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.
Under all chapters of the Bankruptcy Code, most of the debtors assets are distributed to
creditors and the debtor has no obligation to share future earnings with creditors.
a. True
b. False
Liability policies, such as personal liability, professional malpractice, or business
liability insurance, do NOTprotect the insured against
a. a personal injury on the insured’s property, such as the mail carrier who slips and falls
on the owner’s sidewalk.
b. intentional harm caused by the insured.
c. claims for property damaged by the insured.
d. someone injured by the insured away from home or business.
Jack mails an offer to Joan that states, “I offer to sell you my car for $2000. If I don’t
hear from you in 10 days, I will assume you are willing to buy the car for the stated
price.” Jack hears nothing by the deadline and assumes he has a deal. What is the
result?
a. Jack has a deal. His offer was intended and contains definite terms.
b. Jack has a deal. Joan should have responded saying she is not interested in the car if
she didn’t want to be bound to the offer.
c. Joan is not bound. Generally an offeree must say or do something to accept an offer.
d. Joan is not bound. Ten days is not a reasonable amount of time to consider the offer
and accept by mail.
The difference between the UCC requirement of good faith and doctrine of
unconscionability is that
a. good faith prohibits shockingly one-sided terms in a contract.
b. good faith focuses on the parties’ behavior as they perform the contract.
c. unconscionability looks at the parties’ attempt to carry out the terms of the contract in
a reasonable manner.
d. unconscionability focuses on whether a party is honest in fact and exercises
reasonable commercial standards of fair dealing.
Which of the following promises ordinarily must be fully executed in writing to be
enforceable?
a. promises made between two merchants for the sale of goods
b. an agreement between two parties to sell a piece of jewelry for $350
c. a six-month lease on an apartment beginning in 30 days
d. a promise made by an executor of an estate to pay a debt of the estate
Alan, a dentist, and his wife Martha, an attorney, can protect their personal assets with
limited liability from their business dealings by creating and operating a professional
corporation together.
a. True
b. False
The doctrine of precedent requires
a. that the victim testify.
b. that the defendant testify.
c. a 12-member jury of the defendants peers.
d. judges to base rulings on previous cases.
You make an online purchase of a hooded sweatshirt with the logo of the Dallas
Cowboys. The next time you log on, your screen has a banner ad for Dallas Cowboy
hats and shirts. This banner ad is most likely the result of
a. tracking software.
b. a coincidence.
c. the Internet crime of theft of private information.
d. encryption software.
Jim agreed to show Donna’s car to a potential buyer. Donna was not able to be home
since she had to attend a meeting. After showing the car, Jim left the keys in it and the
car was stolen. Which statement is correct?
a. Since Jim is a gratuitous agent, he will only be liable for the loss of the car if his
conduct constitutes gross negligence.
b. Since Jim is a gratuitous agent, he will be liable for the loss of the car if his conduct
constitutes ordinary negligence.
c. Since Jim is a gratuitous agent, he has no liability for the car.
d. Since Jim is a gratuitous agent, he is strictly liable for the loss of the car.
Life Principles are set by your parents and do not change over time.
a. True
b. False
Your text outlines three practices to help us avoid ethical traps: slow down, remember
your Life Principles, and
a. focus on the matter at hand.
b. do not trust your first instinct.
c. think about what society expects.
d. go with your gut reaction.
Usury laws are designed to protect consumers from
a. obtaining loans to gamble on credit.
b. taking insurance polices out on the life of another.
c. companies charging excess interest on loans.
d. professionals practicing a trade without a valid license.
The Family and Medical Leave Act applies to
a. all companies, public or private, regardless of size.
b. companies with 50 or more employees.
c. companies with 100 or more employees.
d. any company engaged in interstate commerce.
Suppose that Emmett impersonates a famous clown. He goes into an advertising agency
and convinces the manager to issue a check to him in the name of the famous clown,
purportedly as part of a fund-raising campaign for a nursing home for old retired
clowns. If Emmett negotiates the check to a check-cashing store by forging the name of
the famous clown, then the ad agency will be able to argue that the bank must
reimburse the account because the bank paid a check on a forged signature.
a. True
b. False
Joel is displeased with his sons lifestyle choices and, instead of dividing his estate, Joel
wants to leave all of his property to his daughter, Marie, when he dies. Joel may
a. not leave everything to his daughter and nothing to his son. If Joel tries to do this, his
son can take a forced share of his fathers estate.
b. disinherit his son, but he must indicate in the will his reason for doing so.
c. disinherit his son for any reason as long as Joel indicates in the will that the son was
omitted on purpose.
d. disinherit his son only if Joel leaves the son a nominal amount, such as $1.
A limited liability company, unlike an S corporation, can have members that are
corporations, partnerships, or nonresident aliens.
a. True
b. False
The criminal penalties under RICO include all of the following EXCEPT
a. imprisonment.
b. capital punishment.
c. confiscation of property acquired through the criminal activity.
d. fines.
George gave his great-grandfather’s pocket watch to Nurse Nadene because he expected
to die soon. This is
a. a testamentary gift.
b. an inter vivos gift.
c. an executed gift.
d. a gift causa mortis.
Victoria registered a trademark under the Lanham Act. Six years later Don noticed
Victoria’s trademark and filed a lawsuit to enjoin her from using it because he had used
it in his home state, even though he hadn’t registered it. Will Don prevail?
a. Yes. Victoria should have conducted a better search of trademarks registered under
state laws.
b. Yes. Federal law specifically states a federal trademark is not valid for any lawful
owner of the same mark under state law.
c. No. Don will not prevail and Victoria can continue to use the mark because of the
time involved.
d. No. But Don can register the mark after it has been 10 years since Victoria registered
it because Victoria cannot renew it.
For the purposes of the statute of frauds, an interest in land includes
a. a long-term lease on an apartment.
b. a real estate mortgage.
c. an easement.
d. All of the above.
The major disadvantage of a trust is
a. expense.
b. lack of privacy.
c. an often lengthy probate process.
d. lack of control.
E-mation, Inc. hires Marvin to steal trade secrets from one of its competitors for
$10,000. Marvin demands half of the money up front. E-mation pays Marvin $5000 but
Marvin decides not to pursue theft of the trade secrets. E-mation sues Marvin for the
return of the $5000. What will the court do with this contract?
a. The court will order Marvin to return the $5000.
b. The court will order Marvin to return the $5000 with interest.
c. The court will order Marvin to obtain the trade secrets.
d. The court will not do anything to help E-mation get its money back.
Generally, either party to an agency relationship has the power to terminate it at any
time.
a. True
b. False
Common law is a body of cases decided by legislatures.
a. True
b. False
Congress established a trust fund for the EPA to use in Superfund cleanup. This trust
fund was initially financed by a tax on what?
a. The general public through federal income taxes
b. Waste management and landfill operators
c. The construction industry
d. The oil and chemical industries
What constitutes a social enterprise’s “triple bottom line”?
a. employees, customers, and profits
b. assets, liabilites, and revenue
c. social concerns, shareholders, and sales
d. people, planet, and profits
Nate works as a sales representative. His employment contract specifies that he cannot
work for a competitor for a period of two years from employment. This is an example
of
a. vagueness.
b. extortion.
c. ambiguity.
d. duress.
A subpoena duces tecum is different from an ordinary subpoena in that a subpoena
duces tecum
a. can only be given to an expert to require a personal appearance before a court or
administrative hearing.
b. is binding on a person even if it is mailed to the person rather than handed to her by a
process server.
c. allows for privileged or confidential information to be turned over the a court or
administrative agency.
d. requires the person to bring specified documents to the court or administrative
hearing.
On January 16, Deb offers to sell her waterbed to Colleen for $600. Colleen accepts and
agrees to pay Deb $600 on January 27. Which of the following is correct?
a. Until January 16, the contract was executory.
b. On January 16, the contract was executed.
c. This contract is a unilateral contract.
d. There is no contract until January 27.
Which of the following is NOTtrue in applying the Williams Act?
a. An individual or group acquiring more than 5 percent of a companys publicly traded
stock must file a public disclosure document with the SEC.
b. A bidder must keep a tender offer open for at least 30 business days initially.
c. If any substantial change is made in the terms of the tender offer, it must be kept open
for at least ten business days following the change.
d. Any shareholder may withdraw acceptance of the tender offer at any time while the
offer is still open.
Which of the following is an example of a purchase money security interest in
consumer goods?
a. A doctor purchasing a computer on credit to create a Webpage to make services and
information available to her patients
b. A doctor purchasing on credit a blood glucose monitor to check his own blood sugar
levels
c. A doctor purchasing a TV/VCR unit on credit to place in her office waiting room
d. A doctor purchasing an exercise bike for his employees to use over the lunch hour
Securities issued by banks are exempt from SEC registration.
a. True
b. False
An American manufacturer has been asked to provide construction equipment to a
foreign government. The contract is for a sizable amount, so the manufacturer wants to
protect itself should the foreign government refuse to pay for the equipment once it has
been delivered. What should the American manufacturer insist upon having if it wants
to protect its right to sue the government in the event it does not pay for the goods?
a. a release of sovereignty
b. a statement of extraterritoriality
c. a waiver of immunity
d. a submission of arbitration to the ICA
Does the statement “The sale of goods will not be enforceable unless there is some
writing, signed by the defendant, indicating that the parties reached an agreement”
accurately reflect the UCC’s basic rule?
a. No. It should also state that the contract must be signed by both parties, not just the
defendant.
b. No. It should state that the contract must require all of the terms of the agreement to
be in writing.
c. No. It should state that the contract must be for the sale of goods of $500 or more.
d. Yes, the wording accurately reflects the UCC’s basic rule.
Discuss the requirements of promissory estoppel.
Compare and contrast the following forms of business organization: sole proprietorship,
general partnership, limited liability company, and corporation as to ease of formation,
liability of owners, management, and tax implications.
Identify four ways a trust can be terminated.
Identify the basic job of a President of the United States, the source of executive power,
and three key powers associated with the position of President.
Explain the origin and purpose of the World Trade Organization.
List and briefly describe the seven key characteristics that must be present for a contract
to be enforceable.
One of the directors of Independent Pallet Mill purchases 100 acres of timberland. In
order for him to sell the timber from this land to Independent, what must he do? If he
does not act properly in this situation, what duty would he violate, and what would be
the result?
The Fallwater Partnership wants to incorporate and is considering using a DPO. Explain
what a DPO is and discuss the advantages and disadvantages of this course of action.
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.
Ron is an accountant who was contacted by Zebra Toy Company to prepare financial
statements. Zebra Toy Company told Ron that it wished to present these documents to
Lion Wholesalers, Inc., a large supplier of toys. If Lion is convinced that Zebra Toy
Company is financially solid, it will issue Zebra a large line of credit.
After Ron prepares the financial documents, Zebra presents the information to Lion
Wholesalers and also to Tiger Toy Company, another wholesaler of toys. Zebra wishes
to obtain a line of credit from Tiger as well as from Lion. If Ron committed a serious
error by overstating Zebra Toy Company’s financial soundness and the two creditors,
Lion and Tiger, are damaged as a result, can these third parties recover damages from
Ron? Explain.
Briefly define patent, copyright, and trademark, and explain how long they last.
Discuss the requirements of the Family and Medical Leave Act.
Discuss the two categories of sexual harassment.
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?
Daniel went onto an Internet message board and found that his ex-wife, Faye, had
posted a message calling him a fat, insensitive jerk who only cared about watching
sports on TV. Does Daniel have any protection against Fayes making such statements to
a potentially large number of readers, some of whom may know Daniel and some of
whom may not?
Andy, Becky and Charlie formed a partnership. Their business was to create Web pages
for students. They would take a person’s academic and career information and make an
attractive Web page. Andy supplied the computer and technical advice. Becky was the
business manager. Charlie did the bulk of the marketing. Charlie and Becky became
irritated with Andy, as it seemed they did more work than he did. Charlie and Becky
decided to end their partnership with Andy. During the winding up process, how are the
assets of the partnership paid out?
Discuss the major provisions of the Clean Air Act.
Kirk purchases a sailboat on credit from Lakefront Sales, and Lakefront keeps a
security interest in the boat. Lakefront then assigns the security interest to First Finance
Co. Explain what having a security interest means. Under the UCC, what defenses can
Kirk assert against First Finance?