Business Law
Test Questions
Course Introduction
Business Law introduces students to the fundamental legal principles and frameworks that govern commercial activities and business organizations. Topics include the structure of the legal system, contracts, agency, employment law, intellectual property, business entities such as corporations and partnerships, and the regulations affecting business transactions. By examining real-world case studies and statutes, students develop a practical understanding of how the law influences business decisions, protects stakeholders, and resolves disputes, enabling them to recognize legal risks and make informed choices in their future business careers.
Recommended Textbook
The Legal Environment of Business 13th Edition by Roger E. Meiners
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22 Chapters
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Page 2
Chapter 1: Todays Business Environment: Law and Ethics
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327 Verified Questions
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Sample Questions
Q1) Administrative agencies can:
A) enact regulations
B) supervise compliance with regulations
C) adjudicate violations of regulations
D) all of the other specific choices are correct
E) none of the other specific choices are correct
Answer: D
Q2) American common law was approved for adoption in Article III of the U.S. Constitution.
A)True
B)False
Answer: False
Q3) The common law began in:
A) France, at the time of the French revolution
B) Russia, at the time of the Russian revolution
C) England, before colonial days in America
D) the U.S., after the Declaration of Independence
E) Italy in the lex mercatoria
Answer: C
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Page 3
Chapter 2: The Court Systems
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Sample Questions
Q1) If a court rules in a particular case in which it is later found not to have jurisdiction:
A) the court will be fined
B) the plaintiff will be fined
C) the judgment of the court will stand
D) the judgment of the court will be suspect in all future cases
E) none of the other choices are correct
Answer: E
Q2) Refer to Fact Pattern 2-1. If Yoshi's case was tried in federal court in California and the issue of substantive law was whether or not a contract existed between Yoshi and the airplane owner, the court would apply the law of Georgia.
A)True
B)False
Answer: True
Q3) In the history of the United States, over 200 judges have been removed from the office of federal judge.
A)True
B)False
Answer: False
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4
Chapter 3: Trials and Resolving Disputes
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Sample Questions
Q1) During voir dire for a trial against MaryElise the opposing party's attorney finds that Jenny, one of the potential jurors, went to high school with MaryElise. The attorney challenges Jenny. Jenny will be rejected from the jury if the attorney can:
A) persuade the judge that Jenny will not help the case
B) persuade the judge that Jenny may be biased
C) persuade the judge that she does not like Jenny
D) persuade the judge to cancel the trial
E) persuade the judge that Jenny is not biased
Answer: B
Q2) If mediation is successful, the parties to the draft a settlement agreement. A)True
B)False
Answer: True
Q3) The first of the pleadings is known as "a claim."
A)True
B)False
Answer: False
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Chapter 4: The Constitution: Focus on Application to Business
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Q1) In Katzenback v. McClung, concerning race discrimination at a restaurant, the Court held that the Constitution does not allow federal regulation of purely local businesses, even if the goal is socially desirable.
A)True
B)False
Q2) The Supreme Court in Hughes v. Oklahoma held that states have compelling interests in protecting natural resources and these interests supersede the Commerce Clause.
A)True
B)False
Q3) The Fourteenth Amendment:
A) incorporates protections from the Bill of Rights and applies them to state governments
B) incorporates protections from the Bill of Rights and applies them to Congress
C) incorporates protections from the Bill of Rights and applies them to corporations
D) incorporates laws from the Declaration of Independence and applies them to state governments
E) none of the other choices are correct
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Chapter 5: Criminal Law and Business
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Sample Questions
Q1) White collar crime cases may occur under federal law or under state law.
A)True
B)False
Q2) In Bridge v. Phoenix Bond, where Phoenix Bond sued Bridge for filing false documents related to tax lien purchases, the Supreme Court held that:
A) RICO's text provides no basis for imposing a first-party reliance requirement
B) RICO's text provides a basis for imposing a first-party reliance requirement
C) RICO is unconstitutional
D) RICO does not apply under these circumstances
E) none of the other choices are correct
Q3) The term mens rea means "the defendant is guilty."
A)True
B)False
Q4) While the Sentencing Guidelines are advisory, they tend to restrict the range of sentences judges impose in criminal convictions.
A)True
B)False
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Chapter 6: Elements of Torts
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Sample Questions
Q1) If a person intends to act to cause a harmful or offensive contact, he is liable for the tort of:
A) assault
B) false imprisonment
C) defamation
D) duress
E) none of the other choices
Q2) Refer to Fact Pattern 6-1. If Elmo had entered Jo's office and threatened to hit her, but never did, Elmo might face a charge of:
A) negligence
B) invasion of privacy
C) assault
D) private nuisance
E) disparagement
Q3) You see a house on fire and rush in to save a person trapped in the house. You suffer burns from the fire. The person who negligently started the fire has no legal obligation to you because there was no knowledge you would become involved.
A)True
B)False
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Page 8
Chapter 7: Business Torts and Product Liability
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Sample Questions
Q1) As stated by the California high court in Greenman v. Yuba Power Products, where Greenman was injured when a tool his wife bought him malfunctioned, manufacturers should bear the costs of injuries their products cause and thus:
A) limited liability should be applied to manufacturers of defective products
B) ultimate liability should be applied to manufacturers of defective products
C) consumers should bear all the risk of using defective products
D) manufacturers should bear some, but not all of the costs, of defective products
E) none of the other choices are correct
Q2) When the tort of interference with contractual relations occurs, the party responsible for the tort is the party who breached an existing contract.
A)True
B)False
Q3) Scienter in tort law means the plaintiff can see the results of a fraud that has been suffered.
A)True
B)False
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9
Chapter 8: Real and Personal Property
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Sample Questions
Q1) When commercial rent includes charges for lighting, cleaning, parking lot maintenance, etc it is referred to as:
A) total rent
B) complete rent
C) net rent
D) extra rent
E) none of the other choices are correct
Q2) If there are "defects" found in a title during a title search the title is said to be:
A) misty
B) clouded
C) misunderstood
D) misrepresented
E) opaque
Q3) Commercial leases tend to be ____ than residential leases.
A) much longer
B) much shorter
C) much simpler
D) much more informal
E) none of the other choices are correct
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Page 10
Chapter 9: Intellectual Property
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Sample Questions
Q1) Musical compositions make up about what percent of the copyrights issued each year:
A) 25%
B) 90%
C) 100%
D) 50%
E) 10%
Q2) Intangible property is property that:
A) is invisible and impossible to hold
B) is tangible and concrete
C) is not taxable
D) is not for sale
E) cannot be sold for profit
Q3) One advantage of a patent is that:
A) the owner has exclusive rights to its use for the length of his life
B) it never expires
C) it provides strong legal protection for its life
D) the owner may not be sued for 15 years
E) it is automatically registered worldwide
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Page 11
Chapter 10: Contracts
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Sample Questions
Q1) ____ of an offer must be unequivocal or definite.
A) Revelation
B) Rejection
C) Resection
D) Consideration
E) none of the other choices are correct
Q2) An effective offer includes which of the following:
A) a clear intent by the offeree to become contractually bound
B) unclear and uncertain basic terms and conditions of the offer
C) clear and certain basic terms of the offer
D) all of the other specific choices are correct
E) none of the other specific choices are correct
Q3) Consideration is the element of a contract that:
A) allows it to be a gift
B) provides the terms of acceptance
C) gives the offeror a better deal
D) gives the offeree a better deal
E) none of the other choices are correct
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Chapter 11: Domestic and International Sales
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Sample Questions
Q1) During negotiations, the seller may induce the buyer to buy goods by making claims or by taking other actions. When those statements or actions relate to the quality, condition, or performance of the goods, the seller creates an implied warranty.
A)True
B)False
Q2) Under the UCC, the seller's basic obligation includes being concerned with:
A) what the goods are used for after they leave the seller's possession
B) the future financial solvency of the buyer
C) the appropriate manner of delivery
D) all of the other specific choices are correct
E) none of the other specific choices are correct
Q3) Unlike express warranties, implied warranties:
A) are not automatically imposed on sellers unless they specifically disclaim them
B) are automatically imposed on sellers unless they specifically disclaim them
C) cannot be automatically imposed on sellers
D) are imposed by the buyer
E) are imposed by the seller
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13
Chapter 12: Business Organizations
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Sample Questions
Q1) Corporations may not be forced to dissolve against the wishes of the board of directors.
A)True
B)False
Q2) Due to the inability to control sales, the government has, to date, prohibited the marketing of franchise operations over the Internet.
A)True
B)False
Q3) The owners of a limited liability company are called members.
A)True
B)False
Q4) ____ are those with stock traded on a stock exchange and, therefore, are likely to have many shareholders.
A) Traded corporations
B) Privately held corporations
C) Close corporations
D) Real corporations
E) none of the other choices are correct
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Page 14
Chapter 13: Negotiable Instruments, Credit, and Bankruptcy
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Sample Questions
Q1) Billy wants to borrow $10,000 to start a male belly dancing business. Creditors are not anxious to lend him the funds. Billy convinces Gary to back-up the credit he gets from a bank. On the loan, Billy is:
A) the guarantor
B) the grantor
C) the sorrier
D) the surety
E) none of the other choices
Q2) Capacity refers to:
A) a company's ability to extend credit to a customer
B) the debtor's ability to pay
C) the debtor's financial condition
D) the debtor's reputation
E) the debtor's assets to secure debt
Q3) A guarantor is the same as a surety.
A)True
B)False
Q4) Bankruptcy in Chapter 13 is usually to be completed in five years.
A)True
B)False
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Chapter 14: Agency and the Employment Relationship
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Sample Questions
Q1) ____ is a person who contracts with another to do something for him but who is not controlled by the other nor subject to the other's right to control with respect to his physical conduct in the performance of the undertaking.
A) a special agent
B) an apparent agent
C) an employee
D) an independent contractor
E) a general agent
Q2) The principal is possibly liable for the torts of the agent if the agent's tort was:
A) authorized by the principal
B) an unauthorized intentional tort outside the scope of the agent's employment
C) an unauthorized intentional tort within the scope of the agent's employment
D) authorized by the principal or an unauthorized intentional tort within the scope of the agent's employment
E) authorized by the principal or an unauthorized intentional tort within the scope of the agent's employment or an unauthorized intentional tort outside the scope of the agent's employment
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16
Chapter 15: Employment and Labor Regulations
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Sample Questions
Q1) The Taft-Hartley Act of 1947 significantly expanded the tactics unions may use to achieve their goals.
A)True
B)False
Q2) Employers obtain documents from non-citizens, but not from citizens, to have as proof of the employees' legal work status in the U.S.
A)True
B)False
Q3) An unfair labor case is filed with the National Labor Relations Board and goes before an administrative law judge for resolution. If one of the parties is unhappy with the decision of the judge, they may appeal to:
A) no one; no appeal is allowed
B) U.S. Court of Appeals
C) the administrative appeals law judge
D) U.S. federal district court
E) none of the other choices
Q4) ERISA deals only with retirement pension benefit plans.
A)True
B)False
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Chapter 16: Employment Discrimination
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Sample Questions
Q1) The most important source of discrimination in employment rules is Title VII of the 1964 Civil Rights Act.
A)True
B)False
Q2) Since some customers prefer to deal with people of their own race, employers may assign black employees to deal with black customers, white employees to deal with white customers, etc., under the defense of business necessity.
A)True
B)False
Q3) Intersectional discrimination refers to the claim that:
A) a person suffered discrimination because of sexual orientation
B) a person suffered discrimination because of race and religion
C) a person was not allowed to take off time from work to attend religious services
D) a person was treated unfairly because of their physical appearance
E) a person was not allowed to mention his cultural origin at work
Q4) Under Title VII, there is an official list of races.
A)True
B)False
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Chapter 17: The Regulatory Process
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Sample Questions
Q1) The usual public comment period for substantive rules is:
A) 60 to 90 days
B) 6 to 9 months
C) 1 year
D) 5 years
E) 30 days
Q2) The procedural requirement of ____ requires that a party seeking judicial review must have sought relief through all possible agency appeal processes before seeking review by the courts.
A) jurisdiction
B) reviewability
C) standing
D) ripeness
E) none of the other choices are correct
Q3) In Summers v. Earth Island Institute the Supreme Court held that environmental and other citizen groups have the right to intervene to challenge most regulatory decisions.
A)True
B)False
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Chapter 18: Securities Regulation
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Sample Questions
Q1) Which class of securities is (are) exempt from the federal securities laws?
A) issues by companies with ten-year profit records
B) issues by corporations with assets under $1 million
C) issues by corporations with over $1 billion in assets
D) all of the other specific choices
E) none of the other choices
Q2) Insider trading is:
A) legal if no profit is made
B) legal if the insider gets an outsider to buy or sell
C) illegal because insiders are strictly prohibited from stock trading under SEC Rule 10b-5
D) illegal because employment contracts for insiders prohibit trading in the securities issued by their employer
E) none of the other choices
Q3) The SEC prohibits investment companies from charging "loads" or commissions on the sale of mutual funds since the companies also charge a management fee.
A)True
B)False
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Chapter 19: Consumer Protection
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Sample Questions
Q1) Gold Hair shampoo advertises that it is the best for bringing out golden highlights of people with blond hair. Gold Hair ads state: "Tests prove that our shampoo is superior to other shampoos in making blond hair shine like gold." What FTC program monitors such claims?
A) the product purity program
B) the advertising substantiation program
C) the proof of product program
D) the consent decree program
E) the deceptive acts program
Q2) Nutritional supplements are:
A) subject to the same regulations as drugs
B) subject to stricter regulations than drugs
C) subject to fewer regulations than drugs
D) more expensive than drugs
E) illegal in many states
Q3) Medical devices approved by the FDA before being sold and then monitored for problems.
A)True
B)False
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Page 21
Chapter 20: Antitrust Law
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Sample Questions
Q1) Which law holds "unfair methods of competition" to be illegal?
A) the Sherman Act
B) the Clayton Act
C) the Federal Trade Commission Act
D) the Antitrust Improvement Act
E) none of the other choices
Q2) In reviewing the competitive effects of mergers, which of the following may be considered?
A) product market
B) geographic market
C) market share
D) product market and geographic market
E) product market and geographic market and market share
Q3) If a company imposing a tie-in has a market share of ____ in the market for the tying product, the use of tying will not be challenged.
A) more than 50%
B) less than 80%
C) less than 50%
D) less than 30%
E) more than 35%
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Chapter 21: Environmental Law
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Sample Questions
Q1) In a case at common law for trespass, which is necessary?
A) there only need be an interference with the use and enjoyment of another person's property
B) the invasion of another's land must be of "serious" magnitude
C) the invasion of another's land must be intentional
D) all of the other specific choices
E) none of the other choices
Q2) In pollution cases, a ____ is a substantial and unreasonable interference with the use and enjoyment of the land of another.
A) public nuisance
B) private environmental trespass
C) trespass
D) negligence
E) none of the other choices are correct
Q3) The Kyoto Treaty was:
A) signed by President Clinton and ratified by Congress
B) signed by President Reagan, but not ratified by Congress
C) not signed by President Clinton, but ratified by Congress
D) signed by President George H.W. Bush
E) none of the other choices are correct
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Chapter 22: The International Legal Environment of Business
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Sample Questions
Q1) Foreign trade zones are ports in a country where any products may be imported and sold without any taxes that would otherwise apply to imports.
A)True
B)False
Q2) The practice of creating an artificial price to use in its accounts when a firm sells goods from a division located in one country to a division within the U.S. is referred to as:
A) artificial pricing
B) pseudo pricing
C) internal market pricing
D) false market pricing
E) none of the other choices are correct
Q3) U.S. producers have the right to go to the International Trade Commission to request a tax be imposed on products from foreign countries that it claims are being subsidized by a foreign government in production.
A)True
B)False
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