Business Law

Question 1
1.	Which of the following is correct about Venue?
 
	It is an alternative to meeting jurisdiction requirements.
 
	Its requirements must be met in addition to meeting jurisdiction requirements.
 
	In most cases, venue selection is up to the defendant.
 
	It allows a party to select the court most likely to decide a case in its favor.
0.5 points   
Question 2
1.	Which of the following is not true regarding common law?
 
	The common law of the United States originally came from England.
 
	Judges must strictly follow precedent in all cases.
 
	A drawback of common law is that legal decisions may be followed after they have become outdated or no longer relevant.
 
	Common law is called common law because judges in England were intended to apply laws similarly is all jurisdictions, thereby making the law common to all.
0.5 points   
Question 3
1.	Damages intended to punish a defendant and deter the defendant from engaging in the same tortious conduct in the future are called:
 
	Penalty damages.
 
	Retribution damages.
 
	Punitive damages.
 
	Preventative damages.
0.5 points   
Question 4
1.	Which of the following is true?
 
	Voting trusts and voting agreements both require the transfer of stock certificates to a trustee.
 
	In a voting trust, the shareholder grants the trustee the right to vote the shares, but in a voting agreement the shareholders vote their own shares.
 
	Voting agreements, but not voting trusts, must be accompanied by proxies executed by the shareholders.
 
	Voting trusts are irrevocable, while voting agreements can be either revocable or irrevocable.
0.5 points   
Question 5
1.	What third party cannot sue to enforce rights in the original contract?
 
a.	A third party creditor beneficiary
 
b.	A third party done beneficiary
 
c.	A third party incidental beneficiary
 
d.	An assignee.
0.5 points   
Question 6
1.	Which of the following is true about the Uniform Partnership Act?
 
	It is a federal statute which covers all partnerships.
 
	It is the statute which set up partnerships as pass-through entities for tax purposes.
 
	It is a model statute which has been enacted by nearly all states as state law governing the formation and operation of partnerships.
 
	It can apply only if there is no other statute or common law principle covering the applicable condition.
0.5 points   
Question 7
1.	Article 2 of the UCC covers which types of transactions:
 
	Sales of goods and sales of real property.
 
	Sales of goods and leases of goods or real property.
 
	Sales of goods and contracts for the providing of services.
 
	Sales of goods and leases of goods.
0.5 points   
Question 8
1.	Which of the following is a false statement?
 
A.	An agency relationship can be created by mutual agreement.
 
B.	An agency relationship can be created by ratification.
 
C.	An agency relationship can be created under the apparent agency doctrine by the acts of the “agent.”
 
D.	An agency relationship can be created under the apparent agency doctrine by the acts of the “principal.”
0.5 points   
Question 9
1.	Which of the following statements is a false one?
 
	Violators of emission standards in the U.S. can be subject to civil penalties pursuant to the Clean Air Act.
 
	Under no circumstances in the U.S. can waste be discharged into navigable rivers since that is pollution.
 
	Companies in the United States can legally buy and sell rights to pollute in the form of so-called emission credits or pollution permits.
 
	The common law doctrine of nuisance can be used to obtain an injunction to stop pollution.
0.5 points   
Question 10
1.	Which of the following is TRUE about warranties under the Uniform Commercial Code?
 
a.	A disclaimer of the implied warranty of merchantability generally must use the word "merchantability" in the disclaimer.
 
b.	The implied warranty of merchantability is made by any person who sells goods.
 
c.	The implied warranty of merchantability if made by a merchant can never be disclaimed since it would not be fair to the consumer.
 
d.	Express warranties can never be made by pictures, samples, or models of goods since express written words are required.
0.5 points   
Question 11
1.	In order to satisfy the Statute of Frauds sufficiency of writing requirement, generally a writing must:
 
	Be a formal, written, sealed document.
 
	Be any written memorandum containing the essential terms of the parties' agreement.
 
	Be signed by the party against whom enforcement is sought.
 
	B and C.
0.5 points   
Question 12
1.	"Piercing the corporate veil" typically can occur and thus personal liability imposed on the purported shareholders when:
 
a.	The alleged corporation is "thinly capitalized."
 
b.	Corporate "formalities," such as issuing shares, electing directors, and appointing officers, are not adhered to.
 
c.	An important motive of the incorporators for incorporating the business was the desire to achieve limited liability.
 
d.	a. and b.
0.5 points   
Question 13
1.	Which of the following is true about sexual harassment in the workplace?
 
	If a supervisor approaches someone and asks that person out for a social date, if the supervisor acts in socially customary manner, it generally will be sexual harassment.
 
	The standards for a hostile or offensive work environment are very vague and depend on all the facts and circumstances.
 
	Sexual harassment claims require that persons of both sexes be involved.
 
	Sexual harassment is covered under OSHA as part of workplace safety.
0.5 points   
Question 14
1.	The seller can recover the purchase price for the goods only under certain circumstances, including when:
 
	The buyer accepts, but fails to pay for the goods.
 
	The goods are destroyed after risk of loss passes to the buyer.
 
	The buyer rejects specially manufactured goods that cannot be resold.
 
	A, B and C.
0.5 points   
Question 15
1.	Which of the following is a false statement?
 
	 To exercise the power of acceptance, the common law requires an offeree to accept the offeror- offer unconditionally and unequivocally.
 
	The death of a party to a contract will always result in the automatic termination of that contract since it would not be right to burden the surviving spouse or other heirs with business matters.
 
	The common law “mirror image” rule generally requires an acceptance of an offer to adhere exactly to the terms of the offer.
 
	A counteroffer under the common law does terminate an offer.
0.5 points   
Question 16
1.	Even an employee at-will can sue for wrongful discharge when he or she:
 
a.	Is discharged in violation of Title VII of the Civil Rights Act.
 
b.	Is discharged in violation of the Public Policy doctrine.
 
c.	Is negligently discharged by the employer.
 
d.	All of the above.
0.5 points   
Question 17
1.	The EPA standards for toxic air pollutants:
 
	Require that all such pollutants which have any risks to humans be eliminated.
 
	Require that companies use the best available technology to minimize these pollutants, regardless of cost.
 
	Allow for safe levels of these pollutants to exist.
 
	A and B only.
0.5 points   
Question 18
1.	Which of the following is a true statement?
 
	In a limited liability company in the U.S., members cannot participate in management.
 
	In a limited liability company in the U.S. members must participate in management.
 
	The typical state limited liability company (LLC) statute in the U.S. would provide that unless the members agree otherwise, all profits of the LLC will be divided equally.
 
	Corporations do not possess any rights under the U.S. Constitution since corporations are artificial legal entities and not real persons.
0.5 points   
Question 19
1.	As to all tort lawsuits:
 
a.	There must be a legal duty owed to the plaintiff by the defendant.
 
b.	There must be the intent to harm by the actor.
 
c.	There must be the showing of a defect.
 
d.	None of the above.
0.5 points   
Question 20
1.	Which is TRUE regarding the employment at-will doctrine in the United States?
 
a.	It can result in a legal but immoral discharge of an employee.
 
b.	It cannot be changed by a contract between the employer and the employee.
 
c.	It is operable in the U.S. and can result in a discharge without notice or cause or good cause but the employer based on federal law has to pay severance to the discharged employee based on the number of years he or she has worked for the firm.
 
d.	It supersedes and prevails over Title VII of the Civil Rights Act.
0.5 points   
Question 21
1.	Which of the following constitutes illegal discrimination pursuant to Title VII of the Civil Rights Act?
 
a.	A shoe store refuses to hire Hispanics as employees.
 
b.	A sporting goods store excludes applicants over the age of 40.
 
c.	A large department store refuses to hire anyone in a wheel chair.
 
d.	None of the above.
0.5 points   
Question 22
1.	If a corporation is properly incorporated in one state and wants to do business in a second state, the corporation:
 
	Must incorporate in the second state.
 
	Must do nothing because being incorporated in one state entitles the corporation to do business in all states.
 
	Register with the Interstate Commerce Commission.
 
	May be required to obtain a certificate of authority from the second state. 

0.5 points   
Question 23
1.	State law provides that existing shareholders may buy new issues of stock in the same proportion as their current holdings. This is done to allow the current stockholders to keep the same voting and dividend rights they had before the new issue. This right is known as a right of:
 
	Redemption.
 
	Ratification.
 
	Preemption.
 
	First refusal.
0.5 points   
Question 24
1.	What is a FALSE statement regarding monopolization analysis pursuant to Section 2 of the Sherman Act?
 
a.	One generally cannot be guilty of or liable for monopolization without having a monopoly first.
 
b.	One can have a monopoly but not have monopoly power and thus not be a monopolizing company.
 
c.	All monopolies are illegal since they are inherently unfair to consumers.
 
d.	Wrongful conduct by a monopoly to establish the legal wrong of monopolization includes illegal AND unethical, predatory, or abusive conduct (which is not necessarily illegal).
0.5 points   
Question 25
1.	335.Which of the following statements is not correct?
 
	Generally, a state court can exercise jurisdiction over a nonresident by showing that he or she had sufficient contacts with the state.
 
	A lawsuit involving a federal question can originate in a federal court in the United States.
 
	The United States Supreme Court has automatic appellate authority over all cases decided in the state courts.
 
	An answer to a lawsuit can admit to allegations made in a complaint in the U.S. civil law system.
0.5 points   
Question 26
1.	All of the directors of a typical business corporation must be:
 
	shareholders of the corporation.
 
	residents of the state and citizens of the United States
 
	incorporators of the corporation
 
	None of the above
0.5 points   
Question 27
1.	Which of the following is a false statement?
 
	 The breach of duty element in the test for negligence liability in the U.S. is governed predominantly by the reasonable person standard.
 
	The doctrine of res ipsa loquitur can apply if an event causing the harm normally does not occur in the absence of negligence.
 
	A battery occurs only if the victim suffers actual serious physical harm, that is, the victim is “battered.”
 
	One may be able to recover damages for emotional distress in a tort lawsuit for negligence.
0.5 points   
Question 28
1.	Under the UCC, if a purported acceptance to an offer contains additional terms:
 
	It is treated as a rejection and counteroffer.
 
	If both parties are merchants, there is a contract and the additional terms may or may not become part of the contract.
 
	If neither party is a merchant, there is no contract.
 
	It is treated as a counteroffer, but it does not reject the original offer.
0.5 points   
Question 29
1.	Which of the following is a true statement?
 
A.	The doctrine of strict liability has completely eliminated the doctrine of negligence as a possible legal theory for an injured person to recover for harms caused by a product.
 
B.	In order to recover for the tort of intentional misrepresentation (or fraud) the victimized plaintiff must have reasonably relied on the misrepresentation.
 
C.	The doctrine of strict tort liability applies to the sale and lease of products and services.
 
D.	Strict liability can be effectively disclaimed or excluded from the transaction by a conspicuous and clear disclaimer.
0.5 points   
Question 30
1.	Which of the following events would probably excuse performance of a contract because of commercial impracticality?
 
	The price of the commodity increases slightly so that the contract will not be as profitable.
 
	There is an unforeseeable trade embargo causing commodity prices to triple.
 
	The promisor of a personal service contract dies.
 
	The subject matter of the contract is destroyed by fire.
0.5 points   
Question 31
1.	What is true about a partner's right to participate in the management of the partnership?
 
	It exists only if the partner has been elected as an officer or management committee member.
 
	It exists only if the partnership agreement gives the partner this right.
 
	It exists automatically, but can be eliminated in the partnership agreement.
 
	It exists automatically and cannot be eliminated in the partnership agreement.
0.5 points   
Question 32
1.	The following are required to be proven in a negligence case except:
 
	The defendant owed a duty or care to the plaintiff.
 
	The defendant was fully aware of the consequences of his actions when they were done.
 
	The defendant breached the duty of care.
 
	The defendant- conduct was an actual cause, in fact, of the injury to the plaintiff.
0.5 points   
Question 33
1.	Which of the following is not a correct statement?
 
	Under the principle of comity, a foreign business that deals with a U.S. business in the U.S. may be subject to U.S. law.
 
	Alternative dispute resolution refers to methods for resolving a dispute outside the traditional court system.
 
	An arbitrator can never render a legally binding decision since he or she is not a traditional judge.
 
	Most online dispute resolution services automatically apply the laws of India since that country is well known as a “high-tech” academic and business center.
0.5 points   
Question 34
1.	A sole proprietor has unlimited liability for:
 
	Personal, but not business debts.
 
	Business, but not personal debts.
 
	Both business and personal debts.
 
	Neither business nor personal debts.
0.5 points   
Question 35
1.	A computer retailer sells some computer games to a minor. This contract is:
 
	Unenforceable.
 
	Voidable.
 
	Void.
 
	Enforceable.
0.5 points   
Question 36
1.	Who can be deemed liable for trading on material inside information based on U.S. securities laws?
 
a.	Misappropriators of inside information
 
b.	Insiders and tipees in conspiracy with insiders
 
c.	Inadvertent tipees who are in a fiduciary relationship with the disclosing party
 
d.	All of the above.
0.5 points   
Question 37
1.	The distinguishing feature of a common law system is:
 
	Requiring guilt to be proven beyond a reasonable doubt.
 
	Using juries to decide cases.
 
	Having both civil and criminal cases.
 
	Following precedent in making decisions.
0.5 points   
Question 38
1.	Which of the following situations, by itself, typically would not
justify a court disregarding the corporate entity?
 
	The corporation failed to follow the necessary corporate formalities.
 
	The corporation is severely undercapitalized.
 
	The corporation does not have enough current assets to pay all its liabilities.
 
	The shareholders have looted the corporation.
0.5 points   
Question 39
1.	The term for jurisdiction based on the location of a piece of property is:
 
	Long arm jurisdiction.
 
	In personam jurisdiction.
 
	In rem jurisdiction.
 
	Subject matter jurisdiction.
0.5 points   
Question 40
1.	Under which of the following types of misrepresentation is the innocent party usually not able to rescind a contract?
 
	Fraud in the inducement.
 
	Fraud in the inception.
 
	Silence as misrepresentation.
 
	Misrepresentation of law.




Question 1
1.	Jiffy Corporation uses cumulative voting in its elections of directors. Kay owns 3,000 Jiffy shares. At an annual meeting at which three directors are to be elected, Mary may cast for any one candidate
 
	1,000 votes.
 
	3,000 votes.
 
	9,000 votes.
 
	27,000 votes.
0.5 points   
Question 2
1.	Snookie, a Jersey Shore Girl, wants to work at Disney's African-themed resort in the African village as a salesperson selling "native" artifacts to the tourists. Disney, however, says that in order to work in a customer-contact position at this park, you MUST be from Africa. Snookie feels she is being discriminated against and wants to sue. The likely result of such a lawsuit would be:
 
	Snookie would prevail since she is being discriminated against because of her national origin.
 
	Snookie would prevail since this Africa-only policy has a disparate impact on non-Africans.
 
	Disney would prevail if it received an exemption from the United Nations allowing it to have such a policy.
 
	Disney would prevail if its policy rose to the level of a Bona Fide Occupational Qualification for the position.
0.5 points   
Question 3
1.	Eric, a supervisor at X Corporation, sexually harasses a subordinate employee by constantly asking her for dates, when she repeatedly and firmly has said "no." The supervisor also makes jokes of a sexual nature around this employee. She becomes so stressed out one day that she had to "clock out" early and go home to compose herself, thereby losing four hours of work. X Corporation learns of the misconduct, and promptly fires the supervisor for violating its sexual harassment policies, and then the company also apologizes to the employee; but she sues the company for sexual harassment nonetheless. Assuming sufficient evidence, the likely result of such a lawsuit would be:
 
	The employer would not be liable since it has policies to combat sexual harassment which it enforced by firing the supervisor.
 
	The employer would be liable but only if the employee could demonstrate that the employer knew or should have known that its supervisor was sexually harassing employees.
 
	The employer would be absolutely liable for the sexual harassment regardless of knowledge or intent.
 
	The employer would not be liable since workplace romance is common in the office today, and the employee was probably too sensitive about it.
0.5 points   
Question 4
1.	Data Corporation created and sells "Economix," financial computer software. Data's copyright in Economix is best protected under
 
	the Berne Convention.
 
	the Paris Convention.
 
	the TRIPS Agreement.
 
	none of the above.
0.5 points   
Question 5
1.	Eagle Manufacturing, Inc., contracted with Digital Repair Services to maintain Eagle's computers. A "Liquidated Damages Clause" provides that Digital will pay Eagle $500 for each day that Digital is late in responding to a service request. If Digital is three days late in responding, and Eagle sues to en¬force this clause, Eagle will
 
	lose, because liquidated damages clauses violate public policy.
 
	lose, unless the liquidated damages clause is determined to be a penalty.
 
	win, because liquidated damages clauses are always enforceable.
 
	win, unless the liquidated damages clause is determined to be a penalty.
0.5 points   
Question 6
1.	Driving a car negligently, Adam crashes into a phone pole. The pole falls, smashing through the roof of a house, killing Beth. But for Adam's negligence, Beth would not have died. Regarding the death, the crash is the
 
	cause in fact.
 
	intervening cause.
 
	unforeseeable cause.
 
	superseding cause.
0.5 points   
Question 7
1.	Security Guns & Ammo, Inc. tells its salespersons not to load a gun during a sale. Bert, a salesperson, loads a gun during a sale. The gun fires, negligently injuring Kathy, who is in the store. Security is
 
	not liable, because Bert was not acting within the scope of employment.
 
	not liable, because employers are not responsible for their employees' torts.
 
	liable under the doctrine of respondeat superior.
 
	liable under the doctrine of res ipsa loquitur.
0.5 points   
Question 8
1.	Donna applies to Eagle Corporation for an administrative assistant's job, which requires certain typing skills. Donna cannot type but tells Eagle that she is willing to learn. Eagle does not hire Donna, who later sues. To successfully defend against the suit under Title VII, it would be best for Eagle to show that
 
	being a member of the majority is a BFOQ.
 
	Donna was not willing to learn to type.
 
	Eagle has a valid business necessity defense.
 
	Eagle's work force reflects the same percentage of mem¬bers of a protected class that characterizes qualified individuals in the local labor market.
0.5 points   
Question 9
1.	Great Goods, Inc. is a consumer products firm. As a source of authority for its organization and functions, its articles of incorporation are
 
	a primary source.
 
	a secondary source.
 
	a source of final resort.
 
	not a reliable source.
0.5 points   
Question 10
1.	Frankie attempts to incorporate his company as Frankie's Pizza Co., Inc. However, when he sends the articles of incorporation to the state for approval, he carelessly forgets to list the name and address of the registered agent for the corporation, which is a statutory requirement to incorporation. The articles of incorporation otherwise is fine, but the state rejects the document due to the missing information, and tells Frankie to submit the document again. However, in the meantime, Frankie, mistakenly thinking that he had a corporation formed, had been doing business as Frankie's Pizza Co., Inc, and, unfortunately, one of Frankie's delivery persons, while making a pizza delivery, negligently caused an automobile accident, injuring a third party. The third party sues Frankie personally for damages for the injuries sustained in the accident, contending that his corporation does not exist. Frankie's best defense to such a lawsuit in most states would be:
 
a.	The "piercing the corporate veil" doctrine
 
b.	The de facto corporation doctrine
 
c.	The de jure corporation doctrine
 
d.	The corporation by estoppel doctrine.
0.5 points   
Question 11
1.	Micro Company makes and sells computer chips. Like most corporations, Micro's officers typically are hired by the company's
 
	directors.
 
	incorporators.
 
	officers.
 
	shareholders.
0.5 points   
Question 12
1.	Java Company hires Ken to manage one of its stores. Although their employment agreement says nothing about Ken being able to hire employees to work in the store, Ken has the authority. This is
 
	apparent authority.
 
	express authority.
 
	imagined authority.
 
	implied authority.
0.5 points   
Question 13
1.	Assume that there is a provision in the Colorado state constitution that conflicts with a federal statute passed by the U.S. Congress and enacted into law. Which is TRUE?
 
a.	The Colorado constitutional provision will prevail since states existed before the national government; and thus the federal law is invalid.
 
b.	The federal statute will control due to the Supremacy Clause in the U.S. Constitution and thus will make the state constitutional law provision invalid.
 
c.	In Colorado, the state constitutional provision will prevail; but the federal statute will apply in the other 49 states.
 
d.	Whichever was passed first will control over the other in Colorado.
0.5 points   
Question 14
1.	Pursuant to the commercial speech doctrine under U.S. constitutional law:
 
	commercial speech is not constitutionally protected since the motive is for business to make money
 
	commercial speech is given the same degree of protection as political speech since it is speech
 
	commercial speech is not constitutionally protected since most commercials on television, especially around dinner-time, are loud, annoying, and gross
 
	the advertising and marketing of adult, vice-like products and services, such as tobacco, liquor, and gambling, can be constitutionally protected.
0.5 points   
Question 15
1.	Ed borrows $1,000 from First State Bank. Fran, a good friend, orally promises the bank that she will repay the debt if Ed does not. The promise generally is enforceable by
 
	Ed only.
 
	Ed or First State Bank.
 
	First State Bank only.
 
	neither Ed nor First State Bank.
0.5 points   
Question 16
1.	Carl holds himself out as a partner of Delta Associates, a partnership, even though he has no connec¬tion to the firm. Carl obtains a loan based on the misrepresentation. Carl's default on the loan results in
 
	Carl and Delta's joint liability for the amount.
 
	Carl's sole liability for the amount.
 
	Delta's sole liability for the amount.
 
	neither Carl's nor Delta's liability.
0.5 points   
Question 17
1.	Local Delivery Company and Regional Trucking, Inc., attempt to enter into a contract in electronic form. Under the Electronic Signatures in Global and National Commerce Act (E¬SIGN Act), because this contract is in electronic form, it
 
	may be denied legal effect.
 
	may not be denied legal effect.
 
	will be limited to certain terms.
 
	will not be enforced.
0.5 points   
Question 18
1.	Gamma Company agrees to sell software to Holly from Gamma's Web site. To complete the deal, Holly clicks on a button that, with reference to certain stated terms, states, "I agree." The parties have
 
	a binding contract that does not include the terms.
 
	a binding contract that includes only the terms to which Holly later agrees.
 
	a binding contract that includes the terms.
 
	no contract.
0.5 points   
Question 19
1.	In the tort of negligence, the doctrine of proximate cause:
 
	refers to the jury approximating degrees of fault among culpable parties
 
	protects careless defendants from the foreseeable consequences of their actions
 
	refers to the jury approximating the extent of emotional distress damages suffered by an aggrieved party
 
	protects careless defendants from the unforeseeable consequences of their actions.
0.5 points   
Question 20
1.	Rowan, a basketball star, signs a two year contract to play basketball for the Bullets for $200,000 per game. Right before a "big game," Rowan goes to the owner of the team and says that he will not play at all unless the owner pays him and additional $10,000 per game. The owner, being desperate, reluctantly agrees and promises to pay Rowan more. Now that the season is over, Rowan demands his additional compensation of $10,000 per game; but the owner of the Bullets refuses to pay. Rowan sues the owner for breach of contract. The most likely result of the lawsuit is that:
 
a.	Rowan wins since this is a valid modification of a pre-existing earlier contract.
 
b.	Owner wins since a contract can never be modified whatsoever, even if the parties agree to the modification.
 
c.	Rowan wins since this is a valid modification of a contract pursuant to the Uniform Commercial Code, which needs no new consideration to be enforceable.
 
d.	Owner wins since Rowan was under a prior duty to play basketball, so the owner's new promise to pay more money for the same act was not detriment on Rowan's part, and consequently was not supported by consideration on Rowan's part, and thus the owner's promise is not enforceable.