Fred sued Document Security Company, alleging he had suffered injuries to his hands
as a result of attempting to fix a jam in one of Document Security’s paper shredders.
Fred alleged the shredder was defective because it failed to contain warnings regarding
the dangers to fingers and hands while attempting to fix jams. In order to succeed, Fred
will have to show:
a. all risk of harm could have been reduced or avoided by the provision of reasonable
instructions or warnings by Document Security Company.
b. paper shredders are inherently dangerous products.
c. his injuries would not have occurred but for the absence of the warnings.
d. foreseeable risks of harm could have been reduced or avoided by the provision of
reasonable instructions or warnings by Document Security Company.
Answer:
Brianna is in charge of new federal agency set up to monitor farming operations. The
agency wishes to institute a rule regarding the use of pesticides. Brianna tells her
associates to publish the proposed rule but to decline taking comments on the rule
because she does not want to deal with unhappy farmers. Assuming you are legal
counsel to the agency, what would you tell Brianna regarding her plan to refuse
comments on the proposed rule?
a. That her plan is a bad one because the Administrative Procedure Act requires that the
public be given an opportunity to comment before a federal agency can promulgate a
rule.
b. That her plan is a bad one because while the Administrative Procedure Act does not
generally require that the public be given an opportunity to comment, it does require
that agencies take public comments when food safety is involved.
c. That her plan is a bad one because while the Administrative Procedure Act does not
generally require that the public be given an opportunity to comment, it does require
that agencies take public comments in all cases other than rule involving taxation.
d. That her plan is a good one.
Answer:
Fact Pattern 2-2
Wally and Janice are both managers in a small corporation set up to manufacture
sporting goods. They both receive bonuses for any ideas that benefit the company,
although Janice’s bonus is computed at a lower rate than Wally’s because she has been
at the company a shorter amount of time. Janice has a great marketing idea that would
result in her receiving a bonus of $1,000. She has it all worked out on her computer.
Unknown to her, one evening after business hours, Wally obtains the information from
her computer and submits it himself the next day. He is immediately awarded a bonus
of $2,000 for the information. Fortunately for Janice, Sally, a custodian, saw Wally in
Janice’s office and heard him calling his wife while he was there to brag about his
misdoings. Sally informed Blaire, the CEO, of Wally’s actions.
Refer to Fact Pattern 2-2. Which of the following types of justice is involved if Blaire
requires that Wally give Janice the entire $2,000 bonus he received?
a. Compensatory
b. Retributive
c. Fair
d. Justifiable
Answer:
Which of the following may be sued under Section 11 of the Securities Act of 1933,
which provides a remedy for a person who purchases a security pursuant to a
misleading registration statement?
a. The underwriters.
b. Persons who gave their consent to be named in the registration statement as future
directors.
c. Both underwriters and persons who gave their consent to be named in the registration
statement as future directors.
d. Any officer as well as underwriters and persons who gave their consent to be named
in the registration statement as future directors..
Answer:
According to the EPA, in order to avail itself of the third-party defense, one of the steps
a prospective purchaser must do is hire an environmental professional to conduct a site
assessment.
a. True
b. False
Answer:
In the caseUnited States v. Lopezreferenced in the text, the U.S. Supreme Court upheld
the Gun-Free School Zones Act, which banned guns near schools, as within Congress’s
power under the Commerce Clause.
a. True
b. False
Answer:
In relation to notice in connection with a property interest, courts may find __________
notice if a reasonable inquiry would have disclosed a prior interest.
a. actual
b. absolute
c. constructive
d. necessary
Answer:
Under strict liability, a defendant can be guilty of a crime regardless of his or her state
of mind.
a. True
b. False
Answer:
Which of the following is true regarding the use of irradiated foods in the U.S.?
a. Irradiated foods are outlawed.
b. Irradiation is allowed only for fruits and vegetables, and no notice is required.
c. Irradiation is allowed for fresh and frozen red meat, and no notice is required.
d. Irradiation is allowed for fresh and frozen red meat, but notice must be required.
Answer:
A person may be liable under Section 16(b) of the 1934 Act if he or she was an officer
or director at the time of:
a. the purchase.
b. the sale.
c. both the purchase and the sale.
d. either the purchase or the sale.
Answer:
Under federal law, it is illegal to employ anyone under the age of __________, except
in specified agricultural occupations.
a. fourteen
b. fifteen
c. sixteen
d. seventeen
Answer:
Any transaction that involves an investment of money in a common enterprise with
profits to come solely from the efforts of others is deemed to be a(n) __________ and
thus a security.
a. stock issuance
b. investment contract
c. secured sale
d. committed sale
Answer:
Sarah Smith works as a laser technician for a local dermatology center consisting of
physicians operating under a partnership agreement. Sarah purchased supplies through
the mail from a medical supply facility totaling $5,000. She signed the contract
agreeing to pay for the supplies in her name, Sarah Smith. A few weeks later the
dermatologists became embroiled in a bitter dispute regarding profits and terminated
the partnership. Unfortunately, the partners were not aware of the debt owed to the
medical supply facility; and the bill remained unpaid. Sarah received a bill from the
supply company for $5,000. Is she liable to the medical supply company, and why or
why not?
a. No, because she was only employed as a technician.
b. No, because the medical supply facility should have asked for proper identification.
c. Yes, because she signed in her own name.
d. Yes, but only because the partnership terminated.
Answer:
Tort damages generally attempt to restore the plaintiff to the same position he or she
was in before the tort occurred.
a. True
b. False
Answer:
The FTC now requires used car sellers to affix a __________ to the cars that they sell.
a. fixed price
b. buyer’s guide
c. base price
d. discount price
Answer:
Based on Exhibit 1.9, which of the following is NOT a component of legal astuteness as
referenced in the text?
a. A set of value-laden attitudes about the importance of law to the firm’s success
b. A practice of leaving the resolution of legal issues to outside counsel
c. The ability to exercise informed judgment when managing the legal aspects of
business
d. Context-specific knowledge of the law and the appropriate use of legal tools
Answer:
CASE 2, American Express Co. v. Italian Colors Restaurant(2013) before the U.S.
Supreme Court, involved a question of whether __________ under the __________
Act.
a. plaintiffs waived class arbitration, Federal Mediation
b. mandatory arbitration, Federal Arbitration
c. employee arbitration, State Arbitration
d. civil rights discrimination, National Right to Work
Answer:
In 2014, the __________ announced it considered __________ a __________ virtual
currency.
a. Wall Street Protection Group, ETF funds, non-negotiable
b. Consumer Financial Protection Bureau, Bitcoin, convertible
c. Internal Revenue Service, Bitcoin, convertible
d. Internal Revenue Service, Gold, non-negotiable
Answer:
An example of a fanciful trademark is:
a. Kodak.
b. Shell.
c. Tide.
d. Camel.
Answer:
A principal may be held liable for the torts of a(n) __________ only in extraordinary
circumstances, usually involving highly dangerous acts or nondelegable duties.
a. agent
b. servant
c. employee
d. independent contractor
Answer:
The labeling of medical devices is under the jurisdiction of the Food and Drug
Administration.
a. True
b. False
Answer:
Many states have applied Article 2 of the UCC to software licenses either directly or by
analogy.
a. True
b. False
Answer:
Which of the following is true regarding whether the interest of a limited partner in a
limited partnership is considered a security?
a. Such an interest is considered a security only if the limited partnership involves an
investment in real estate.
b. Such an interest is not considered a security because a partnership, not an investment
scheme, is involved.
c. Such an interest is rarely considered a security because limited partners, to protect
their limited liability, are prohibited by law from taking part in the control of the
partnership business.
d. Such an interest is almost always considered a security because limited partners, to
protect their limited liability, are prohibited by law from taking part in the control of the
partnership business.
Answer:
Which of the following is NOT true regarding current U.S. copyright law?
a. The material must be sufficiently original.
b. Protection is automatic.
c. Use of a copyright notice is required.
d. Registration is not required.
Answer:
Which of the following are damages that give the plaintiff the benefit of its bargain,
putting the plaintiff in the case position it would have been in if the contract had been
fulfilled?
a. Expectation damages
b. Reliance damages
c. Restitution damages
d. In kind damages
Answer:
Which of the following is true regarding remedies for patent infringement?
a. The patent holder may seek preliminary and permanent injunctive relief and
damages, as well as court costs and attorneys’ fees.
b. The patent holder may seek preliminary and permanent injunctive relief and
damages, as well as court costs, but attorneys’ fees are unavailable.
c. The patent holder may seek permanent injunctive relief and damages, as well as court
costs and attorneys’ fees, but preliminary injunctive relief is unavailable.
d. The patent holder may seek damages, as well as court costs and attorneys’ fees, but
injunctive relief is unavailable.
Answer:
An important step in comprehensively managing environmental liability and reducing
penalties for noncompliance is to conduct periodic environmental audits.
a. True
b. False
Answer:
Which of the following is true regarding whether an independent contractor is an agent
of a principal?
a. An independent contractor is always an agent of the principal.
b. An independent contractor, by definition, is not an agent of the principal.
c. An independent contractor may or may not be an agent generally depending on
whether the independent contractor has authority to enter into contracts on behalf of the
hiring party.
d. An independent contractor is an agent only if the hiring party is a merchant.
Answer:
Playing loud music late at night for recreation in a residential neighborhood can
constitute a private nuisance.
a. True
b. False
Answer:
In quid pro quo sexual harassment cases and hostile environment cases, the employer is
always vicariously liable under the __________ standard when a supervisor takes a
tangible employment action against a subordinate.
a. negligence-in-support-relation
b. aided-in-the-agency-relation
c. federal-directive
d. assisted-in-the-creation
Answer:
Without further inquiry, boycotts are per se illegal under the Sherman Act.
a. True
b. False
Answer: