Reynaldo Produce, Inc. The parties agree to ship the oranges "F.O.B. Quaff n' Quench " via Swiftline Trucking Company. The oranges rot in transit. The loss is suf?fered by
A) Quaff n' Quench.
B) Swiftline.
C) Columbia.
D) Reynaldo Produce.
Q3) Generally, all contracts are assumed to be shipment contracts if nothing to the contrary is stated in the contract.
A)True
B)False
Q4) A buyer has an insurable interest in identified goods only if he or she has title to the goods.
A)True
B)False
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Page 23
Chapter 22: Performance Breach of Sales Lease Contracts
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Sample Questions
Q1) Loading Ramps Plus Inc. contracts to sell sixteen aluminum loading ramps to Moving Services, Inc. Loading Ramps ships the ramps, which Moving Services accepts but does not pay for. Loading Ramps can
A) sue to recover the purchase price plus inci?dental damages.
B) sue to recover the purchase price minus inci?dental damages.
C) resell the ramps to any buyer willing to reclaim them from Moving Services.
D) require Moving Services to revoke its acceptance of the ramps.
Q2) On May 1, Garage Prefabricators, Inc., agrees to sell four portable garages to Hiway Truck Service Center. Five days later, Hiway refuses delivery and cancels the contract.
Garage Prefabricators is enti?tled to
A) force Hiway to accept the garage.
B) recover any damages from Hiway but not resell the garage.
C) resell the garage and recover any damages from Hiway.
D) resell the garage but not recover any damages from Hiway.
Q3) The doctrine of commercial impracticability does not extend to problems that could have been foreseen.
A)True
B)False
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24
Chapter 23: Warranties
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Sample Questions
Q1) Marcos buys a pneumatic drill from NuTools Inc. Owen leases a table saw from Piecework Tools Sales & Lease Company. Later, Marcos and Owen become aware of defects in the goods that indicate breaches of warranty. An action for breach of warranty accrues when
A) the seller or lessor tenders delivery.
B) the buyer or lessee becomes aware of the breach.
C) the nonbreaching party notifies the breaching party of the breach.
D) four years have passed since the breach occurred.
Q2) Trucks & Trailers, Inc. (T&T), and United Delivery Service enter into a contract for a lease of trucks. T&T is a merchant who deals in goods of the kind leased. Under the UCC, an implied warranty of merchantability arises
A) automatically.
B) only if the lessee asks for such a warranty.
C) only if the lessor expresses such a warranty.
D) only in conjunction with sales contracts, not lease contracts.
Q3) An expression of opinion will usually create a warranty.
A)True
B)False
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Chapter 24: International Law in a Global Economy
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Sample Questions
Q1) Generally, U.S. employers abroad must abide by U.S. discrimination laws unless to do so would violate the laws of the country where their workplaces are located.
A)True
B)False
Q2) Some countries provide insurance for their citizens' investments abroad.
A)True
B)False
Q3) Franchising is a form of licensing.
A)True
B)False
Q4) The United States and other members of a certain organization agree to grant normal trade relations (NTR) status to each other with regard to im?ports and exports. This organi?zation is
A) the Convention on Contracts for the International Sale of Goods.
B) the International Export-Import Bank.
C) the United Nations.
D) the World Trade Organization.
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Chapter 25: The Function Creation of Negotiable Instruments
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Sample Questions
Q1) An instrument that promises to pay "in goods" can be negotiable.
A)True
B)False
Q2) To buy a stuffed cow, Ken executes a check "pay to Laura or bearer" and gives it to Laura, who does not own a stuffed cow. This check is
A) negotiable.
B) nonnegotiable, because it does not indicate a specific payee.
C) nonnegotiable, because it may be a joke.
D) nonnegotiable, because Laura does not own a stuffed cow.
Q3) An instrument is nonnegotiable unless the word "negotiable" is printed on it.
A)True
B)False
Q4) Ralph gets his paycheck from Shakes n' Burgers Restaurant, his em?ployer, and attempts to deposit it in his account at Town Bank. Uri, the bank's teller, notices that on the check the amount stated in words is different from the amount stated in numerals. Which amount can the bank lawfully credit to Ralph's account?
Q5) To be negotiable, an instrument must be payable in money.
A)True
B)False
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Chapter 26: Transferability and Holder in Due Course
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Sample Questions
Q1) For a check, a "reasonable time" is ninety days after the date of the check.
A)True
B)False
Q2) To avoid the risk of loss from theft, a holder may convert a blank indorsement to a special indorsement.
A)True
B)False
Q3) Giuseppe writes a check "payable to bearer" and hands it to Hamilton. Imogene steals the check and delivers it to Jocelyn, an innocent third person. Hamilton can recover the proceeds of the check from
A) Imogene.
B) Jocelyn.
C) Giuseppe.
D) no one.
Q4) Refer to Fact Pattern 26-1B. By writing "without recourse" with her signature, Destiny
A) avoids the risk of loss from theft of the instrument.
B) relieves herself of liability on the instrument.
C) converts the check into a nonnegotiable instrument.
D) locks the instrument into the bank collection process.
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Chapter 27: Liability, Defenses, and Discharge
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Sample Questions
Q1) Warranty liability arises only when a transferor indorses the instrument.
A)True
B)False
Q2) Orson signs a check "pay to the order of Painless Dental" drawn on Orson's account in Quantum Bank. To impose liability on Orson if the bank dishonors the check, Painless Dental should present it for payment within
A) one year.
B) six months.
C) ten days.
D) thirty days.
Q3) Primary liability on a negotiable instrument is conditional.
A)True
B)False
Q4) A person who signs an instrument without authorization can be held personally liable for payment by a holder in due course.
A)True
B)False
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Chapter 28: Banking in the Digital Age
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Q1) Checks are usually three party instruments.
A)True
B)False
Q2) Martha has a checking account with Homeplace Bank. Martha signs a check "payable to Phillipa" drawn on Martha's account. Homeplace Bank is
A) the payer.
B) the drawee.
C) the drawer.
D) the payee.
Q3) Misty's debit card, issued by National United Bank, is stolen and used without her permission. She tells the bank within thirty days. She may be re?quired to pay no more than
A) $5.
B) $50.
C) $500.
D) $5,000.
Q4) A forged signature on a check has no legal effect as the signature of a drawer.
A)True
B)False
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Chapter 29: Creditors Rights and Remedies
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Q1) Erin and Dooley, a married couple, borrow $120,000 from Capital & Credit Bank to buy a home. When Erin and Dooley divorce, they are unable to make payments on the mortgage. The market value of the home has declined to less than the balance of the loan. Capital & Credit agrees to a sale of the property for this amount. This is
A) a prepayment penalty.
B) forbearance.
C) foreclosure.
D) a short sale.
Q2) Vito borrows $110,000 from Watershed Bank to buy a home. If he fails to make payments on the mortgage, the bank has the right to repossess and auction off the property securing the loan. This is
A) a short sale.
B) forbearance.
C) foreclosure.
D) the right of redemption.
Q3) Forbearance is a postponement of part or all of the payments on a loan for a limited time.
A)True
B)False
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Page 31
Chapter 30: Secured Transactions
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Q1) Corporate Bank wants to perfect its security interest in inventory owned by Outdoor Outfitters, Inc. Most likely, a financing statement should be filed with A) the bank manager.
B) the county clerk.
C) the U.S. Department of the Interior.
D) the secretary of state.
Q2) Debit & Credit Financing, Inc., and Equity Lending Company are secured parties with security interests in property owned by Fleet Shipping Corporation. Priority between these security interests is generally determined by A) the amount of the claim.
B) the custom in the trade.
C) the time of perfection or attachment.
D) the "float" of the liens.
Q3) When more than one party claims an interest in the same collateral, a perfected secured party's interest has priority over the interest of most other parties.
A)True
B)False
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Chapter 31: Bankruptcy Law
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Q1) In a Chapter 13 case, after the debtor has completed all payments, the court grants a discharge of all debts provided for by the repayment plan.
A)True
B)False
Q2) Dorothy files a petition for bankruptcy in bankruptcy for relief through an individual's repayment plan. If she is granted a discharge, debts that will most likely be discharged include
A) claims not provided for by the plan.
B) payments on retirement accounts.
C) claims for domestic support obligations.
D) credit-card debt incurred more than one year before filing.
Q3) Luxuro Furniture & Floors, Inc., files a petition in bankruptcy for relief through reorganization. Luxuro's reorganization plan must contain
A) a plan to turn over its future income to the trustee.
B) a certificate proving attendance at a credit-counseling briefing.
C) a provision of adequate means for the plan's execution. d a statement of preference for one creditor over another.
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Chapter 32: Agency Formation and Duties
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Q1) Employers can avoid certain tax liabilities by hiring independent contractors instead of employees.
A)True
B)False
Q2) California Produce Company hires Drew to work on California Produce's shipping dock, checking outgoing loads and dispatching the company's drivers. With respect to California Produce, Drew is most likely
A) an agent.
B) an independent contractor.
C) a principal.
D) a work for hire.
Q3) Refer to Fact Pattern 32-1B. At the shop, Margo is
A) an independent contractor.
B) Neon's employee only.
C) Neon's employee and agent.
D) Neon's principal.
Q4) Ratification involves a question of intent, and intent can be expressed only by words.
A)True
B)False
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Chapter 33: Agency Liability and Termination
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Q1) Garry drives a truck as an employee for Heavy Hauling, Inc. Garry would most likely be considered acting outside the scope of her employment if he
A) crashed into a car at the airport while off duty.
B) hit a pedestrian in a parking lot during a "working" lunch.
C) ran over an attendant at a gas station while refueling the truck.
D) smashed into a store-front while intoxicated on-duty.
Q2) When the parties terminate an agency, it is the principal's duty to notify any third parties who know of the existence of the agency that it has been terminated.
A)True
B)False
Q3) If a principal ratifies a contract without knowing all of the facts, the principal can rescind the contract.
A)True
B)False
Q4) A principal whose identity is totally known by a third party with whom an agent contracts on the principal's behalf is an undisclosed principal.
A)True
B)False
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Page 35
Chapter 34: Employment, Immigration, and Labor Law
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Q1) Seiko works for TallTales Publishing, Inc. The basis for Seiko's contribution under the Federal Insurance Contribution Act to help pay for benefits that will partially make up for her loss of income on retirement is her
A) seniority at TallTales.
B) annual wage base.
C) special job skills.
D) county of residence.
Q2) Whenever a work-related injury or disease occurs, employers must make reports directly to the Occupational Safety and Health Administration.
A)True
B)False
Q3) Like Social Security, Medicare is funded by contributions from the employer and the employee.
A)True
B)False
Q4) During collective bargaining, the employer and the union are obligated to reach an agreement.
A)True
B)False
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Chapter 35: Employment Discrimination and Diversity
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Q1) Melanie files an employment discrimination suit against Natural Resources Industries Corporation under the Civil Rights Act of 1964 on a disparate-impact theory. To succeed, Melanie must show that members of a protected class are adversely affected by any of the following except the employer's A) practices.
B) procedures.
C) tests.
D) seniority system.
Q2) The distribution of promotions and other job benefits according to a seniority system is not normally a good defense to a suit for employment discrimination.
A)True
B)False
Q3) Title VII of the Civil Rights Act of 1964 prohibits job discrimination against majority group individuals, such as white males.
A)True
B)False
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Chapter 36: Sole Proprietorships and Franchises
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Q1) FreezE Yogurt Corporation provides its prospective franchisees with projected earnings figures based on actual data. FreezE Yogurt must also disclose
A) the number and percentage of franchisees that achieved the figures.
B) hypothetical examples of potential earnings.
C) an answer to the entrepreneur's question, "How much will I make?"
D) none of the choices.
Q2) Some states require that a franchisor submit advertising aimed at pro?spective franchisees to the state for approval.
A)True
B)False
Q3) A sole proprietor does not own the entire business.
A)True
B)False
Q4) When a franchise agreement contains a notice-and-cure provision, a franchisee's breach of the duty of honesty and fidelity is not enough to allow the franchisor to terminate the franchise.
A)True
B)False
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Chapter 37: Partnerships and Limited Liability Partnerships
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Q1) A limited partnership cannot be dissolved by court decree.
A)True
B)False
Q2) One can join a partnership even if all other partners do not consent.
A)True
B)False
Q3) Refer to Fact Pattern 37-1B. Cornell's assignment of his interest in Equity Lending to Financial Consultants Corporation results in
A) nothing with respect to Cornell or Equity Lending.
B) the automatic termination of Equity Lending's legal existence.
C) Cornell's liability for all of Equity Lending's debts.
D) Cornell's wrongful dissociation and liability for any damages.
Q4) A limited liability partnership may exempt its partners from personal liability for any partnership obligation.
A)True
B)False
Q5) The intent to associate is a key element of a partnership.
A)True
B)False
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Chapter 38: Other Organizational Forms for Small Businesses
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Q1) As the beneficiary of a business trust, Kevin's liability for trust debts and obligations is
A) limited to his capital investment in the trust.
B) limited to his personal assets.
C) nothing.
D) unlimited.
Q2) Oni's Adventure Travel and Paquito's Wild River Tours form a joint venture. Oni can participate in the venture's management
A) only to the extent that she assumes liability for the venture's debts.
B) only to the extent of her investment in the venture.
C) to any extent.
D) to no extent.
Q3) The law considers all new, single-owner businesses to be sole proprietorships unless the owner affirmatively adopts some other form.
A)True
B)False
Q4) The law governing limited liability companies is uniform.
A)True
B)False
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Chapter 39: Corporate Formation and Financing
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Q1) If a corporation has S corporation status, it can avoid the imposition of income taxes at the corporate level.
A)True
B)False
Q2) The state can suspend the entity's corporate status until the taxes are paid or even dissolve the corporation for failing to pay taxes.
A)True
B)False
Q3) Hudson and Ilka want to market a new line of kayaks and related gear under the brand name Journeys as a corporation-Journeys Inc. To avoid income taxes at the corporate level, they should form
A) a C corporation.
B) a close corporation.
C) an S corporation.
D) a private corporation.
Q4) In corporate law, acts of a corporation that are beyond its express or implied powers are de facto or de jure acts.
A)True B)False
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Chapter 40: Corporate Directors, Officers, Shareholders
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Q1) Dividends can be paid from the undistributed net profits earned by the corporation.
A)True
B)False
Q2) Each director can access the corporation's facilities and premises.
A)True
B)False
Q3) Dionne is an officer of Event Ticketing, Inc. As an officer, with respect to the corporation, Dionne is
A) a fiduciary.
B) a forum.
C) a proxy.
D) a quorum.
Q4) Merina and Nelli form Orchids, Inc. Ultimate responsibility for pol?icy decisions necessary to the management of corporate affairs rests with Orchids's
A) board of directors.
B) incorporators.
C) officers.
D) shareholders.
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Chapter 41: Mergers and Takeovers
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Q1) When deciding which form of business organization to choose, businesspersons normally consider only one factor.
A)True
B)False
Q2) Imogen is a shareholder of Jazz Street Studios, Inc. Imogen could normally ex?er?cise appraisal rights if Jazz Street participated in A) a share exchange.
B) a dissolution.
C) a takeover.
D) a winding up.
Q3) Ramon is a shareholder of Quantum Mechanix Corporation. Ramon could normally ex?er?cise appraisal rights if Quantum participated in A) a consolidation. B) a dissolution.
C) a liquidation.
D) a winding up.
Q4) The state cannot dissolve a corporation under any circumstances. A)True B)False
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Chapter 42: Securities Law Corporate Governance
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Q1) The Securities and Exchange Commission does not regulate the content of proxy statements.
A)True
B)False
Q2) Corporate "outsiders" may not be held liable for insider trading under Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5.
A)True
B)False
Q3) Liability can be imposed on those who are negligent in not discovering fraud in connection with a registration statement or prospectus.
A)True
B)False
Q4) Private parties can sue violators of Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 for rescission of a contract to buy securities.
A)True B)False
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Page 44
Chapter 43: Administrative Agencies
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Q1) An administrative rule may be arbitrary and capricious if the agency failed to provide a rational explanation for its decision.
A)True
B)False
Q2) All federal government agencies must make their records available electronically on the Internet and in other electronic formats.
A)True
B)False
Q3) Personnel Employment, Inc., has been ordered to appear at a hearing be?fore an administrative law judge of the Social Security Administration. A significant difference between a trial and an administrative hearing is that A) attorneys are not allowed to attend administrative hearings.
B) clients are not allowed to communicate with their attorneys dur?ing adminis?trative hearings.
C) hearsay can be introduced as evidence in an administrative hearing.
D) the burden of proof is on the charged party to prove innocence.
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Chapter 44: Consumer Law
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Q1) Lucy takes out a student loan from Midtown Bank. When she fails to make the scheduled payments for six months, Midtown advises her of further ac?tion that it will take. This violates
A) no federal law.
B) the Fair and Accurate Credit Transactions Act.
C) the Fair Debt Collection Practices Act.
D) the Truth-in-Lending Act.
Q2) Slow-Brew Coffee Company sells coffee and related beverages. The company's ad contends that ambitious businesspersons "Drink Us & Rise Up in the World!' " The Federal Trade Com?mission would consider this ad to be
A) false and misleading.
B) impermissibly vague and general.
C) a deceptive half-truth.
D) none of the choices.
Q3) A credit-card company must send monthly bills to cardholders twenty-one days before the due date.
A)True
B)False
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Chapter 45: Environmental Law and Sustainability
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Q1) There are no defenses to liability under the Comprehensive Environmental Response, Compensation, and Liability Act.
A)True
B)False
Q2) Bertha owns land located outside Centre City. Bertha sells the land to Disposal & Recycling, Inc., which establishes a hazardous waste disposal facility at the site. Disposal & Recycling accepts only waste transported by Eco Trucking Inc. exclusively from Federated Industries, Inc. Several years later, Disposal & Recycling closes its facility and sells the land to Garden Variety Retail Corporation, which builds a Home & Yard store on the site. Meanwhile, some of Centre City's citizens complain to the Environmental Protection Agency (EPA) that the city's municipal water supply is pol?luted. The EPA investigates and discovers that the sources of the pollu?tion are leaks of hazardous waste from what is now the Home & Yard site. The EPA cleans up the site. Who can be held liable for the cost of cleaning up the site? What standards must Centre City meet regarding the water?
Q3) The Clean Water Act permits the filling or dredging of wetlands without a permit.
A)True
B)False
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Chapter 46: Antitrust Law
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Q1) Market power is the ability of a firm to enter a given market.
A)True
B)False
Q2) The possession of monopoly power is the only element needed to establish the offense of monopolization.
A)True
B)False
Q3) U.S. antitrust laws may be applied to protect foreign consumers and competitors from violations committed by U.S. business firms.
A)True
B)False
Q4) A price-fixing agreement that is reasonable does not violate antitrust law.
A)True
B)False
Q5) Attempted monopolization is a violation of antitrust law.
A)True
B)False
Q6) The purpose of antitrust law is to reduce competition.
A)True
B)False
Page 48
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Chapter 47: Professional Liability and Accountability
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Q1) An accountant's liability under the Securities Act of 1933 re?quires privity of contract with the purchaser of a security.
A)True
B)False
Q2) Negligence cases against professionals usually focus on the element of causation.
A)True
B)False
Q3) Edward, an attorney, allows a statute of limitations to lapse on a claim by Fabrication Company, a client. Edward
A) can be held liable for malpractice.
B) has violated an ethical standard but cannot be held liable.
C) is subject to criminal penalties under the statute of limitations.
D) will be automatically disbarred.
Q4) An accountant can avoid liability by proving that his or her negligence was only the proximate cause of the cli?ent's loss.
A)True
B)False
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Chapter 48: Personal Property and Bailments
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Q1) Mallory's sister Naomi gives Mallory a leather working kit for Christmas. Mallory uses the kit to make a saddle. Mallory's acquisition of the saddle is by A) gift.
B) accession.
C) confusion.
D) production.
Q2) A bailment must be in writing to be valid. A)True
B)False
Q3) Common carriers can contract away their liability for damaged goods. A)True
B)False
Q4) Refer to Fact Pattern 48-1B. Truck & Transfer can avoid liability
A) by proof that Truck & Transfer was not negligent.
B) by proof that Truck & Transfer's loading dock is in a high-crime area.
C) by proof that United Home was negligent in hiring TTC.
D) under any circumstances.
Q5) A bailee must exercise reasonable care in preserving the bailed property. A)True
B)False
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Chapter 49: Real Property Landlord-Tenant Law
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Q1) LaDonna signs a one-year lease with Mae to occupy an apartment near the University of Iowa. LaDonna needs the apartment for two semesters only and may have to sublet it for the rest of the term. LaDonna's tenancy is
A) a periodic tenancy.
B) a tenancy at will.
C) a tenancy at sufferance.
D) a fixed-term tenancy.
Q2) Buck owns five acres of land in California. On the land Buck has a house and a toolshed. There are ten large maple trees around the house. The real property includes A) the land only.
B) the land and the house only.
C) the land, the house, and the toolshed, but not the trees.
D) the land, the house, the toolshed, and the trees.
Q3) A license is a right to go onto land owned by another and take away some part of the land itself or some product of the land.
A)True
B)False
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Chapter 50: Insurance
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Q1) Lamont applies for a health insurance policy with MedInsure, Inc., an insurance company, through Netta, an agent who works for MedInsure. Lamont pays the initial premium. Netta writes a binder, which A) acknowledges the application and promises to consider it. B) attests to the truth of each statement in the application C) evidences receipt of the payment of the initial premium. D) indicates that a policy is pending and states its essential terms.
Q2) WeatherGuard Roofing Corporation obtains an insurance policy that protects WeatherGuard against liability in the event of injuries or losses sustained by its employees during the course of their employment that are not covered under workers' compensation insurance. This is
A) casualty insurance.
B) employer's liability insurance.
C) key-person life insurance.
D) term life insurance.
Q3) A pro rata clause requires that all carriers proportionately share in any loss.
A)True
B)False
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Chapter 51: Wills and Trusts
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Q1) If no children or grandchildren survive a decedent who dies without a will, a surviving spouse receives the entire estate.
A)True
B)False
Q2) A "living will" is a will drafted and executed during a decedent's life.
A)True
B)False
Q3) Karissa's will states, "I give to my sister Lexy my condominium in Miami, Florida." This is
A) a general legacy.
B) a residuary.
C) a specific bequest.
D) a specific devise.
Q4) In his will, Bryson makes a gift of $12,000 to Curtis. This is
A) a general bequest.
B) a general devise.
C) a specific bequest.
D) a specific devise.
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