Corporate Law
Final Test Solutions
Course Introduction
Corporate Law provides students with a comprehensive understanding of the legal framework governing corporations and other business entities. The course explores the formation, management, and dissolution of companies, as well as the rights and duties of directors, officers, and shareholders. Key topics include corporate governance, fiduciary responsibilities, mergers and acquisitions, securities regulation, and compliance with statutory requirements. Through case analysis and statutory interpretation, students develop the skills to assess legal risks and advise organizations on corporate decision-making and ethical considerations within the context of national and international regulatory environments.
Recommended Textbook Business Law and the Legal Environment Standard Edition 8th Edition by Jeffrey F. Beatty
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Page 2
Chapter 1: Introduction to Law
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Q1) Henry David Thoreau felt that war was unjust and therefore refused to pay his taxes when the United States declared war on Mexico.Thoreau felt that there was a higher law than the law of the land.Which theory of jurisprudence was he applying?
A)Legal positivism
B)Natural law
C)Legal realism
D)Common law
Answer: B
Q2) Curtis filed a lawsuit against Ulhoff for failure to repay $1,000 according to the terms of a promissory note.The trial ended before it began,with the trial judge granting a motion for summary judgment in favor of Curtis.Ulhoff has appealed,and the Supreme Court of Iowa has remanded the case.This means
A)Curtis automatically wins because he won in the lower court.
B)Ulhoff automatically wins because he lost in the lower court.
C)Neither party wins because the case is being thrown out.
D)We don't know who wins yet because the case is being returned to the trial court for additional steps.
Answer: D
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Page 3
Chapter 2: Ethics and Corporate Social Responsibility
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Q1) Which person argued that a corporate manager's primary responsibility is to the shareholders of the organization and that managers should make the company as profitable as possible while also complying with the law?
A)John Rawls
B)John Stuart Mill
C)Immanuel Kant
D)Milton Friedman
Answer: D
Q2) Which of the following statements best exemplifies how society as a whole benefits from ethical behavior?
A)Consumers are willing to pay more for a product they believe to be ethically produced. B)People feel better when they behave ethically.
C)Unethical behavior can be very costly.
D)Ethical behavior builds trust which is important in all of our relationships.
Answer: D
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Chapter 3: International Law
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Q1) Various agencies that have great impact on world business operate under the United Nations.Name these organizations and describe the purpose of each.
Answer: The World Bank: its purpose is to end poverty by encouraging development;it loans money to the poorest countries on favorable terms.
The International Monetary Fund: its purpose is to foster worldwide economic growth and financial stability.
The World Intellectual Property Organization: its mission is to promote the protection of intellectual property--patents,copyrights,trademarks,and industrial design.
The UN Commission on International Trade Law: it aims to harmonize international business law by proposing model legislation on such topics as international payments and e-commerce;it was responsible for putting forth the UN Convention for the International Sale of Goods (CISG)and the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention).
Q2) NAFTA is a trade agreement between the United States,Canada,and Mexico.
A)True
B)False
Answer: True
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Page 5
Chapter 4:
Common Law, Statutory Law, and Administrative Law
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Q1) If the President vetoes a bill and if both the House and Senate repass the bill by a two-thirds margin,the bill becomes law.
A)True
B)False
Q2) ATC,Inc.offered health insurance benefits to unmarried,same-sex domestic partners but not to unmarried,cohabiting heterosexual couples.Ray,an employee of ATC,Inc. ,challenged the benefit plan,claiming that it was in violation of Title VII of the Civil Rights Act.Under the Civil Rights Act,an employer may not discriminate against any individual on the basis of sex.Discuss the tools that a court may use in interpreting the Civil Rights Act.
Q3) Which law imposes controls on federal agencies by requiring basic fairness in areas not regulated by enabling legislation?
A)The 1964 Civil Rights Act.
B)The Clean Agency Act.
C)The Administrative Procedure Act.
D)The Freedom of Information Act.
Q4) The majority of work done by legislative bodies is performed in committees.
A)True
B)False
Page 6
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Chapter 5: Constitutional Law
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Q1) A form of due process that holds that certain rights are so fundamental that the government may not eliminate them is referred to as
A)procedural due process.
B)judicial restraint.
C)substantive due process.
D)eminent domain.
Q2) If Oregon passed a statute that prohibited liquor stores from engaging in any kind of advertising,that statute would be
A)valid as an exercise of police power.
B)valid,as alcohol is illegal for minors.
C)invalid as a violation of the Commerce Clause.
D)invalid as an unreasonable restriction of free speech.
Q3) Jackie purchased a condominium.When she bought it,she realized the homeowner's association had a variety of rules and regulations that she would need to follow.One regulation was that no children were allowed to live in the complex.Two years after buying the condominium,Jackie gave birth to a child.She was immediately served with papers notifying her to move out of the complex.Discuss the constitutionality of the homeowner association's action.
Q4) Discuss the Miller test to determine if a creative work is obscene.
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Chapter 6: Dispute Resolution
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Q1) Of all forms of dispute resolution,which one probably offers the strongest "win-win" potential because its goal is voluntary settlement?
A)litigation
B)arbitration
C)jurisdiction
D)mediation
Q2) Define discovery,and identify and explain five of the most important forms of discovery.
Q3) Primary methods of alternative dispute resolution include litigation and mediation.
A)True
B)False
Q4) Roberto sued Monica for injuries received in a traffic accident.If Monica does not respond to the complaint and summons served by Roberto within the prescribed time limits,Roberto may obtain a
A)judgment on the pleadings.
B)summary judgment.
C)pretrial conference.
D)default judgment.
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Chapter 7: Crime
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Q1) In general,police do not need a warrant to find out what websites you have visited.
A)True
B)False
Q2) Roger assaulted Jim in a tavern,causing medical expenses and lost wages.Which of the following is true?
A)Roger can be prosecuted by the state for a criminal offense,and Jim may sue him for money damages.
B)If Roger is convicted of criminal assault,Jim is not allowed to sue him for money damages because that would violate the double jeopardy clause of the Constitution.
C)If Jim refuses to press charges against Roger,the state cannot initiate a criminal proceeding against him.
D)Jim can either elect to sue for money damages or proceed with criminal charges.
Q3) The Federal Sentencing Guidelines are just guidelines.Judges do not have to follow them.
A)True
B)False
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Chapter 8: Intentional Torts and Business Torts
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Q1) Don was standing in a cafeteria line holding a plate.Tim was upset with Don.Tim turned Don around and grabbed the plate out of Don's hand.Tim then held the plate up and threatened to break it over Don's head.Tim has committed
A)a battery,but not an assault.
B)an assault,but not a battery.
C)both an assault and a battery.
D)neither an assault nor a battery.
Q2) Wholesome Bread,Inc.advertised that its honey wheat bread had 25% fewer calories than a competing brand,Valley Grains.In fact,Wholesome's bread had the same amount of calories as Valley Grains' bread.Wholesome Bread's conduct
A)does not violate the Lanham Act because of the First Amendment freedom of speech. B)does not violate the Lanham Act because Wholesome did not act with actual malice. C)does not violate the Lanham Act because comparative ads are exempt from the law. D)violates the Lanham Act.
Q3) Discuss the four elements that must be proven in order to win a defamation case.
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Chapter 9: Negligence, Strict Liability, and Product Liability
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Q1) A defendant engaging in an ultrahazardous activity is almost always liable for any harm that results.
A)True
B)False
Q2) On Monday,Travis took his four-wheeler to Reppart's Equipment & Service for repair because the steering was not working properly.On Friday,he called Reppart's to see if his four-wheeler was ready because he wanted it for a weekend trip.Reppart's said they had done the major repairs but that the steering system still needed some work and they needed another few days to finish the repairs.Travis told them he would pick the four-wheeler up and use it for the weekend and then bring it back to have them finish their work.While riding with friends on the weekend,Travis ran into someone because the steering stuck and he couldn't swerve to avoid them.Discuss how a court would determine causation in a negligence suit against Travis.
Q3) A contractor used dynamite to loosen a rocky hillside.The blast from the dynamite caused a house foundation to crack.The house was located over a half-mile away from the dynamite site.The contractor was careful when using the dynamite,and no allegation of negligence is made.However,the house owner claims the contractor is liable for damage to the foundation.Is the house owner correct? Explain.
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Chapter 10: Privacy and Internet Law
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Q1) Which statement regarding FIPS is true?
A)FIPS are only recommendations,not law.
B)FIPS originated from the Department of Justice.
C)FIPS has been ineffective in shaping privacy policies.
D)FIPS was established after the 9/11 terrorist attacks.
Q2) When you shop online,most retailers collect personal information about you.
A)True
B)False
Q3) After Jan's boyfriend broke up with her,she posted sexually explicit pictures of him on her Facebook page and wrote about how he was a terrible boyfriend.Jan's actions are protected by the First Amendment to the Constitution.
A)True
B)False
Q4) Which of the following regulates deceptive practices regarding a company's privacy policy?
A)Section 5 of the FTC Act
B)the federal COPPA
C)the federal ECPA
D)the FCC's privacy directive
Q5) Explain the core principles in the Fair Information Practices.
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Chapter 11: Introduction to Contracts
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Q1) Mike made the following offer to Mick: "I will pay you $500 if you agree to paint my house." Mick replied that he would.At this point,the contract is an
A)executed,bilateral,express contract.
B)executory,bilateral,implied-in-law contract.
C)executed,unilateral,express contract.
D)executory,bilateral,express contract.
Q2) Patty is a poor college student struggling to work and keep up with her studies.Fred,her uncle,promises to pay Patty support of $200 per month for the next six months.Although Fred didn't ask her to,she quits her current job in order to devote full time to her studies for the next six months.Fred makes one payment and then stops with no explanation.If Patty sues,what is the likely result?
A)Fred would win,as he did not ask Patty to quit her job.
B)Patty would win,as a contract was formed when Fred promised to pay her the support.
C)Fred would win,as family members cannot sue each other for breach of an oral promise.
D)Patty may win under the doctrine of promissory estoppel.
Q3) Discuss the requirements of promissory estoppel.
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Chapter 12: Agreement: Offers and Acceptances
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Q1) April put an advertisement in the newspaper advertising the sale of her computer for $500.Simultaneously,six people responded to the ad by mail with formal written acceptances.April is bound on all six contracts to sell her computer for $500.
A)True
B)False
Q2) Noah tells Ivy he is willing to sell his comic book collection to her for $100.Ivy says no,she would rather save her money to buy a new cell phone.What just happened?
A)termination by expiration
B)termination by rejection
C)termination by revocation
D)termination by operation of law
Q3) Spangel Fashions sends out its spring and summer catalog to Cindy.Cindy falls in love with the cute dress featured on the front cover of the catalog.When Cindy calls to order the dress,she is informed that the company has sold out of the dress.Cindy is upset and claims that the store is in breach of contract.She argues that the catalog presented an offer,which she accepted when she called to order the dress.Is Cindy correct? Why/why not?
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Page 14
Chapter 13: Consideration
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Q1) What two exceptions did the UCC create for accord and satisfaction check cases?
Q2) Courts distinguish between mere gifts between parties and legally binding commitments by the element of consideration.
A)True
B)False
Q3) If someone provides a service that he or she is already obligated to do,it is an example of
A)a promissory estoppel.
B)a past consideration.
C)an illusory promise.
D)a preexisting duty.
Q4) Contracts in which one party agrees in good faith to buy all his requirements of certain goods from the other party are generally unenforceable because there is no definite amount.
A)True
B)False
Q5) Frank's Furniture Company promised in a written agreement to purchase as much walnut wood "as it desires" from Forestry Products,Inc.If Frank's purchased walnut wood from another source and Forestry Products sued,what is the likely result?
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Chapter 14: Legality
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Q1) Suppose that Lenny Lawyer enters into an agreement with Cindy Client that his fee will be a percentage of the recovery Lenny obtains for Cindy in her pending divorce.State law makes such a contingency fee arrangement illegal in divorce actions.What will be the probable outcome if Lenny attempts to enforce the agreement?
A)The contract will be valid.Cindy would not have been able to afford an attorney otherwise and therefore Lenny was doing a public service.
B)The contract will be voidable at Cindy's option.
C)The contract will be void as violating a statute.Lenny will not be able to recover anything.
D)The contract will be unenforceable if Lenny did not get the agreement in writing.
Q2) An unconscionable contract is one that a court refuses to enforce because of A)fundamental unfairness.
B)illegality.
C)its limit to free trade. D)overt vagueness.
Q3) Discuss the pros and cons of gambling and state what the California Court of Appeals ruled regarding the treatment of gambling on credit.
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Page 16
Chapter 15: Voidable Contracts: Capacity and Consent
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Q1) A person who is mentally impaired generally can create only __________ contracts.
A)fraudulent
B)void
C)unconscionable
D)voidable
Q2) Fraudulent but innocent misrepresentation permits the injured party to rescind a contract.
A)True
B)False
Q3) What is the difference between a unilateral mistake and a mutual mistake? Under what circumstances will a court refuse to rescind a contract based on the defense of a "mistake"?
Q4) Adrianna wants to purchase a ten-acre tract of land.Under what circumstances would the seller be required to divulge information Adrianna does not possess?
Q5) Reed,a 15-year-old,has run out of money while on a trip away from home.Martha gives him food,a place to sleep,and his bus fare home,in exchange for Reed's promise to pay $200 after he got home.Is Reed's promise enforceable?
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Chapter 16: Written Contracts
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Q1) Derek and Abyan were discussing business over lunch when they agreed on the sale of a five-acre parcel of land.Since neither of them had any paper with them,Derek wrote the following on a napkin: "Abyan agrees to purchase from Derek a 5-acre parcel located at the local address of 123 105th Street,St.Joseph,Minnesota,U.S.A.for the price of $4,500 per acre.Transfer of title,payment,and possession to take place on May 1,2011." Abyan signed the napkin.On May 1,2011,Derek was ready to close the deal and transfer title but Abyan refused to pay the purchase price.If Derek sues Abyan for the price of the land,the most likely result will be
A)Abyan will win because the writing is not sufficient under the Statute of Frauds.
B)Derek will win because the writing is sufficient under the Statute of Frauds.
C)Abyan will win because Derek did not sign the writing.
D)Derek will win because the Statute of Frauds does not apply to this situation.
Q2) When a contract falls within the Statute of Frauds but is not in writing,the contract is A)illegal.
B)unenforceable.
C)void.
D)voidable.
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Page 18
Chapter 17: Third Parties
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Q1) Norm and Frank have a legal contract that is silent with regard to an assignment of the contract.In order for Norm to assign all or part of his rights under a contract,Frank must grant such permission to Norm.
A)True
B)False
Q2) A rock group assigns its payment under a performance contract to the Costume Shop,a business that has supplied the group with outrageous stage outfits,and to which the group owes a great sum of money.Under this arrangement the rock group is the A)assignor.
B)assignee.
C)delegator.
D)delegatee.
Q3) Martina hired Alexander to renovate her home and specifies that Alexander use Spiffy Painting for all the painting because of Spiffy's excellent reputation.In this case,Spiffy is a(n)
A)creditor beneficiary.
B)incidental beneficiary.
C)intended beneficiary.
D)debtor beneficiary.
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Page 19
Chapter 18: Contract Termination
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Q1) What does the term "substantial performance" mean? What factors are generally considered when determining whether one of the parties has substantially performed?
Q2) Dana hires Paris to paint a portrait of her poodle,"Mack." The painting is to be done to Dana's personal satisfaction.Upon completion of the painting,which of the following will be true?
A)Dana may refuse to accept the painting if she really does not like it.
B)Dana may refuse to accept the painting only if a reasonable person would not like it.
C)Dana may refuse to accept the painting if she cannot afford to pay for it.
D)Dana may not refuse to accept the painting.
Q3) The law strongly prefers to apply the objective standard to contracts because
A)it requires both parties to carry out their obligations in good faith.
B)the subjective standard gives unlimited power to the promisee.
C)it is almost impossible to breach a contract under this standard.
D)the subjective standard gives unlimited power to the promisor.
Q4) Concurrent conditions arise when there is both a condition precedent and a condition subsequent.
A)True
B)False
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Page 20
Chapter 19: Remedies
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Q1) To win expectation damages,the injured party must prove the breach of contract caused damages that can be quantified with reasonable certainty.
A)True
B)False
Q2) Carswell,a contractor,enters into a contract with Helen,a homeowner,to remodel her bathroom.The contract provides a specific completion date.The contract provides that if Carswell does not have the job finished by the date,Helen may deduct $200 per day from the contract price until the job is finished.This is an example of liquidated damages.
A)True
B)False
Q3) The remedy of reformation
A)applies only when money damages are inadequate.
B)can be used to correct mistakes in the original contract.
C)is available only if fraud is involved.
D)is a commonly used remedy.
Q4) Identify and describe the principal contract interests a court may seek to protect.
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21
Chapter 20: Practical Contracts
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Q1) An honest effort to meet both the spirit and letter of the contract is termed
A)reasonable circumstances.
B)sole discretion.
C)honest representation.
D)good faith.
Q2) Which of the following is the best example of a contract title?
A)AGREEMENT
B)LEASE AGREEMENT
C)LEASE AGREEMENT BETWEEN ALISON ALBRIGHT AND KEYSTONE PROPERTIES
D)CONTRACT BETWEEN LESSOR AND LESSEE
Q3) Which of the following generally is NOT in the introductory paragraph of a contract?
A)the date of the contract
B)the covenants of the contract
C)the parties to the contract
D)the nature of the contract
Q4) You should hire a lawyer to review any legal papers you have to sign,especially such papers as lease agreements or car purchases.
A)True
B)False
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Chapter 21: Introduction to Sales
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Q1) Sean of Sean's Shrimp House was enjoying a cup of cappuccino while visiting with Ollie at Ollie's Ocean Front Bar & Grill.During the course of their conversation,Sean agreed to supply 100 pounds of shrimp per month for the next year to Ollie's restaurant at the price of $2.50 per pound.When Sean got back to his office,he sent a written confirmation of the agreement to Ollie.Six weeks after receiving the confirmation Ollie wrote back,stating that he had not agreed to the price of $2.50 per pound.Is Ollie bound to the confirmation?
Q2) Under the UCC,a modification to a contract for the sale of goods needs no consideration to be binding.
A)True
B)False
Q3) A requirements contract is a contract
A)in restraint of trade.
B)in which the seller provides all of the goods that the buyer needs.
C)in which the buyer purchases all of the goods that the seller produces.
D)in which a party must buy a product it does not want in order to be allowed to buy a product it requires.
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Page 23
Chapter 22: Ownership, Risk and Warranties
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Q1) Mason bought a rotisserie in preparation for a party he was planning.When he put a chicken on the rotisserie,it would not rotate,but stayed in one position where it burned the chicken on one side and left it raw on the other.When he returned the rotisserie to the store,the salesperson disclaimed any responsibility because he had never told Mason the rotisserie would rotate the food as it cooked.Does Mason have any recourse?
A)No,the salesperson did not make any express warranties.
B)Yes,the salesperson made an express warranty just by selling the goods.
C)Yes,although the salesperson did not make any express warranties,the UCC imposes an express warranty on the sale.
D)Yes,although the salesperson did not make any express warranties,the UCC imposes an implied warranty of merchantability under which the rotisserie is guaranteed to be fit for the ordinary purposes for which it is used.
Q2) Which of the following would be a breach of the implied warranty of merchantability?
A)a knife that cuts its user when slicing a bagel
B)a radio that does not pick up FM signals
C)a match that burns a spot in the carpet when accidentally dropped
D)a dress watch that does not keep accurate time after getting wet
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Chapter 23: Performance and Remedies
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Q1) Liquidated damages are not permitted under the UCC.
A)True
B)False
Q2) A court order requiring the seller to perform as promised is called
A)specific performance.
B)cover.
C)liquidated damages.
D)good faith.
Q3) Master Glue Hairspray,Inc.contracts to purchase 100 umbrellas with its logo and slogan,"A spray a day keeps the rain and wind away!" specially printed on the umbrellas and its 1-800 telephone number on the umbrella handle.After the seller completes the order,Master Glue refuses to accept or pay for the umbrellas.Because of the special logo and telephone number,the seller has been unable to find a new buyer.If the seller sues Master Glue,what is the proper measure of the seller's damages?
A)contract price minus market value of the goods at the time of delivery
B)contract price
C)lost profits
D)cover price minus contract price
Q4) Identify the possible remedies for a seller when the buyer breaches a contract.
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Chapter 24: Secured Transactions
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Q1) For a security interest to attach,there must be an agreement.
A)True
B)False
Q2) Wanderlust gave a security interest in his Conestoga wagon to Iowa Bank who perfected its security interest by filing a financing statement with the appropriate officials in Iowa.Five months later,Wanderlust hit the trail again,moving to Montana.If Iowa Bank wants to continue its perfected interest in the Conestoga wagon,it should A)file a continuation statement for another five years in Iowa before Wanderlust moves on.
B)re-perfect by filing a financing statement in the appropriate place in Montana,according to Montana law,within four months of Wanderlust's entering Montana.
C)repossess the Conestoga wagon.
D)file a continuation statement for another four months in Iowa before Wanderlust moves on.
Q3) Fowler Bros.has applied to Gibralter Bank for a $50,000 loan for its business expansion.If Fowler Bros.plans to use its account at Gibralter Bank as collateral,discuss what the bank needs to do for a security interest to attach.
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Page 26
Chapter 25: Creating a Negotiable Instrument
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Q1) Trisha loaned Brian $600 evidenced by a promissory note.When Brian paid off the loan,he did not ask Trisha for the note.She sold it to Carin,a holder in due course.Brian does not have to pay Carin since he already paid Trisha the full $600.
A)True
B)False
Q2) Kent Weston wrote a check for $500 payable to the order of Chester Jones.Chester indorsed the back of the check as follows: "Chester Jones." The check is now A)order paper.
B)bearer paper.
C)a cashier's check.
D)special paper.
Q3) Margo is in possession of a check issued to her by Felix.The check states,"Pay to the order of Margo." If Margo wishes to transfer the check to Pete to pay a debt she owes him,all she needs to do is strike out her name on the front of the check,write in Felix's name,and give it to him.
A)True
B)False
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Chapter 26: Liability for Negotiable Instruments
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Q1) If an employee with responsibility for issuing instruments forges a check or other instrument,then any indorsement in the name of the payee,or a similar name,is valid as long as the person who pays the instrument doesn't know of the fraud.
A)the Imposter Rule
B)the Conversion Rule
C)the Employee Indorsement Rule
D)the Fictitious Payee Rule
Q2) Anyone who presents a check for payment makes certain warranties.Which of the following is NOT one of those warranties?
A)that he or she is a holder
B)that the check has not been altered
C)that the drawee is a solvent institution
D)that all signatures are authentic
Q3) Dwight Stringer signed three promissory notes as an agent for his company.The first,he signed "Dwight Stringer,agent for Park Systems,Inc." The second,he signed "Dwight Stringer,Agent." The third note was signed merely "Park Systems,Inc." Discuss the liability of Dwight and Park Systems,Inc.on each of the notes.
Q4) List the warranties a transferor of a negotiable instrument makes.
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28
Chapter 27: Accountants Liability
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Q1) The Big Four accounting firms spend about what percentage of their revenue on litigation,including settlements and insurance?
A)less than five percent
B)between 10 and 20 percent
C)between 25 and 35 percent
D)over 50 percent
Q2) Criminal liability for accountants
A)is not an option under securities law;there is only civil liability.
B)is possible under the Securities Act of 1933,the 1934 Act,state securities laws,and the Internal Revenue Code.
C)may result in fines but not imprisonment from violation of the federal securities laws.
D)will result from violation of the accountant-client privilege under federal law.
Q3) Under the amended Securities Exchange Act of 1934,accountants are liable jointly and severally whether or not they knew they were violating the law.
A)True
B)False
Q4) Under what circumstances are accountants liable to their clients for fraud?
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Chapter 28: Agency Law
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Q1) Grant is a delivery person for Watkins Furniture.One day,after delivering a chair to Nadine's house,he stopped at a fast food restaurant to get a sandwich at the drive-through window.As he was leaving the parking lot,he accidentally hit the rear of Blanche's car.Discuss the possible liability of Watkins for Grant's accident.Would there be any difference in the potential liability of Watkins if Grant had the accident after driving 30 miles away to visit a friend?
Q2) A principal must indemnify an agent for any reasonable expenses incurred in carrying out his or her responsibilities.
A)True
B)False
Q3) Pamela hired Lena to sell her business.Lena
A)can buy the business as long as the price is fair.
B)can buy the business as long as she qualifies for financing.
C)can buy the business only with Pamela's permission.
D)cannot buy the business under any circumstances.
Q4) If Denise is hired to work as a cashier,she has the implied authority to do acts reasonably necessary to carry out her job.
A)True
B)False
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Chapter 29: Employment and Labor Law
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Q1) Firing an employee for her refusal to violate the law would raise a claim of wrongful discharge.
A)True B)False
Q2) Under the Family and Medical Leave Act,an employee can take up to 12 weeks of paid leave each year for certain personal and family illness situations.
A)True
B)False
Q3) Jenna works for Mega Corp as a production employee.She is paid an hourly wage.She wishes to negotiate her own employment contract with management since she does not agree with the terms of her union's collective bargaining agreement.Can Jenna negotiate her own contract? Explain.
Q4) Secondary boycotts
A)are generally legal provided the boycott is peaceful.
B)are generally legal provided the boycott does not involve public employees such as nurses or school teachers.
C)are not expressly permitted nor prohibited under federal law.
D)are generally illegal.
Q5) Discuss the requirements of the Family and Medical Leave Act.
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Chapter 30: Employment Discrimination
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Q1) The Age Discrimination in Employment Act protects persons
A)between 30 and 65 years of age.
B)age 70 and older.
C)between 45 and 70 years of age.
D)age 40 and older.
Q2) Which of the following is TRUE about affirmative action?
A)Affirmative action is required by Title VII.
B)Affirmative action is prohibited by Title VII.
C)Affirmative action is allowed in government contracts if it can show the programs are needed to overcome specific past discrimination.
D)Affirmative action programs are usually voluntary on the part of employers,since courts have no power to order remedies for past discrimination.
Q3) Which of the following traits is NOT currently protected under Title VII?
A)national origin
B)sexual orientation (homosexual vs.heterosexual)
C)gender (male vs.female)
D)family responsibility (mothers vs.fathers)
Q4) What is the process for filing a suit under Title VII of the Civil Rights Act?
Q5) Discuss the two categories of sexual harassment.
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Chapter 31: Starting a Business: Llcs and Other Options
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Q1) The corporate form of business
A)was first known and used by the Greeks and then spread through the Romans to England.
B)was not known until the advent of the Industrial Revolution.
C)was first allowed in the State of New York around 1811 and is considered to be an American creation.
D)is a relatively new concept developed shortly after the Great Depression.
Q2) Which of the following would NOT be personally liable for the debts of the business?
A)a sole proprietor
B)a partner in a general partnership
C)an S corp shareholder
D)a partner in a joint venture
Q3) Charles and Ellen,an unmarried couple,run an ice cream store.The business is not incorporated,and they have filed no formation papers with the state.Their business is a A)sole proprietorship.
B)partnership.
C)franchise.
D)limited liability company.
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Chapter 32: Partnerships
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Q1) Max,Jenny,and Craig are partners.They have purchased an elegant Victorian home and converted it into an office for their partnership.Craig decides to use the partnership's office to host some evening parties.Craig has a sideline business of arranging expensive gatherings and charging each person a handsome price to attend these "elite" parties.When Max and Jenny find out what Craig is doing,they demand that he pay them for the use of the property.How much money,if any,is Craig required to pay the partnership?
A)Nothing.He is free to use partnership property for his own uses.
B)Nothing,but he will be removed from the partnership for violating his fiduciary duty.
C)He must turn over any profits he earned from this activity.
D)He must pay the fair market value for the use of the house.
Q2) Larry and Reed are partners in Custom Pet Grooming.As they are both nearing retirement age,when they form their partnership,they agree they will end their business relationship and sell Custom Pet Grooming in three years.Larry and Reed have a A)franchise.
B)term partnership.
C)partnership at will.
D)partnership by estoppel.
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Chapter 33: Life and Death of a Corporation
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Q1) Under the Model Act,a corporation must have at least one director unless all shareholders agree to eliminate the board or the corporation has fewer than _____ shareholders.
A)10
B)25
C)50
D)100
Q2) A corporation officially states its purpose is "to engage in any lawful activity for which corporations may be organized under the General Corporation Law of Idaho." Under corporate law,this purpose is too broad.A corporation's purpose must be more narrowly defined.
A)True
B)False
Q3) What term identifies stock that has been authorized and sold?
A)authorized and paid stock
B)outstanding stock
C)treasury stock
D)authorized and unissued stock
Q4) Identify four circumstances that might persuade a court to pierce the corporate veil.
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Chapter 34: Management Duties
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Q1) Major Corporation wants to acquire control of Forte Company.What are some legal steps Forte can take to resist a hostile takeover?
Q2) A staggered board of directors is an example of A)a hostile takeover maneuver.
B)a special committee.
C)a shark repellent.
D)None of these are correct.
Q3) Courts have long ruled that corporate directors and officers owe a fiduciary duty to A)the corporation only.
B)the corporation and shareholders.
C)shareholders only.
D)society at large.
Q4) Courts are sympathetic to managers acting in the best interests of the corporation,even when the acts are illegal.
A)True
B)False
Q5) What is the definition of the business judgment rule?
Q6) List and discuss the three ways to acquire control of a corporation.
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Chapter 35: Shareholder Rights
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Q1) Maureen,a shareholder of Metra,Inc. ,is unhappy with how the corporation is being managed.Maureen wants the company to sell off its unproductive divisions.Which statement is correct?
A)If Maureen owns at least 1 percent or $2,000 of Metra's stock,she can require the company to include her proposal in its proxy statement.
B)If Maureen has a proper purpose,she can require the company to include her proposal in its proxy statement.
C)If Maureen can show cause,she can require the company to automatically sell off its unproductive divisions.
D)Maureen cannot require that the company put her proposal to sell off unproductive divisions on its proxy statement.
Q2) A derivative lawsuit is filed by a shareholder of the corporation if his or her own rights have been harmed.
A)True
B)False
Q3) List and describe the various rules that apply to fundamental corporate changes requiring shareholder approval.
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Chapter 36: Bankruptcy
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Q1) When a debtor no longer has an obligation to pay a debt,that debt has been
A)terminated.
B)revoked.
C)completed.
D)discharged.
Q2) Who operates the business and develops a plan of reorganization in Chapter 11 bankruptcies?
A)the trustee
B)the debtor in possession
C)the state courts
D)the creditors' committee
Q3) The correct order of payment of claims from the debtor's estate would be
A)secured claims,priority claims,unsecured claims.
B)secured claims,unsecured claims,priority claims.
C)priority claims,secured claims,unsecured claims.
D)priority claims,unsecured claims,secured claims.
Q4) Karen has filed for bankruptcy.Who has the authority to confirm or reject a plan of payment,and what factors will be considered when deciding whether to approve a repayment plan under Chapter 13?
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Chapter 37: Securities Regulation
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Q1) What are the purposes of a registration statement and what information must it contain?
Q2) State securities statutes are known as
A)going dark laws.
B)blue sky laws.
C)big country laws.
D)sunshine laws.
Q3) Countywide Metals is a small company that incorporates in the state in which it is doing business and plans to offer and sell $100,000 worth of stock only to residents of the county in which it is doing business.Discuss the requirements Countywide must meet for registering its securities.
Q4) A control security is stock which gives the owner a controlling interest in the company.
A)True
B)False
Q5) The SEC has enforcement powers,including the power to issue cease and desist orders,to levy fines,and to confiscate profits from illegal transactions.
A)True
B)False
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Chapter 38: Antitrust
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Q1) The Clayton Act prohibits anticompetitive mergers.
A)True
B)False
Q2) Exclusive dealing contracts,if they have an anticompetitive effect,are illegal under the
A)Sherman Act only.
B)Clayton Act only,
C)Sherman Act and Clayton Act.
D)Sherman Act,Clayton Act,and Robinson-Patman Act.
Q3) A monopoly is illegal
A)under any circumstances,under Section 2 of the Sherman Act.
B)only if it is gained or maintained by using wrongful tactics.
C)if you have greater than 50 percent of market share.
D)any time there are no interchangeable products.
Q4) Both the Justice Department and the Federal Trade Commission have the authority to enforce antitrust laws.
A)True
B)False
Q5) Discuss when monopoly power is not a violation of Section 2 of the Sherman Act.
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Chapter 39: Consumer Protection
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Q1) An employer cannot request a consumer report on a potential employee without that person's permission.
A)True
B)False
Q2) In 30-year mortgages,the finance charge typically exceeds the amount of the principal.
A)True
B)False
Q3) With regard to mortgages,the Consumer Finance Protection Bureau (CFPB)requires mortgage servicers
A)to contact borrowers who are 36 days late in making a payment.
B)to wait 180 days after nonpayment before beginning foreclosure.
C)to credit payments within 3 days after they are received.
D)to extend delinquent borrowers additional time to repay the loan.
Q4) The Trimbles apply to Community Bank for an installment loan of $20,000 to remodel their bathroom.Discuss the disclosures Community Bank is required to make.
Q5) What must a seller disclose under the Magnuson-Moss Warranty Act?
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Chapter 40: Environmental Law
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Q1) Local regulation is more effective than state or federal regulation in controlling air pollution.
A)True
B)False
Q2) Discuss the purpose of the Paris Accord and its relationship to the United States.
Q3) Which law requires the EPA to set national standards for substances if they are potentially harmful to human health?
A)Resource Conservation and Recovery Act
B)Oil Pollution Act
C)Safe Drinking Water Act
D)Ocean Dumping Act
Q4) When must an environmental impact statement be prepared and what must it discuss?
Q5) The EPA will allow individual states' air pollution level to rise as long as it still meets the EPA's existing national standards.
A)True
B)False
Q6) Discuss the major provisions of the Clean Air Act.
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Chapter 41: Intellectual Property
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Q1) Only civil penalties can be incurred under the Uniform Trade Secrets Act.
A)True
B)False
Q2) Martina developed a new type of apple tree which could be reproduced through grafting.She cannot protect her rights in this tree by obtaining a plant patent since the tree cannot be reproduced by planting its seeds.
A)True
B)False
Q3) A company's trade secret lasts for
A)20 years after the application is filed.
B)70 years after the death of the creator.
C)10 years,but it can be renewed for an unlimited number of terms as long as it is used.
D)as long as it is kept confidential.
Q4) Of the following,which is an advantage of trademark registration?
A)Potential damages are lower.
B)After five years the mark becomes almost impossible to challenge.
C)It allows the trademark owner to use the TM symbol to put others on notice of the protection.
D)It can't be used as an internet domain name.
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Chapter 42: Real Property and Landlord Tenant Law
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Q1) Grandpa owns a farm.In a signed writing,Grandpa gave Sue the irrevocable right to use a road on his farm so that Sue could more easily reach her own property.What kind of interest in land did Grandpa give to Sue?
A)easement by grant
B)easement by implication
C)reserved easement
D)easement by prescription
Q2) Owners in a joint tenancy with the right of survivorship cannot transfer their interest during their lifetime.
A)True
B)False
Q3) Landlord-tenant relationships are governed by a mixture of property law,contract law,and negligence law.
A)True
B)False
Q4) Carlos conveys his property "to Noah for life,then to Maxie." Noah has a life estate,and Maxie has a remainder.
A)True
B)False
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Chapter 43: Personal Property and Bailment
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Q1) Which of the following occurs when a person uses labor and/or materials to add value to personal property belonging to another?
A)accession
B)bailment
C)an inter vivos gift
D)a mutual-benefit bailment
Q2) Hanna intends to give her granddaughter,Melodee,her antique hat pin.This heirloom has been kept under lock and key in the wall vault in the library of Hanna's house in Virginia.The hat pin is currently the only item in the vault.When Hanna is visiting Melodee in Connecticut,Hanna gives Melodee the only key to the vault.Melodee is grateful for the present and excitedly accepts.In this situation has there been a completed gift?
A)No.There has been no physical delivery of the hat pin.
B)Yes.There has been physical delivery of the hat pin.
C)No.There has only been constructive delivery of the hat pin.
D)Yes.There has been constructive delivery of the hat pin.
Q3) All bailments have to be by agreement between the bailor and bailee.
A)True
B)False
Q4) Distinguish between a contract and a gift.Give an example of each.
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Chapter 44: Planning for the Future: Wills, Trusts and Insurance
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Q1) A later will revokes a prior will only if that revocation is clearly stated.
A)True
B)False
Q2) The person who receives the proceeds from an insurance policy is the A)owner.
B)testator.
C)insurer.
D)beneficiary.
Q3) Mountain Ridge Bank has been named trustee for a $100,000 trust Fred and Martha Betts established for "the living children of the grantors." List the requirements for establishing a trust.Identify the primary obligation of the trustee,and discuss the fiduciary duty of the trustee.
Q4) The Uniform Probate Code has been adopted in all states. A)True B)False
Q5) How many witnesses are required for a nuncupative will to be valid?
A)one
B)two
C)five
D)seven
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