Commercial Transactions
Mock Exam
Course Introduction
Commercial Transactions explores the legal framework governing the sale and transfer of goods, payment mechanisms, secured transactions, and other essential aspects of business dealings. The course addresses fundamental topics such as the formation and performance of contracts, the rights and obligations of buyers and sellers, negotiable instruments, and the creation and enforcement of security interests. Through case studies and statutory analysis, students gain a comprehensive understanding of how commercial law facilitates trade and resolves disputes, equipping them with critical skills needed for practice in corporate, banking, and business law environments.
Recommended Textbook
Business Law Text and Cases 14th Edition by Kenneth
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Page 2
W. Clarkson
Chapter 1: Law and Legal Reasoning
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Sample Questions
Q1) "UCC 2-207(1)" is a citation to Uniform Commercial Code Section 2-207, subsection 1.
A)True
B)False
Answer: True
Q2) 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
Q3) Charles is a federal judge whose judicial decisions are part of case law, which does not include interpretations of
A) regulations created by administrative agencies.
B) constitutional provisions.
C) statutes enacted by legislatures.
D) parties' subjective motives for engaging in litigation.
Answer: D
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3
Chapter 2: Courts and Alternative Dispute Resolution
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Q1) A court's review of an arbitrator's award may be restricted.
A)True
B)False
Answer: True
Q2) Kari and Lillian, who are citizens of Mississippi, are involved in a case related to the adoption of their child. Over this case, Mississippi state courts have
A) concurrent jurisdiction with federal courts.
B) concurrent jurisdiction with other state courts.
C) exclusive jurisdiction.
D) no jurisdiction.
Answer: C
Q3) Some cases decided by federal courts of appeals are not subject to review by the United States Supreme Court.
A)True
B)False
Answer: False
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Chapter 3: Court Procedures
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Sample Questions
Q1) A court of appeals re-hears all of the evidence introduced at trial.
A)True
B)False Answer: False
Q2) There is one uniform set of rules of procedure for all courts.
A)True
B)False Answer: False
Q3) Any relevant material, including information stored electronically, can be the object of a discovery request.
A)True
B)False Answer: True
Q4) Before a trial, the plaintiff can file a motion to dismiss.
A)True
B)False Answer: True
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Chapter 4: Business and the Constitution
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Q1) The Bill of Rights protects individuals against types of interference by the federal government.
A)True
B)False
Q2) The police obtain a search warrant and search Jordan's apartment. After yelling obscenities at the officers, Jordan confesses to a crime and implicates his friends. The Constitution protects against
A) obscene speech.
B) implication of others.
C) unreasonable searches.
D) none of the choices.
Q3) The U.S. Constitution explicitly mentions a general right to privacy.
A)True
B)False
Q4) The national government can regulate almost every commercial enterprise in the United States.
A)True
B)False
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Page 6
Chapter 5: Business Ethics
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Q1) Management's behavior sets the ethical tone of a firm.
A)True
B)False
Q2) According to the view that Applied Engineering Corporation is a "citizen," the firm is expected to
A) participate in bettering communities and society.
B) primarily generate revenue for its owners.
C) have no responsibility other than profit maximization.
D) efficiently allocate scarce resources.
Q3) As part of a hiring process, Codex Marketing Company conducts an Internet search to discover what a job candidate has posted. To Codex, this act should present A) an ethical issue.
B) a legal question.
C) a personnel problem.
D) none of the choices.
Q4) If an action is legal, it is ethical.
A)True
B)False
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Chapter 6: Tort Law
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Q1) A plaintiff who voluntarily enters into a risky situation, knowing the risk involved, will be allowed to recover for any consequent injury.
A)True
B)False
Q2) Tort law provides remedies for acts that cause damage to property.
A)True
B)False
Q3) False imprisonment occurs when a person restrains another intentionally and without justification.
A)True
B)False
Q4) Basil, a clerk at Cycle World, takes a bicycle from the store without the owner's permission. Basil is liable for conversion
A) if he damages the bicycle.
B) if he does not have a good reason for taking the bicycle.
C) if he fails to prevent a theft of the bicycle from his possession.
D) under any circumstances.
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Chapter 7: Strict Liability and Product Liability
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Q1) Camp Gear, Inc., makes and sells a camp stove to Devin. Camp Gear fails to exercise "due care" to make the stove safe, however, and Devin is injured as a result. Camp Gear is most likely liable for A) assumption of risk.
B) commonly known danger.
C) negligence.
D) product misuse.
Q2) To support the imposition of strict product liability, a product must be substantially changed from the time it is sold to the time an injury occurs.
A)True
B)False
Q3) Under the doctrine of strict liability, if there is no fault, there is no liability.
A)True
B)False
Q4) A statute of limitations may restrict the time within which an action in product liability may be brought.
A)True
B)False
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Chapter 8: Intellectual Property Rights
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Sample Questions
Q1) Moe applies nano technology to invent a device that reduces the half-life of spent plutonium rods used in nuclear-fuel reactors. He names the device "Halftime." He also writes Nano Nukes, a book about this invention and other uses for nano technology. Moe can obtain copyright protection for
A) the device.
B) all of the choices.
C) the name "Halftime."
D) the book Nano Nukes.
Q2) In 2017, Kelly writes Like the Wind, a novel about marathoners and ultra marathoners. 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) until a revised or updated edition is issued.
Q3) A trademark must be registered to support a trademark infringement action.
A)True
B)False
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Chapter 9: Internet Law, Social Media, and Privacy
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Sample Questions
Q1) Jason transfers select copyrighted music recordings, without the copyright owners' authorization, through his computer and phone to his friends. Jason does not charge his friends for his "service." This is
A) copyright infringement.
B) a license.
C) goodwill.
D) "fair use."
Q2) Broadband, Inc., an Internet service provider, supplies information to the Federal Trade Commission concerning possible unfair or deceptive ads originating in a foreign jurisdiction. Under federal law, Broadband is
A) immune from liability.
B) subject to liability if the information is false.
C) subject to liability if the ads were sent through B's service.
D) subject to liability in the foreign jurisdiction, but not in the United States.
Q3) "Bad faith intent" is too subjective to be an element of a cause of action under the Anticybersquatting Consumer Protection Act.
A)True
B)False
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Chapter 10: Criminal Law and Cyber Crime
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Q1) Don sends e-mail to Eve, promising her a percentage of the amount in a foreign bank account if she will assist in transferring the funds to a U.S. bank account. Eve forwards her account number, but the funds are never sent. Instead, Don quickly withdraws the funds in Eve's account. This is
A) hacking.
B) identity theft.
C) phishing.
D) cyber fraud.
Q2) One purpose of criminal sanctions is to deter others from committing similar crimes in the future.
A)True
B)False
Q3) Criminal law spells out the duties that exist between persons or between citizens and their governments.
A)True
B)False
Q4) Falsifying public records or altering a legal document is larceny.
A)True
B)False
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Chapter 11: Nature and Terminology
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Q1) A promise is a declaration that something will or will not happen in the future.
A)True
B)False
Q2) In contract law, intent is determined by the secret, subjective intent, or belief, of a party.
A)True
B)False
Q3) Informal contracts are usually based on their substance rather than their form.
A)True
B)False
Q4) A contract that has been fully performed by the parties is an executory contract.
A)True
B)False
Q5) Contract law assures the parties to private agreements that the promises they make will be enforceable.
A)True
B)False
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Page 13
Chapter 12: Agreement in Traditional and E-Contracts
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Q1) Megan gives out a business card with an e-mail address on it. It is reasonable to infer that Megan has consented to
A) transact business electronically.
B) submit to the recipient's jurisdiction.
C) respond to e-mail sent to that address.
D) nothing.
Q2) Play-It-Loud, LLC, provides music-streaming services online subject to complex pricing schedules. To control specific offers for the services and thus the resulting contracts, important terms to provide online include
A) a provision relating to the resolution of any dispute.
B) a detailed history of the music business.
C) positive reviews from users of the service.
D) an updated list of the music available through the service.
Q3) An acceptance must be unequivocal.
A)True
B)False
Q4) In a bilateral contract, communication of acceptance is necessary.
A)True
B)False
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Chapter 13: Consideration
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Q1) Refer to Fact Pattern 13-3. The next day, Sal changes his mind and again offers to deliver Tasty's products. Tasty is willing to deal, but for a new price. Sal and Tasty
A) may agree to a new contract, but it cannot include a new price.
B) may agree to a new contract that includes the new price.
C) must perform their original contract.
D) must perform the part of their original contract that is executory.
Q2) Ross promises to pay Sara, his niece, $5,000 if she obtains her degree at Tech University, where she is in her third year. Sara graduates. Ross is
A) not required to pay because Sara was already at Tech.
B) not required to pay because obtaining a degree benefits Sara.
C) required to pay because a job can be hard to find after college.
D) required to pay because Sara obtained a degree at Tech.
Q3) Desi's Uncle Eduardo tells Desi, "If I feel you deserve it at the time, I will give you a new car when you graduate from college." This promise A) is illusory.
B) is enforceable.
C) relies on forbearance.
D) consists of a preexisting duty.
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Chapter 14: Capacity and Legality
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Q1) Contractual capacity includes the financial ability to pay for the benefits of a contract.
A)True
B)False
Q2) Even in states that permit certain types of gambling, courts find that gambling contracts are illegal.
A)True
B)False
Q3) Betty sells her Clothes Shop to Diane. In the sale agreement, there is a covenant not to compete that prohibits Betty from opening another clothing store within a certain distance. If a court concludes that this restriction is unreasonable, it will most likely
A) award Betty damages equal to the speculative profit of a closer store.
B) order Diane to stop doing business.
C) reform the covenant.
D) prohibit both parties from opening clothing stores.
Q4) A covenant not to compete included in the sale of an ongoing business is always unenforceable.
A)True
B)False
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Chapter 15: Mistakes, Fraud, and Voluntary Consent
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Sample Questions
Q1) An innocent party does not need to suffer an injury to collect damages as a result of a misrepresentation.
A)True
B)False
Q2) Olive, the owner of Olive's Orchard, contracts to sell its harvest to Pure Foods, Inc.
Later Olive refuses to perform. Pure Foods files a suit to enforce the contract. Olive and Pure Foods are in a state that does not recognize the doctrine of unconscionability. To defend successfully against enforcement of the contract on similar grounds, Olive might rely on traditional notions of
A) fraud.
B) materiality.
C) mistake.
D) value.
Q3) Refer to Fact Pattern 15-3. The contract between Doyle and Ezra that includes the mistake may be rescinded if the mistake involves A) a material fact.
B) any fact.
C) value or quality.
D) any of the choices.
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Page 17
Chapter 16: The Writing Requirement in Our Digital World
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Sample Questions
Q1) Air Flo, Inc., and Banyan Grove Apartments enter into an oral contract in which Air Flo agrees to provide air-conditioning and heating maintenance for Banyan Grove's facilities for two years. This contract is enforceable by
A) Air Flo.
B) Banyan Grove.
C) any third party, such as a HVAC supplies provider.
D) none of the choices.
Q2) A contract must be in writing to be enforceable if the contract makes performance possible within any definite period of time.
A)True B)False
Q3) primary obligation is a promise to pay another's debt only if that party fails to pay. A)True B)False
Q4) An oral contract for a transfer of land is always enforceable. A)True B)False
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18
Chapter 17: Third Party Rights
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Sample Questions
Q1) A contract between Laser Equipment, Inc., and Medical Center contains a clause stating that any assignment is "void." This ordinarily prohibits A) any assignment.
B) no assignment.
C) only an assignment of contract rights to personal services.
D) only an assignment that would change the obligor's risk.
Q2) Steel, Inc., and Transport Company enter into a contract. UniOil Corporation, which will indirectly benefit from the deal, is prevented from having rights under the contract by the principle of A) assignment.
B) delegation.
C) privity.
D) alienation.
Q3) If a third party has the right to control the details of contract performance, the third party is an incidental beneficiary.
A)True
B)False
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Chapter 18: Performance and Discharge
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Q1) Ed's Electric substantially performs its contract with Forest Hills Apartments, Inc., to deliver and install an alarm system and parking lot lighting. Forest Hills is entitled to A) damages.
B) nothing more.
C) to be excused from performance.
D) suspend performance.
Q2) The law allows an innocent party to be discharged when the other party has materially altered a written contract without consent.
A)True
B)False
Q3) Refer to Fact Pattern 18-2. If bad weather destroys Flora's crops, the obligation to deliver produce to Harvesters is A) breached. B) discharged.
C) not affected.
D) suspended.
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Chapter 19: Breach of Contract and Remedies
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Q1) Handicrafts & Hobbies Store agrees to hire Iliana for one year at a salary of $600 per week. When Handicrafts & Hobbies cancels the contract, Iliana spends $150 to obtain a similar job that pays $450 per week for a year. Iliana is entitled to recover
A) the amount of the wages that Handicrafts & Hobbies promised only.
B) the difference between the wages at the two jobs only.
C) the difference between the wages at the two jobs plus $150.
D) $150 only.
Q2) Nominal damages are awarded for the breach of a contract to nominate someone or something to a higher office, position, or category.
A)True
B)False
Q3) Ordinarily, the remedy for a seller's breach of a contract for a sale of real estate is damages.
A)True
B)False
Q4) Courts order reformation most often when fraud or mutual mistake is present. A)True
B)False
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Chapter 20: The Formation of Sales and Lease Contracts
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Q1) The UCC requires a contract modification to be supported by new consideration. A)True
B)False
Q2) Under the UCC, parties to sales and lease contracts are free to establish whatever terms they wish.
A)True
B)False
Q3) The UCC imposes some different rules on merchants.
A)True
B)False
Q4) Marine Expeditions, Inc., pays Nate's Boats $4,000 to use an oceangoing vessel for a month. For the purposes of the UCC, this is
A) a merchant's firm offer.
B) an option contract.
C) a lease.
D) a sale.
Q5) Intangible property has conceptual existence and thus comes under Article 2. A)True
B)False
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Chapter 21: Title, Risk, and Insurable Interest
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Q1) Roasters Corporation and Outdoor Barbecues, Inc., enter into a contract for a sale of a commercial grill. The contract requires Roasters to deliver the goods to Speedy Delivery Company for transport to Outdoor. Risk of loss passes to Outdoor when
A) Roasters delivers the goods to Speedy.
B) Roasters and Outdoor enter into their contract.
C) Speedy transports the goods to Outdoor.
D) Outdoor begins to use the grill.
Q2) Garden & Field stores order a specific assortment of rose bulbs from Hybrid Flora Company. Hybrid mistakenly ships a selection of annuals, which Garden & Field rejects and returns via Intra-state Transport, Inc. During the return, the annuals are lost. The loss is suffered by
A) Garden & Field.
B) Hybrid Flora.
C) Intra-state Transport.
D) Garden & Field's customers by an increase in the prices of other goods.
Q3) A seller has an insurable interest in goods as long as the goods are in existence.
A)True
B)False
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23
Chapter 22: Performance and Breach of Sales and Lease Contracts
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Q1) Pavers Inc. contracts to buy some heavy equipment from Earthmovers, Inc. Before either party performs, Earthmovers sells its assets to Excavation Corporation. On learning of the sale, Pavers is concerned about its contract with Earthmovers. Pavers should
A) demand assurances of performance from the seller.
B) consider the contract repudiated and sue the seller for breach.
C) buy the equipment from a different firm and bill the seller for the price.
D) buy the equipment from a different firm and bill Excavation for the price.
Q2) Tarts & Pies Bakery contracts with Sweet Fruits for strawberries to be delivered by Refrigerated Trucking Company. On the day of delivery, the refrigeration on the trucks is not working. Sweet Fruits
A) may ship the strawberries to the buyer using a different carrier.
B) must cancel the contract.
C) must wait to ship the strawberries until the carrier fixes its trucks.
D) must ship the goods through a different carrier and pay damages.
Q3) The principle of good faith applies to both parties to a sales contract.
A)True
B)False
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Page 24
Chapter 23: Warranties
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Q1) If warranties are inconsistent, implied warranties displace express warranties.
A)True
B)False
Q2) A seller is not required to give a written warranty for consumer goods sold.
A)True
B)False
Q3) Lighter Than Air, Inc., and Mario enter into a contract for a sale of a hang glider. Lighter Than Air, a merchant who deals in goods of the kind sold, makes implied and express warranties in connection with the sale. The Magnuson-Moss Warranty Act was designed to prevent deception in warranties by
A) displacing the UCC as the primary source of warranty rules.
B) making warranties easier to understand.
C) prohibiting disclaimers of warranties.
D) requiring sellers to give written warranties for consumer goods.
Q4) An action for breach of warranty accrues when the seller or lessor tenders delivery.
A)True
B)False
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25
Chapter 24: International and Space Law
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Q1) A nation that launches objects into space is absolutely liable for personal injury and property damage caused by its objects on Earth or in flight.
A)True
B)False
Q2) Renew Energy Company, a U.S. firm, and Seawater Petro, a Dutch firm, enter into a contract that includes an arbitration clause. This clause must provide that the arbitrator will be
A) any specified third party.
B) the American Arbitration Association.
C) the Dutch Arbitration Organization.
D) the International Chamber of Commerce.
Q3) A foreign citizen can bring a civil suit in a U.S. court for a violation of an international tort law.
A)True
B)False
Q4) Few countries guarantee compensation to foreign investors if their property is taken.
A)True
B)False
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Chapter 25: Negotiable Instruments
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Q1) Oren signs an instrument payable to the order of Pay-Out Loans, Inc., "on or before" June 15. This instrument is
A) negotiable.
B) not negotiable, because the maker can move up the payment date.
C) not negotiable, because moving up the payment date is optional.
D) not negotiable, because the exact payment date cannot be determined from the face of the instrument.
Q2) A statement in an instrument that payment can be made only out of a particular fund renders it nonnegotiable.
A)True
B)False
Q3) Laura writes on a piece of paper, "I owe you $400," signs it, and gives it to Max. This instrument is A) negotiable.
B) not negotiable, because it does not include an express promise to pay.
C) not negotiable, because it does not recite any consideration.
D) not negotiable, because it does not state any conditions to payment.
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Chapter 26: Transferability and Holder in Due Course
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Q1) Rochelle fraudulently induces Sybil to sign a note. Rochelle sells the note to Terry, who does not know of the fraud and takes the note for value and in good faith, and thus becomes an HDC. Terry sells the note to Ulrich, who sells the note back to Rochelle. Does Rochelle acquire Terry's HDC rights in the note?
Q2) Often, whether a holder will be able to obtain payment on an instrument will depend on whether he or she is a holder in due course.
A)True
B)False
Q3) Gwen signs a check payable to Hart and gives it to him. Hart indorses the back, and transfers the check to Ingrid. To negotiate the check to Jaime, Ingrid must
A) write "Ingrid" on the back.
B) write "pay to the order of Jaime [signed] Ingrid" on the back.
C) deliver the check to Jaime.
D) obtain Jaime's signature on the back.
Q4) A bearer instrument can be converted into an order instrument through indorsement.
A)True
B)False
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Page 28
Chapter 27: Liability, Defenses, and Discharge
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Q1) Hilltop Bank is an HDC of a note for $1,000 on which there is the forged signature of "Rob." If sued on the note by Hilltop, Rob's best defense would be A) illegality.
B) fraud in the execution.
C) material alteration.
D) forgery.
Q2) Elena, an employee of Builders, Inc., forges the signature of Carly, Builders's president, on a company check and cashes it at Delta Bank. Carly would ratify Elena's actions by
A) asking Delta Bank to prosecute Elena for forgery.
B) discharging Elena from Builders's employment.
C) entering into a repayment agreement with Elena.
D) filing criminal charges against Elena herself.
Q3) 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) Riley pays State Bank $500 plus a service fee to draw a check on itself payable to Torque Plumbing. The party that is responsible for paying the check is
A) both Riley and State Bank.
B) none of the choices.
C) only State Bank.
D) only Riley.
Q2) State Bank agrees to accept a check by setting aside sufficient funds to cover the amount. This check is considered
A) deposited.
B) cashed.
C) certified.
D) a provisional credit.
Q3) Only a customer or a person authorized to draw on an account can order a bank not to pay a check when it is presented for payment.
A)True
B)False
Q4) E-money replaces physical cash with virtual cash.
A)True
B)False
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Chapter 29: Creditors Rights and Remedies
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Q1) A surety cannot assert the principal debtor's bankruptcy as a defense to avoid liability on the debtor's obligation.
A)True
B)False
Q2) If a homeowner defaults, or fails to make the mortgage payments, the lender loses the right to foreclose on the mortgaged property.
A)True B)False
Q3) A court's order to seize a debtor's property after a judgment is referred to as a writ of execution.
A)True
B)False
Q4) In a few states, statutes allow the homestead exemption only if the judgment debtor has a family.
A)True B)False
Q5) A debtor's vehicle is never exempt from satisfaction of a judgment debt. A)True B)False
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Chapter 30: Secured Transactions
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Q1) 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.
Q2) The payment of Mo's debt to Neil is guaranteed by Mo's personal property. This is governed by
A) the Uniform Commercial Code.
B) the Federal Trade Commission.
C) the U.S. Constitution's commerce clause.
D) the Bankruptcy Reform Act of 2005.
Q3) Any breach of the terms of the security agreement can constitute default.
A)True
B)False
Q4) A secured party is any creditor who has a security interest in a debtor's collateral.
A)True
B)False
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Chapter 31: Bankruptcy Law
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Q1) Spicy Pizza, Inc., files for bankruptcy underChapter 11. Spicy'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.
Q2) Daniel is a trustee for a federal bankruptcy court. Daniel's duties include
A) collecting the debtor's available estate.
B) establishing priority for the payment of unsecured creditors.
C) operating a debtor's business to obtain maximum profit for creditors.
D) submitting to an examination under oath by the creditors.
Q3) The basic duty of a trustee is to collect the debtor's property and reduce it to money for distribution.
A)True
B)False
Q4) Any "person"-defined as including corporations-may be a debtor in a liquidation proceeding.
A)True
B)False
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Chapter 32: Agency Formation and Duties
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Q1) Refer to Fact Pattern 32-2. Garage Door hires Janitorial Service Company to clean the store. Garage Door gives Janitorial Service instructions as to what needs to be cleaned and when. With respect to Garage Door, Janitorial Service is
A) an independent contractor.
B) an employee only.
C) an employee and agent.
D) an principal.
Q2) The agent has the right to a safe working environment.
A)True
B)False
Q3) Unless an agent does not act in exchange for payment, the principal must pay the agreed-on value for the agent's services.
A)True
B)False
Q4) An agent is not authorized to act instead of a principal in doing business with third parties.
A)True
B)False
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Chapter 33: Agency Liability and Termination
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Q1) OnlineSales.com uses an e-agent to take a purchase order from a consumer over the Internet. The e-agent fails to provide an onscreen confirmation of the order. The effect of any error in the order can be avoided by A) OnlineSales.com.
B) the consumer.
C) both parties.
D) none of the choices.
Q2) A special power of attorney permits an agent to transact all business for a principal. A)True
B)False
Q3) Darla serves in a representative capacity for Ellen. To accomplish the objectives of this relationship, Darla's authority can be implied
A) by contradiction.
B) by custom.
C) by any subjective measure.
D) under no circumstances.
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35
Chapter 34: Employment, Immigration, and Labor Law
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Q1) Shipping Dispatch, LLC, provides its employees with an e-mail system. The company notifies them that it will monitor their communications over the system. Some employees file a suit against their employer, claiming a violation of privacy. The court is most likely to hold that, with respect to communications over the e-mail system, A) the employees did not have a reasonable expectation of privacy.
B) the employer violated the employees' privacy rights.
C) federal law prohibits the employer's "intentional interception."
D) federal law prohibits the employees' privacy claim.
Q2) Livia takes temporary family leave from her job at Manufacturers Corporation to care for a new baby. On Livia's return from the leave, Manufacturers must A) restore Livia to her same position or a comparable position.
B) reimburse Livia for her expenses while on leave.
C) promote Livia to the status of a key employee.
D) do nothing.
Q3) If a union loses the majority support of those it represents, an employer is not obligated to continue recognition of the union.
A)True
B)False
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Chapter 35: Employment Discrimination
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Q1) Refer to Fact Pattern 35-3. To successfully defend against Art's claim, Banquet will have to show that
A) Art consistently failed to meet the essential requirements of his job.
B) Banquet cannot make changes to the doors without undue hardship.
C) the individual who replaced Art is qualified for the position.
D) the doors were not installed as an act of intentional discrimination.
Q2) Race can be a bona fide occupational qualification.
A)True
B)False
Q3) Mechanical Engineering, Inc., may be liable for the sexual harassment of an employee if it knew or should have known about the harassment, failed to take immediate action, and the harassment was committed by
A) the employee's previous employer.
B) a company supervisor.
C) a competitor.
D) any of the choices.
Q4) A wage differential due to any factor violates the Equal Pay Act.
A)True B)False
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Chapter 36: Small Businesses and Franchises
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Q1) In choosing a form of business organization for a new enterprise, important factors include tax considerations.
A)True
B)False
Q2) Champions Corporation licenses the trademarks to its products to Direct Marketing, Inc., to reproduce on caps, sweatshirts, and similar goods for sale. This is
A) a franchise.
B) none of the choices.
C) a business loan.
D) a sole proprietorship.
Q3) Any suit against the business or its employees can lead to unlimited personal liability for the owner of a sole proprietorship.
A)True B)False
Q4) Anyone who does business must create a separate business organization. A)True
B)False
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Chapter 37: All Forms of Partnerships
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Q1) A partner may not have the right to dissociate from the partnership.
A)True
B)False
Q2) Nora and Owen do business as Profit & Property, a real estate investment partnership. In acting on the firm's behalf in a deal with Village Mall, Nora takes advantage of an opportunity to make a secret profit on her own behalf. To her firm, Nora is liable for
A) breach of the duty of care.
B) breach of contract.
C) breach of the duty of loyalty.
D) nothing.
Q3) Cherry Creek Development, LP, is a limited partnership that invests in residential real estate projects. Its limited partners include more than 150 sophisticated investors and investment professionals. A Cherry Creek limited partner loses his or her limited liability if he or she
A) participates in the firm's management.
B) does not participate in the firm's management.
C) invests in a project that Cherry Creek has declined.
D) votes to sell or dissolve the firm.
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Page 39
Chapter 38: Limited Liability Companies and Special Business Forms
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Q1) A limited liability company can be taxed as a corporation.
A)True
B)False
Q2) Unless otherwise agreed, joint venturers have an equal voice in controlling a venture-related project.
A)True
B)False
Q3) Normally, a member who dissociates from a limited liability company (LLC) has the right to force the LLC to dissolve.
A)True
B)False
Q4) Data Analytics, LLC, is a limited liability company. Unless the articles of organization specify otherwise, it will most likely be assumed that the firm is
A) member-managed.
B) manager-managed.
C) an aggregate of member and non-member managers. D) run by an outside professional management group.
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Chapter 39: Corporate Formation and Financing
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Q1) Harry and Ilene 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) an alien corporation.
B) a close corporation.
C) an S corporation.
D) a private corporation.
Q2) Boutique Bodega Corporation would like to change its corporate status to that of an S corporation. To qualify, the shareholders must not be
A) corporations.
B) estates.
C) individuals.
D) partnerships.
Q3) Owen is a registered agent for Pods & Phones, Inc., which incorporated in California. As a registered agent, Owen
A) agreed to sell stock in the firm before it existed.
B) applied to California on the firm's behalf to obtain its corporate charter.
C) represents the firm as a marketing agent.
D) receives legal documents on behalf of the firm.
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Page 41
Chapter 40: Corporate Directors, Officers, and Shareholders
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Q1) Mike is a shareholder of Natural Gas, Inc. Natural Gas uses cumulative voting to elect directors. This means that the number of Mike's votes is determined by the number of A) years that he has been a shareholder.
B) members of the board to be elected multiplied by the total number of voting shares that he holds.
C) shareholders present at the shareholders' meeting.
D) shareholders' meetings that he has attended.
Q2) The board of Management Consultants, Inc., can delegate some of its responsibilities to
A) the firm's incorporators.
B) the firm's officers.
C) the firm's shareholders.
D) no one.
Q3) A director or officer must act in good faith.
A)True B)False
Q4) Corporate officers are selected and removed by shareholders.
A)True
B)False
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Chapter 41: Mergers and Takeovers
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Q1) Whether a combination is a merger or a consolidation, the rights and liabilities of the shareholders are the same.
A)True
B)False
Q2) Garden Supply Company and Home & Lawn Corporation plan to consolidate. Most likely, the articles of consolidation will be filed with
A) the county recording office.
B) the local retailers' association.
C) the state's secretary of state.
D) the U.S. Department of Commerce.
Q3) Shareholders cannot lose their appraisal rights under any circumstances.
A)True
B)False
Q4) Refer to Fact Pattern 41-2. Unified Resources acquires
A) all of Shale's and Tierra's assets.
B) half of Shale's and Tierra's assets.
C) none of Shale's and Tierra's assets unless there is a formal transfer.
D) only assets that Shale and Tierra acquired after a combination was proposed.
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43
Chapter 42: Investor Protection, Insider Trading, and Corporate Governance
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Q1) Every state has its own corporate securities laws that regulate the offer and sale of securities within tis borders.
A)True
B)False
Q2) OnSpec, Inc., and its officers, directors, and shareholders, buy and sell securities. Section 16(b) of the Securities Exchange Act of 1934 covers purchases and sales of securities involving
A) corporate insiders.
B) misappropriation.
C) short-swing profits.
D) tippers and tippees.
Q3) Ridley is an officer of Sun Watts, Inc. Ridley knows that a Sun Watts engineer recently developed a new, inexpensive method for collecting, storing, and converting solar power into fuel. Ridley takes advantage of this information to buy Sun Watts stock from Taylor and, after the discovery is announced, to sell the stock to Ulrich at a profit. Taylor claims that this is a violation of federal law. Is Taylor correct? If so, what federal law has Ridley violated, and what are its possible penalties?
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Page 44
Chapter 43: Administrative Agencies
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Q1) The Nuclear Regulatory Commission is an independent regulatory agency. Its basic functions include making rules, investigating activities that it regulates, enforcing its rules and adjudicating disputes. All of these functions are part of A) the judicial process.
B) the legislative process.
C) the administrative process.
D) the executive process.
Q2) The Environmental Protection Agency (EPA) discovers that Fish Farms, Inc. has violated an EPA regulation. If no settlement is reached, the EPA can A) issue a formal complaint against Fish Farms. B) do nothing.
C) take the matter to the U.S. Supreme Court.
D) immediately impose sanctions on Fish Farms.
Q3) Some federal agencies are not subject to the requirements of the Administrative Procedure Act.
A)True B)False
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Page 45
Chapter 44: Consumer Law
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Q1) The Fair Debt Collection Practices Act attempts to ensure that creditors are always paid by debtors.
A)True
B)False
Q2) Hearth & Home Furniture store advertises bedroom suites at a "Special Low Price of $599." When Ilene tries to buy one of the suites, Jill, the salesperson, tells her that they are all sold and no more are obtainable. Jill adds that Hearth & Home has other bedroom suites available for as low as $2,599. This is
A) a cease-and-desist order.
B) bait-and-switch advertising.
C) counteradvertising.
D) puffery.
Q3) Mattress Company advertises a special sale-all bedding, half price. The ad does not state that the sale price does not include delivery or shipping costs. To avoid claims of deceptive advertising, Mattress should
A) clearly and conspicuously disclose the shipping cost in its ads.
B) display the shipping cost in small print on ads displayed in stores.
C) include the shipping cost in small print on its receipts.
D) not reveal the shipping cost.
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Page 46
Chapter 45: Environmental Protection
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Q1) Rural Electric Company submits a bid to build a dam on federal land as part of a federal project. For this action, an environmental impact statement is most likely
A) prohibited.
B) required.
C) unnecessary.
D) voluntary.
Q2) Injured individuals can rely on the common law to obtain damages from business polluters.
A)True
B)False
Q3) The Environmental Protection Agency is required to set maximum levels for pollutants in public water systems.
A)True
B)False
Q4) The Environmental Protection Agency has concluded that greenhouse gases, including CO2 emissions, do not constitute a public danger.
A)True
B)False
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Page 47
Chapter 46: Antitrust Law
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Q1) Gas, Inc., and Oil Corporation refine and sell gasoline. To limit the supply of gas on the market and thereby raise prices, Gas and Oil agree to buy "excess" supplies from dealers and "dispose" of it. This is
A) a deal that neither restrains trade or harms competition.
B) a legal restraint of trade.
C) a per se violation of the Sherman Act.
D) subject to analysis under the rule of reason.
Q2) Monopoly power is an extreme amount of market power.
A)True
B)False
Q3) HVAC Parts Company charges different buyers different prices for identical goods. HVAC's prices are subject to evaluation under A) the Clayton Act.
B) the Federal Trade Commission Act.
C) the Sherman Act.
D) no antitrust law.
Q4) The market-share test measures a firm's percentage share of a market.
A)True B)False
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Chapter 47: Professional Liability and Accountability
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Q1) Silvia prepares federal corporate income tax returns for Trade & Pawn Stores, Inc., and other firms. Under the Internal Revenue Code, with respect to an understatement of a client's tax liability, Silvia may be liable for
A) negligent or willful misconduct.
B) none of the choices.
C) only negligent misconduct.
D) only willful misconduct.
Q2) Lauren is an attorney. Like the conduct of all attorneys, Lauren's conduct is governed by rules of professional conduct established by the state in which she is licensed, and the Model Rules of Professional Conduct of
A) the Securities and Exchange Commission.
B) the American Bar Association.
C) the American Institute of Certified Public Accountants.
D) the International Accounting Standards Board.
Q3) Professionals are governed by the contracts they enter into with their clients.
A)True B)False
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Chapter 48: Personal Property and Bailments
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Q1) Rob steals a damaged, broken bike that is parked, unlocked, in a bike rack. He repairs, paints, and replaces parts on the bike until it is like new. The original owner, Sue, then claims it. The bike belongs to
A) Rob and Sue as co-owners.
B) Rob because he improved it substantially.
C) the state under an estray statute.
D) Sue because Rob stole it.
Q2) Dona owns factory machinery and the tools to service it, as well as office furniture, including computers. Emily owns patents, trademarks that identify the products made under those patents, and stock in the company that sells those products. Personal property includes items owned by
A) Dona and Emily.
B) Dona only.
C) Emily only.
D) neither Dona nor Emilio.
Q3) Businesses often pay taxes on the personal property they own, use, or lease.
A)True
B)False
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Chapter 49: Real Property and Landlord-Tenant Law
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Q1) Riley owns Sunnyvale Apartments. He promises his tenants that during the lease term, neither he nor anyone with a superior title to the property will disturb the tenants' use and enjoyment of the premises. This is
A) a tenancy at sufferance.
B) the covenant of quiet enjoyment.
C) the implied warranty of habitability.
D) a special warranty deed.
Q2) Grant wants to transfer the ownership of his warehouse to Holly by deed. To do so requires
A) the grantee's signature only.
B) the grantor's signature only.
C) the grantee's and the grantor's signatures.
D) a judge's signature.
Q3) Personal property may become real property by attaching it to real property.
A)True
B)False
Q4) A quitclaim deed offers the most protection against defects in the title.
A)True
B)False
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Chapter 50: Insurance
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Q1) Energy Industries, Inc., obtains insurance policies with Fidelity Insurance, Inc., and Goodworth Insurance Company against the risk of loss of Energy's property. Each policy includes a multiple insurance clause. A fire partially destroys one of Energy's buildings. Energy can collect from Fidelity
A) all of the loss.
B) half of the loss.
C) its proportionate share of the loss to the total amount of insurance.
D) none of the loss.
Q2) The words used in an insurance contract are given their ordinary meanings in light of the nature of the coverage involved.
A)True
B)False
Q3) Property insurance cannot be canceled for nonpayment of premiums.
A)True
B)False
Q4) When there is an ambiguity in an insurance policy, the provision generally is interpreted against the insurance company.
A)True
B)False
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Chapter 51: Wills and Trusts
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Q1) A decedent is a person who has died.
A)True
B)False
Q2) According to the terms of Donna's will, specific gifts are made, and taxes and other estate expenses and debts are paid. The assets of her estate that remain are
A) the bequest.
B) the devise.
C) the legacy.
D) the residuary.
Q3) Roy dies without a will. The distribution of Roy's estate is prescribed by A) Roy's closest relatives.
B) durable powers of attorney.
C) intestacy laws.
D) will substitutes.
Q4) A gift of real estate other than by will is a devise.
A)True
B)False
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Chapter 52: The Legal Environment of Business
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Q1) Cell Service Corporation pads all of its customers' bills with an unexpected fee, adding up to millions in profit for Cell at a small expense for each individual customer. In this situation, the customers could most affordably fight this charge by
A) bringing individual lawsuits.
B) engaging in individual arbitration.
C) filing a class action.
D) taking their case to the state legislature.
Q2) Hal patents a new type of running shoe. Hal and Iconic Shoe Company enter into a contract that allows the firm to make and market the shoe in exchange for royalty payments to Hal that decrease after the patent expires. In a previous case, a similar agreement was held to be invalid. According to the dissent in Kimble v. Marvel Entertainment, LLC, stare decisis
A) means "sticking to some wrong decisions."
B) does not require retaining "baseless and damaging precedents."
C) promotes unpredictability and inconsistency in the business world.
D) permits parties to negotiate a licensing agreement that reflects the true value of a patent.
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Page 54
Chapter 53: Torts and Crimes
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Q1) USA Sales Company publishes a "Privacy Policy" to attract customers, but fails to invest adequate resources in cyber security. A lack of security that allows hackers to steal customers' personal data from a business's computer system can be
A) the hackers' defense to criminal charges.
B) the ground for a suit by the Federal Trade Commission.
C) the basis for USA's recovery under a traditional insurance policy.
D) a source of bad publicity, but there are no other consequences.
Q2) The existence of an ethical duty on the part of Commerce & Trade Company, and other businesses, to prevent an attack by hackers on business computer systems, and consequent theft of customers' and employees' personal data, is evidenced by
A) a business's offer of credit monitoring in the event of a breach.
B) a business's cyber security insurance.
C) the individuals' trust in the business to protect their data.
D) a business's stated "Privacy Policy."
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Chapter 54: Contracts and E-Contracts
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Q1) Evermore Marketing LLC and Family Restaurants Inc. engage in an instant-messaging conversation while discussing an existing contract. Evermore suggests a modification-an increase in fees. Family asks about an increase in service. Evermore replies, "No limits!" Family responds, "Great!" As a modification of the parties' contract, this chat is most likely
A) enforceable.
B) not enforceable because any indication of an agreement is "accidental."
C) not enforceable because it is an instant-messaging conversation.
D) not enforceable because the language is relatively "careless."
Q2) Copa Mundo Fantasy Sports League involves soccer games in which the participants compile imaginary teams consisting of real athletes. These games would be considered gambling in a state that finds the outcome of a game is determined
A) unpredictably by factors outside the participants' control.
B) more than 50 percent by the participants' skill.
C) at the end of a full professional season.
D) almost entirely by the participants' judgment.
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56
Chapter 55: Domestic and International Sales and Lease Contracts
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Q1) The label on AmBeer Inc.'s beer reads, "U.S. quality" and, beneath that phrase in small print, "Made with Imported Hops." Bruce and other consumers file a class action against the brewer in California, which prohibits the use of an unqualified U.S.-origin claim. The plaintiffs' best ground for a possible recovery is most likely
A) misleading advertising.
B) unethical labeling practices.
C) inconsistent puffery.
D) inferior taste.
Q2) Fleet Feet, an online travel company, buys blocks of rooms from Grande Hotel, a hotel in Harbor City, at a wholesale rate. Fleet Feet resells the rooms to consumers at a retail rate. One recent effort by cities to collect taxes from e-commerce has focused on A) hotels that sell blocks of rooms at wholesale rates.
B) non-resident consumers who reserve rooms in in-state hotels.
C) online travel companies.
D) the dire financial straits of the cities during the latest recession.
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Page 57
Chapter 56: Negotiable Instruments
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Q1) A digital invoice is
A) an electronic version of a paper bill that can be paid online.
B) an online view of a paper bill that cannot be paid online.
C) a statement for a subscription service that makes B2B payments.
D) a supplemental record of a transaction payment.
Q2) Businesses have been required to switch to digital invoices in A) the European Union.
B) the United States.
C) countries that host the Association of Financial Professionals.
D) the home regions of cloud-based companies.
Q3) Virtual currency is a medium of exchange that operates like a currency in some environments. In other words, more precisely, virtual currency is A) digital money.
B) coins and bills.
C) checks, notes, and other negotiable instruments in paper form.
D) all of the choices.
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Chapter 57: Creditors Rights and Bankruptcy
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Q1) Beth borrows $10,000 from the U.S. Department of Education to help pay for her education at Community College. She signs a note payable to DOE for the amount of the loan plus interest. The borrower will be considered in default if she fails to A) any of the choices.
B) repay the loan according to the terms in the note.
C) graduate from Community College within four years of the loan.
D) find employment in her program of study after graduation.
Q2) Robert borrows $15,000 from State College to help pay for his education. He signs a note payable to the school for the amount of the loan plus interest. Robert defaults, and the school transfers the note to a collection agency. This means that A) additional costs to collect payment can be added to the unpaid principal.
B) additional requirements can be imposed on the borrower to graduate.
C) none of the choices.
D) Robert may have to accept a job offer from a select list of employers.
To view all questions and flashcards with answers, click on the resource link above.
Chapter 58: Agency and Employment
Available Study Resources on Quizplus for this Chatper
12 Verified Questions
12 Flashcards
Source URL: https://quizplus.com/quiz/22620
Sample Questions
Q1) Nadia, an employee of Omar in Saudi Arabia, engages in a wrongful act without Omar's knowledge or consent. Under the principles of sharia law, responsibility for Nadia's act lies with
A) only Nadia.
B) only Omar.
C) Nadia and vicariously-by extension-to Omar.
D) neither Nadia nor Omar.
Q2) Price & Profit Inc. and other employers routinely check job applicants' social media posts when deciding whom to hire. These sites can provide information on an applicant's race, religion, and other protected characteristics. Price can legally base its hiring decisions on the basis of A) none of the choices.
B) race.
C) any protected characteristic.
D) religion.
To view all questions and flashcards with answers, click on the resource link above.
Chapter 59: Business Organizations
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14 Verified Questions
14 Flashcards
Source URL: https://quizplus.com/quiz/22621
Sample Questions
Q1) Rick forms Study Groups Inc. to start a social media site online. He selects Takeaway as the domain name. Responsible for coordinating databases related to namespaces online
A) are the Web hosts of online businesses.
B) is the U.S. Copyright Office.
C) is the U.S. Patent and Trademark Office.
D) is the Internet Corporation for Assigned Names and Numbers.
Q2) Predictive analytics in the digital realm focuses on
A) predicting certain behavior based on certain data.
B) analyzing certain data to predict digital developments.
C) analyzing certain predictions to monitor certain results.
D) predicting certain digital data based on reasoned analysis.
Q3) Outlier Inc. hosts client accounts in servers located in foreign countries. The U.S. government issues a warrant to obtain e-mails related to a drug case from one of those accounts. Outlier refuses to comply. On the government's appeal, it is most likely that a court will
A) order the owner of the account to "stand and deliver."
B) order Outlier to comply with the warrant.
C) order the government to abide by Outlier's refusal.
D) order the foreign countries to seize Outlier's servers.
To view all questions and flashcards with answers, click on the resource link above. Page 61
Chapter 60: Government Regulation
Available Study Resources on Quizplus for this Chatper
12 Verified Questions
12 Flashcards
Source URL: https://quizplus.com/quiz/22622
Sample Questions
Q1) Don, like many attorneys, is storing his firm's confidential client information on the cloud. Like other professionals, Don should assume that
A) he does not need to be concerned with keeping the information secure.
B) the cloud provider will take precautions to keep the information secure.
C) he is ultimately responsible for the information.
D) privacy notification requirements are being complied with.
Q2) Eve is an attorney. With respect to client information, under the American Bar Association's Model Rules of Professional Conduct, Eve, like other attorneys
A) is required to guarantee that a breach of confidentiality will never occur.
B) has an ethical duty to safeguard the information.
C) does not need to be concerned with keeping the information secure.
D) does not own the data.
Q3) To reduce the emission of greenhouse gases, power companies are required to save specified amounts of energy by
A) all of the states.
B) less than half of the states.
C) more than half of the states.
D) none of the states.
To view all questions and flashcards with answers, click on the resource link above.
Chapter 61: Property and Its Protection
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8 Verified Questions
8 Flashcards
Source URL: https://quizplus.com/quiz/22623
Sample Questions
Q1) Bay City condemns private, residential property and conveys it to Commercial Construction Corporation to develop a shopping, dining, and entertainment complex on the city's waterfront. According to the United States Supreme Court,
A) a state can prohibit taking for economic development.
B) eminent domain may be used to further development.
C) a state can permit taking for redevelopment of slum areas.
D) all of the choices.
Q2) According to the United States Supreme Court,
A) Metro City can take a parking lot for a privately owned sports stadium.
B) all of the choices.
C) Laborville can condemn a vacant field for a private manufacturing plant.
D) Sleepyton can take residential property for a private corporate complex.
Q3) Bob owns a virtual asteroid near the virtual planet Cosmo in the virtual DeepSpace universe. Property consists of a bundle of rights in anything that has an ascertainable value and is subject to ownership. This definition encompasses A) intangible objects used in virtual worlds like DeepSpace.
B) digital books, music libraries, and movie downloads.
C) all of the choices.
D) domain names and expensively created Web sites.
To view all questions and flashcards with answers, click on the resource link above.
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