Business Law
Exam Questions
Course Introduction
Business Law is a foundational course that explores the legal principles and frameworks that govern commercial transactions and the operation of businesses. Students will examine essential topics such as contract law, agency, sales, negotiable instruments, and the regulation of business organizations including partnerships, corporations, and limited liability companies. The course also covers aspects of employment law, intellectual property, and dispute resolution methods. Emphasis is placed on understanding how legal issues impact day-to-day business operations and decision-making, equipping students with the knowledge to identify, analyze, and respond to legal challenges in the business environment.
Recommended Textbook
Canadian Business and the Law 5th Edition by Dorothy Duplessis
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Page 2
Chapter 1: Knowledge of Law As a Business Asset
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Sample Questions
Q1) What law regulates the use of tanning beds in Nova Scotia?
A) the Tanning Beds Act
B) the Consumer Protection Act
C) the Criminal Code of Canada
D) the Constitution of the World Health Organization
Answer: A
Q2) What is the primary asset needed to maximize protection of entrepreneurs and the entire business enterprise?
A) inventory tracking software
B) accounting software
C) surveillance cameras
D) knowledge of business law
Answer: D
Q3) Which of the following is an example of the values represented in the Canadian legal system?
A) The system seeks to be partial and flexible.
B) The system strives to produce just outcomes.
C) The system seeks to limit fairness and equity.
D) The system demands fairness and subjectivity.
Answer: B
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Chapter 2: The Canadian Legal System
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Q1) The judges in Canada's higher courts are appointed, and those in the lower courts are elected.
A)True
B)False
Answer: False
Q2) The government enacted new legislation prohibiting retailers from displaying tobacco products except at the moment of sale at the till. Which of the following best describes the legal basis for a business to challenge the new law?
A) The new law is a violation of the commercial freedom of businesses and is therefore unconstitutional.
B) The new law interferes with freedom of expression, which is protected under section 2 (b) of the Canadian Charter of Rights and Freedoms.
C) The new law is likely to be ineffective in reducing the number of people who smoke or take up smoking.
D) The government has no legal right to control how businesses choose to display a legal product, because such matters are private law, not public law.
Answer: B
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Chapter 3: Managing Legal Risks
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Sample Questions
Q1) The most common way to transfer risk is by buying insurance.
A)True
B)False
Answer: True
Q2) Rollie's Electric Ltd. notes its lawyer's account for annual corporate fees has been paid twice. No refund was received; instead, a second account has been sent, marked "paid in full." Why are Rollie and his business associates now contacting other lawyers?
A) to devise a plan to recover the overpayment
B) to determine what action would be best
C) because lawyers' billing practices may vary
D) because circumstances warrant a change of lawyer
Answer: D
Q3) Most lawyers can be expected to have the expertise necessary to head up a risk management department.
A)True
B)False
Answer: False
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Chapter 4: Dispute Resolution
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Sample Questions
Q1) The activities of a large multinational corporation violated federal and provincial environmental laws. It polluted a clean water source and caused illness among the people and wildlife inhabiting the affected area. What would the corporation's lawyers most likely suggest as the main reason for attempting to force resolution of the legal dispute through ADR?
A) a desire to avoid establishing a common law precedent for damages arising from environmental infractions
B) a need to sustain the operation based on the amount of capital resources committed to it business activities
C) the ability to keep details of the contamination and of the settlement private and confidential
D) the fact that an arbitrator's decision will be binding and likely be favourable to the corporation
Q2) What is the meaning of "evidence" in the legal environment?
A) the proof presented in court to support a claim
B) facts that are strictly documentary in nature
C) facts that are strictly verbal in nature
D) the oral details of the defence to the claim
Q3) Contrast the advantages and disadvantages of alternate dispute resolution.
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Page 6
Chapter 5: An Introduction to Contracts
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Q1) Which of the following is an example of a contract that would be governed by legislation and NOT by common law?
A) a contract involving the sale of goods governed by the Sale of Goods Act
B) a contract involving the supply of services governed by the Employment Act
C) a contract retaining a lawyer to perform legal services on behalf of a client
D) a verbal contract involving an exchange of services for a set monetary price
Q2) Most Canadian jurisdictions require contracts regarding interests in land to be in written form.
A)True
B)False
Q3) Why would a lawsuit be considered the least favourable choice of remedy for non-performance in a contractual business relationship?
A) The court's remedy will focus on the parties' economic realities.
B) The court will limit its remedy to focus on the specific disputed transaction.
C) The court will direct its decision strictly to the finding of the correct answer.
D) The court's decision will focus on the parties' best business options.
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Chapter 6: Forming Contractual Relationships
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Q1) Where the expiry date for acceptance of an offer lapses, the offer is no longer alive.
A)True B)False
Q2) Thomas gave Jerron his final sales pitch, offering 10 percent off the list price, 60 days for payment, a delivery date, and delivery terms. What has happened so far at this point in the negotiation process?
A) A consensus on the parties' rights and obligations has been reached.
B) A consensus on the terms of the offer between parties was reached.
C) A complete offer has been extended that is now open to acceptance.
D) There has been a mutual expression of willingness to do business.
Q3) Identify and briefly described two main risks negotiators face when attempting to negotiate commercial agreements that will lead to legally enforceable contractual obligations.
Q4) It is difficult to prove the presence of contractual intention in agreements between family members.
A)True
B)False
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Chapter 7: The Terms of a Contract
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Q1) What is the legal term given to a clause that allows the parties to reopen negotiations or terminate the contract if specified events occur?
A) a condition precedent
B) an implied term
C) an entire contract clause
D) an exemption clause
Q2) Identify four grounds used by the courts for introducing implied terms into contracts. Give an example of each.
Q3) Contracting parties can agree to limit the liability for a breach to less than what is recoverable under the principles of contract law.
A)True
B)False
Q4) Some Canadian courts have ruled that a good faith clause is not an automatic term of every contract and can be implied only when it is consistent with the parties' intentions.
A)True
B)False
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9
Chapter 8: Non Enforcement of Contracts
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Sample Questions
Q1) A simple oversight or error by one negotiating party does not constitute a legal mistake and provides no basis for voiding a contract.
A)True
B)False
Q2) What is an "electronic signature," and is it legally valid?
Q3) When applying for life and disability insurance protection on her mortgage, Marabou neglected to disclose that she had been diagnosed with type 2 diabetes. As players in the commercial contractual area have a duty to look after their own interests, the insurance policy will be enforced should she become disabled or die as a result of the undisclosed pre-existing condition.
A)True
B)False
Q4) A beneficial service contract is enforceable as long as it was commercially viable for the business owner employing a minor.
A)True
B)False
Q5) With respect to a contractual relationship, identify the types of remedies for misrepresentation available to the affected parties and how they are applied.
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Chapter 9: Termination and Enforcement of Contracts
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Sample Questions
Q1) A clause that excludes or limits liability even for a profoundly serious breach of contract is unenforceable, if it is unconscionable or would be unfair or unreasonable.
A)True
B)False
Q2) Explain why a court may deny the remedy of specific performance where it is satisfied that there has been improper behaviour by the plaintiff. Identify and provide two examples of the rules that are applicable in these particular circumstances and explain briefly the meaning both of those rules imply.
Q3) A breach can have the effect of terminating a contract.
A)True
B)False
Q4) Identify the test established in the still-leading decision of Hadley v. Baxendale (1854), 9 Exch 341. Briefly describe what the test determines and how it is applied.
Q5) Employees can be held liable for their employers' actions.
A)True
B)False
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11
Chapter 10: Introduction to Tort Law
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Sample Questions
Q1) The risks of liability for torts are substantial for just about any business venture. As a result, good business requires good risk management. What are the implications in the human relations area? Also, how does a good risk management plan affect the cost of insurance? Explain.
Q2) A judge will likely rely on expert opinions from occupation experts, labour economists, and actuaries when determining the value of an injured plaintiff's diminished earning capacity.
A)True
B)False
Q3) Which of the following is the phrase "unreasonable conduct" synonymous with when considered in its legal context?
A) battery
B) deceit
C) negligence
D) fraud
Q4) What is the common law rule regarding the availability of compensation when the plaintiff's contributory negligence contributed to his/her injury? How has this been changed by legislation?
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Page 12
Chapter 11: The Tort of Negligence
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Q1) If a court finds Rudy's spinal injuries are also the result of Rudy encouraging Benj to drive his boat at the excessive speed that caused the accident, what will immediately come into play?
A) contributory negligence
B) the standard of care
C) volenti non fit injuria
D) provincial legislation
Q2) Answering which of the following in the affirmative would strongly support a court's ability to order redress for negligence causing a victim's loss?
A) Was there carelessness on the part of the defendant?
B) Does the defendant have sufficient funds to pay for the loss?
C) Was the harm independently done?
D) Was the offending act unintentional?
Q3) In what legal context are concerns regarding the recovery of economic loss arising from a wrongful act prevalent?
A) negligent misstatement
B) prima facie negligence
C) professional incompetence
D) negligent incompetence
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Page 13
Chapter 12: Other Torts
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Sample Questions
Q1) Out of all of the common law Canadian provincial jurisdictions, only Alberta, British Columbia, Manitoba, Nova Scotia, Ontario, and Prince Edward Island have passed occupier's liability legislation.
A)True
B)False
Q2) Arwyn is a highly successful artist. She has recently become aware of a gallery that is selling replicas of some of her smaller sculptures. Identify the tort claim available to Arwyn in these circumstances and explain what a court will require to be proven to its satisfaction. Briefly discuss the effect satisfying this requirement will have, with respect to providing a remedy for Arwyn.
Q3) Any person whose presence is not a benefit to the occupier but to which the occupier has no objection is legally described as an invitee.
A)True
B)False
Q4) Identify who an occupier of a building is responsible for and briefly explain the basis on which the extent of that responsibility is varied.
Q5) Describe the questions that should be included in an occupier's liability risk management plan.
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Page 14
Chapter 13: The Agency Relationship
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Q1) A principal whose identity is unknown to a third party who has no knowledge that the agent is acting in an agency capacity is legally known as an undisclosed principal.
A)True
B)False
Q2) A fiduciary owes a duty of good faith toward another because of their relationship.
A)True
B)False
Q3) Agency relationships generated difficult complications resulting from unethical practices, necessitating the legislation of numerous special statues to govern agent's duties and responsibilities.
A)True
B)False
Q4) Identify and briefly describe the typical forms of power of attorney. Provide an example of each form of power of attorney you have identified.
Q5) Identify each type of agency authority and describe what is required of the principal in each instance.
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Chapter 14: Business Forms and Arrangements
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Sample Questions
Q1) A court is deliberating whether WestWood Dental Offices should be bound by obligations that allegedly arose by virtue of apparent authority. The claim relates to a purchase agreement for dental imaging equipment. What will the court most likely strongly rely on when arriving at a decision?
A) what a third party knows or ought to know of a partner's limited authority
B) whether the partner understands that the law protects business customers
C) what a partner knows or ought to know of an outsider's limited authority
D) whether a third party understood the risks of agents going astray
Q2) Ivan is the sole proprietor of Voyageur Transport. He operates Voyageur with three small ships that transport supplies by the riverways to northern settlements after spring breakup. Which of the following most likely applies with respect to Ivan's use of the name "Voyageur Transport"?
A) Business name use is subject to more specialized rules for this form of business.
B) To avoid fines and penalties, the business name must be registered.
C) A business name is irrelevant to an owner's ability to sue for business obligations.
D) There are no legal requirements for this form of business organization.
Q3) Discuss the distribution of the profits of a corporation.
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Chapter 15: The Corporate Form: Organizational Matters
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Q1) Remmie Ltd. owns all of the Class B shares in Rex Holdings Inc., giving it 40 percent of the equity and 82 percent of the voting power. How is Remmie able to exert control over Rex?
A) through a dual-share structure
B) through a fractional share structure
C) through a multi-class share structure
D) through a flow-through share structure
Q2) Which of the following is a feature of the legislation that regulates securities in Canada?
A) The Supreme Court of Canada has held that federal securities legislation is constitutional.
B) The provinces and federal government share jurisdiction over securities legislation.
C) All securities regulation in Canada falls under the federal jurisdiction.
D) Each province and territory has its own distinct securities legislation.
Q3) Among the objectives of securities legislation are to provide a mechanism for the transfer of securities and to regulate the activities of those engaged in the trading of securities.
A)True
B)False
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Page 17
Chapter 16: The Corporate Form: Operational Matters
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Q1) Why is it important that the Supreme Court of Canada has set law in place allowing creditors to pursue an action based on the obvious and more open-ended duty of care?
A) The law extends a change in duty in the vicinity of insolvency.
B) The law extends the duty of care beyond the corporation.
C) The duty of care is to be judged subjectively.
D) The court will disregard socioeconomic conditions.
Q2) A unanimous shareholder agreement is an agreement that defines the relationship among people who have an ownership interest in a corporation.
A)True
B)False
Q3) What common law decision provides the leading analysis of the principles underlying the corporate opportunity doctrine?
A) Re City Equitable Fire Insurance Co. [1925] 1 Ch 407
B) Canadian Aero Service Ltd. v. O'Malley [1974] S.C.R. 592
C) Peoples Department Store v. Wise (2004), 244 DLR (4th) 564 (S.C.C.)
D) BCE v. 1976 Debenture Holders (2008) SCC 69
Q4) Briefly discuss the oppression remedy. Identify the categories of conduct a court would usually find to be oppressive in nature.
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Page 18
Chapter 17: Personal Property
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Q1) Which of the following distinguishes a commercial bailment contract from a consumer bailment contract?
A) the limitation of standard forms to consumer contracts
B) the seriousness of a defect affecting the formation of a contract
C) the court's inclination to apply differing standards to each
D) the seriousness of a defect preventing the performance of a contract
Q2) What is the name used to describe the individual who has the right to enforce a lien over property until such time as storage fees have been paid?
A) warehouseman
B) financier
C) storagekeeper
D) skilled storagekeeper
Q3) Describe bailment, and discuss its key issues.
Q4) The function of a clause in a warehouseman's contract containing a description of the extent to which the bailee is liable for damage is to signal which party should buy insurance on the item being stored.
A)True
B)False
Q5) Identify the risks relating to personal property.
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Chapter 18: Intellectual Property
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Q1) What is the relationship between the qualitative and quantitative aspects of copying a substantial part of another's work with respect to copyright infringement?
A) determines whether the author has a valid right to object to dealings with or uses of the work
B) determines whether the author has a valid right to be associated with the work
C) determines infringement based on whether the part taken is a key or distinctive part
D) determines infringement based on whether the work is associated with a cause
Q2) What is the primary purpose of copyright?
A) to take intellectual property confidentially
B) to provide a right of exploitation of certain works
C) to license intellectual property
D) to make useful articles appear innovative
Q3) Identify the general categories of information commonly used in a business or commercial context that would be considered confidential.
Q4) List the factors identified by the Supreme Court of Canada that must be considered with respect to a confusion created by similar trademarks.
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Chapter 19: Real Property
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Q1) Juha and Tesalle presented an offer to purchase at $15 000 below Rickie's asking price for her home. Rickie did not accept the offer, stating that she would accept $2000 less than asking price. The couple countered, offering $5000 below asking price, with the appliances included, and Rickie accepted. How many offers did this transaction require before a contract of purchase and sale existed?
A) one
B) one, plus the acceptance
C) two
D) three
Q2) Sarafal was disappointed to learn that she would be unable to plant a hedge along the front borders of her property. She didn't object to having mountain ash trees planted along the street, but the absence of any possibility of a hedge affected her purchasing decision. In this instance, what is the ability to place conditions on ownership most strongly influenced by?
A) an encroachment agreement
B) zoning regulations
C) a restrictive covenant
D) planning schemes
Q3) Identify the key features of the registry system.
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Page 21
Chapter 20: The Employment Relationship
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Q1) What is the most common defence to an allegation of employment-related discrimination?
A) approved affirmative action
B) approved employment equity plans
C) bona fide occupational requirement
D) group insurance or pension plans
Q2) A judge is hearing a matter involving a claim for damages by an employee. The plaintiff alleges she suffered harm in the course of performing her employment duties, caused by a new manager's careless actions. Which of the following is a distinguishing characteristic of this type of action?
A) Claims alleging an employer's negligent hiring must prove fault by that party.
B) Vicarious liability for negligent hiring relieves the errant employee of liability.
C) Proof of an employer fault isn't required for vicarious liability for employees.
D) An employer's vicarious liability for negligent hiring is a strict liability in law.
Q3) Define harassment and list the various forms that such conduct may take.
Q4) List the essential content that should be included in an employment contract.
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Chapter 21: Terminating the Employment Relationship
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Q1) Kyrie has filed a wrongful termination suit alleging bad faith on the part of her former employer of nine years. At the time of her dismissal from her law clerk position, Kyrie earned $52 000 annually and fringe benefits of $100 per month. What damage award has Kyrie's lawyer suggested could be awarded under the labour standards legislation in these circumstances?
a.
$11 200
b.
$32 800
c.
$44 800
d.
$98 400
Q2) Which of the following cases set out the factors to be considered in determining quantum of appropriate notice on termination of employment as endorsed by the Supreme Court of Canada?
A) Dowling v. Halifax (City of) [1998] S.C.R. 22
B) Cronk v. Canadian General Insurance (1994), 19 O.R. (3d) 515 (Gen Div.)
C) Machinger v. HOJ Industries Ltd. [1992] 1 S.C.R. 986
D) Bardal v. Globe & Mail Ltd. (1960) 24 D.L.R. (2d) 140 (Ont. H.C.)
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Chapter 22: Professional Services
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Q1) What rule or rules apply when litigation involves a third-party claim?
A) Third-parties must be sued in separate litigation proceedings.
B) The plaintiff must sue the third party and the defendant.
C) Normal negligence principles will apply.
D) Third parties are entitled to recover the costs of being brought into the litigation.
Q2) In the case of a negligently prepared audit, a reasonably foreseeable use and reliance by a number of individual third parties establishes that the professional's duty of care exists. By applying the judiciary's imposed policy considerations at the second step of the test, the court is able to shield the professional from liability by limiting the use of the audit to its statutory purpose.
A)True
B)False
Q3) Identify the various ways in which a practising lawyer may charge fees for the professional services he or she renders.
Q4) Identify specific obligations that apply to a professional as fiduciary.
Q5) Briefly discuss the effects of a limited liability partnership on liability for partners of a firm and the firm itself.
Q6) Briefly discuss the concept of professional-client privilege.
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Chapter 23: Sales and Marketing: the Contract, Product, and Promotion
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Q1) Which of the following would be considered immaterial with respect to the series of rules contained in the provincial sale of goods legislation that determine when title transfers?
A) under Rule 2, whether the contract for specific goods is unconditional
B) under Rule 5, whether goods are sold on approval or on "sale or return"
C) under Rule 3, the putting of goods into a deliverable state
D) under Rule 1, the postponement of time of payment or delivery
Q2) What influences and directs, among other things, the creation of goods, services, or ideas?
A) federal and provincial legislation
B) intellectual property law
C) consumer demand
D) marketing law
Q3) What is meant by the term "merchantable quality"?
A) a reasonable quality, considering the description of the goods
B) the value declared or known to the buyer at the time
C) the value of goods corresponds with their description
D) the price paid determines the reasonableness of quality
Q4) Identify the warranties that are implied in sales transactions by the Sale of Goods Act.
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Chapter 24: Sales and Marketing: Price, Distribution, and Risk Management
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Q1) What prohibits the sale of a product at a price that is higher than the advertised price?
A) a voluntary agreement between the offending party and the Competition Bureau
B) a penalty carrying a maximum 14-year jail sentence and/or fine of $25 million
C) a criminal provision of the Competition Act
D) a civil provision of the Competition Act
Q2) Which of the following would a Competition Bureau investigator most likely indicate as the reason for seeking a remedial order from a judge?
A) discouraging distribution through exclusive regional dealerships
B) meeting a higher burden of proof due to the serious consequences of a finding of guilt
C) finding evidence of a product line being used as a loss leader
D) failing to reach a voluntary agreement resolving a reviewable matter
Q3) False, misleading, or deceptive advertising or claims are sources of legal risks that arise from marketing promotion activities.
A)True
B)False
Q4) List the sources of legal risks in marketing that relate to price.
Q5) Briefly discuss the regulation of door-to-door selling.
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Chapter 25: Business and Banking
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Q1) In what way do banks, trust companies, stockbrokerages, and insurance companies share a commonality with one another?
A) Each institution ensures stability within the financial services industry.
B) Liberalized ownership rules are traditionally applied to the four sectors.
C) Each is subject to the same regulations affecting the financial services industry.
D) The traditional financial services industry contained the four distinct sectors.
Q2) The acceptance of cheques for payment creates risk for the businesses that accepts them. The use of cheques for payment also creates risks for businesses paying for services or supplies. What are these risks?
Q3) The risk associated with a retailer accepting payment for goods in cash is that, while payment is immediate, the money may be counterfeit.
A)True
B)False
Q4) Identify the essential point for a creator of a cheque, and briefly discuss what is required in order for the bank to honour the cheque with respect to a payee or holder in due course.
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Page 27
Chapter 26: The Legal Aspects of Credit
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Q1) Which of the following is a common means of dealing with payment risk in international transactions?
A) guarantees
B) security agreements
C) a letter of commitment
D) a letter of credit
Q2) Discuss the letter of commitment and describe the basic terms that are detailed in this type of financing document.
Q3) What would an importer of goods want to assure it has obtained prior to making payment for those goods to a foreign supplier?
A) title documents
B) a letter of commitment
C) credit arrangements
D) collateral security
Q4) A deficiency results when a creditor has been forced to sell assets because of borrower default and the price realized by the sale is less than the outstanding amount of the debt.
A)True B)False
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Chapter 27: Bankruptcy and Insolvency
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Q1) A sale of a bankrupt's assets that can be declared void because it was not made in good faith or for valuable consideration is legally known as a reviewable transaction.
A)True
B)False
Q2) What is a similarity between a proposal and an arrangement under the Companies' Creditors Arrangement Act?
A) Both enable the debtor to seek DIP financing.
B) Both severely limit creditor protection.
C) The goal of each is to reduce the amount recovered by creditors.
D) Each limits feasible debt recovery and creditor agreement.
Q3) A payment made with the intention of giving a related person priority over at least one other creditor within one year of a bankruptcy order is described under the Bankruptcy and Insolvency Act as a reviewable settlement.
A)True
B)False
Q4) Explain what a proof of claim is and the procedure involved once a proof of claim has been submitted.
Q5) Identify the purposes that a proposal is intended to achieve.
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Page 29
Chapter 28: Insurance
Available Study Resources on Quizplus for this Chatper
70 Verified Questions
70 Flashcards
Source URL: https://quizplus.com/quiz/27019
Sample Questions
Q1) Which of the following would strongly support a reduction of the amount of an insurance premium?
A) assuming responsibility to pay part of the loss through a deductible
B) regulating the insurance industry generally
C) actively monitoring the insurance industry
D) mandating the terms that must be found in various insurance contracts
Q2) Which of the following has the main goal of protecting the public from unscrupulous, financially unstable, and otherwise problematic insurance companies?
A) the federal Department of Industry
B) the provincial insurance ombudsman
C) insurance industry legislation
D) consumer protection legislation
Q3) What type of insurance would provide coverage for the costs of a machine breakdown?
A) business interruption insurance
B) property insurance
C) casualty insurance
D) equipment life and disability insurance
Q4) Explain the nature and purpose of business interruption loss insurance.
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