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Toby is the commissioner of environmental matters for State X, the state with the
cleanest air in the nation. U.S. Pollution Company wants to move into State X.
Unfortunately, State X has had a severe economic downturn. Many of the citizens are
ready to trade some environmental cleanliness for jobs. Toby is on the hot seat. The
governor and others say that State X has done very well and has always beaten all other
states in meeting national ambient air quality standards. In fact, State X is so far in
compliance that Pollution Company could operate for many years before there was a
problem. What would you suggest to Toby regarding compliance with the Clean Air
Act?
a. Toby should disregard the Clean Air Act so long as his state is meeting national
ambient air quality standards.
b. Toby should disregard the Clean Air Act so long as his state is meeting national
ambient air quality standards, and he can show an economic downturn of at least 10%
in his state over the past 12 months.
c. Toby should disregard the Clean Air Act so long as his state is meeting national
ambient air quality standards, he can show an economic downturn of at least 10% in his
state over the past 12 months, and he can show an increase in the unemployment level
of at least 5% in his state over the past 12 months.
d. Toby should not disregard the Clean Air Act because it requires that air quality in
those areas that meet the national ambient air quality standards not be allowed to
deteriorate.
Answer:
Laws that punish actions that were not illegal when performed are known as:
a. bills of attainder.
b. proscriptive laws.
c. ex post facto laws.
d. criminal laws.
Answer:
__________ refers to a method by which courts hold shareholders individually liable
for claims against a corporation.
a. Reverse liability
b. Piercing the corporate veil
c. Upholding the ethical theory
d. Unveiling
Answer:
When internationally accepted arbitration rules are used in conjunction with the parties'
own methods of selecting an arbitration panel, it is known as a(n) __________
arbitration.
a. multinational
b. neutral
c. ad hoc
d. private
Answer:
The Fair Debt Collection Practices Act applies only to third-party debt collectors.
a. True
b. False
Answer:
Under the UCC, a firm offer only applies to:
a. merchants.
b. merchants and non-merchants.
c. non-merchants.
d. option contracts.
Answer:
Which of the following is the group given the ultimate legal authority to change
management?
a. Shareholders
b. Human resource managers
c. The mayor in the applicable jurisdiction
d. The city council in the applicable jurisdiction
Answer:
According to Rule 10b-5, a company's silence or "no comment" to a rumor will make it
liable, but only if the company has not previously spoken on the subject and insiders are
not trading or tipping.
a. True
b. False
Answer:
__________ competition is competition between companies producing the same type of
product.
a. Intrabrand
b. Interbrand
c. Vertical
d. Oriented
Answer:
CASE 2 United States v. Freed (2006) involved a trustee of the Enota campground and
alleged violations of National Forest Service regulations. The trustee was convicted at
trial. On appeal, the court addressed whether the __________ applied to the trustee and
her conviction.
a. Responsible Corporate Officer doctrine
b. impossibility defense
c. mens rea defense
d. respondeat superior defense
Answer:
Under the Children's Online Privacy Protection Act, websites are prohibited from
collecting personal information from children regardless of whether parental consent is
obtained.
a. True
b. False
Answer:
Under the EEOC, gender will qualify as a BFOQ where a gender-based restriction is
based on:
a. assumptions of the comparative employment characteristics of women in general.
b. the rights of others to privacy.
c. stereotyped characterizations of the sexes.
d. sex but not age.
Answer:
A corporation is a private entity that can be created by a mere handshake, as long as the
shareholders have completed a certificate of incorporation.
a. True
b. False
Answer:
Sneaky opened a new dress shop catering to college aged students. Sneaky advertised
for sales associates but would only hire applicants who had been trained in computer
skills in high school. Sally, age 50, was denied employment on the basis that although
she was highly skilled in computer usage, she obtained her training after high school.
Computer training was not available in Sally's high school nor was it typically available
in high schools during that time period. Sally sued for age discrimination. Sneaky
denied liability pointing out that his advertisement only referred to computer training. It
in no way referenced an age requirement. Sneaky claimed that the fact that all his
associates were younger was simply a coincidence. Which of the following is true
regarding Sally's claim?
a. Sneaky should win because he was entitled to require high-school based computer
training.
b. Sneaky should win unless Sally can obtain evidence that Sneaky intentionally used
the requirement to discriminate based upon age.
c. Sally should win under a disparate treatment theory if she can show that the
requirement systematically excludes individuals protected by the Age Discrimination in
Employment Act.
d. Sally should win under a disparate impact theory if she can show that the
requirement systematically excludes individuals protected by the Age Discrimination in
Employment Act.
Answer:
Based on Exhibit 1.6, which of the following is NOT a way in which U.S. law protects
workers?
a. Through regulating certain terms and conditions of employment
b. Through requiring the employer to provide certain benefits
c. Through protecting civil rights in the workplace
d. Through requiring the provision of educational opportunities to workers
Answer:
The Securities and Exchange Commission recognizes the affirmative responsibility of
officers and directors under federal securities laws to ensure the accuracy and
completeness of public company filings with the SEC.
a. True
b. False
Answer:
__________ has been called the lifeblood of administrative agencies.
a. Rule making
b. Administrative adjudication
c. Informal discretionary action
d. Policy
Answer:
In CASE 8.2 MacNeil Automotive Products, Ltd. v. Cannon Automotive, Ltd.(2010),
MacNeil subcontracted with Canon Automotive to provide floor mats on automobiles.
MacNeil claimed the mats were defective and breached the express warranty. The main
question before the court was whether:
a. the sales talk constituted an implied warranty for fitness of purpose.
b. the sales talk constituted an implied warranty of merchantability.
c. the sales talk was puffery or an express warranty.
d. the sales talk properly disclaimed all express warranties.
Answer:
All fifty states have constituency statutes.
a. True
b. False
Answer:
__________ law is a type of law referencing formal rules embodied in constitutions and
statutes enacted by legislatures.
a. Public
b. Private
c. Substantive
d. Remedial
Answer:
In CASE 20.6 Jones v. H. F. Ahmanson & Co. (1969), the court held that the
defendants-__________ shareholders, who did not allow the remaining shareholders to
exchange their shares, breached a(n) __________ to the plaintiffs-__________
shareholders, and ordered defendants to __________to the plaintiffs.
a. minority, financial duty, majority, pay damages
b. majority, fiduciary duty, minority, return control of the corporation
c. majority, fiduciary duty, minority, pay damages
d. minority, duty of loyalty, majority, return control of the corporation
Answer:
What is the major provision of the Equal Pay Act of 1963?
a. It mandates equal pay for equal work without regard to gender.
b. It mandates equal pay for equal work without regard to gender or age.
c. It mandates equal pay for equal work without regard to gender, race, or age.
d. It mandates equal pay for equal work without regard to race.
Answer:
The CASE 11.3 Kirtsaeng v. John Wiley & Sons, Inc. (2013) involves the __________
which holds that once a copyright owner sells a copyrighted product, the owner cannot
prevent its resale or transfer to others.
a. Contributory Copyright Doctrine
b. Copyright Misuse Doctrine
c. Fair Use Doctrine
d. First Sale Doctrine
Answer:
Miranda is a cashier at Super Store. Saturday is their busiest day. She tells her
supervisor Sam that she needs to be off every Saturday because that is the religious
holiday for the religion to which she has recently converted. What are Sam's obligations
to Miranda?
a. He has an absolute obligation under the law to let her off every Saturday unless he
can prove that she is not using the time for religious observance.
b. He cannot fire her based on her religious beliefs, but he has no duty to let her off on
the busiest day of the week.
c. Under the law, he must allow her to be off as requested, but only if she can establish
that under the tenants of her religious beliefs she is doomed if she does not attend
worship services regularly.
d. He must make reasonable accommodations for her unless doing so would cause
undue hardship on the business.
Answer:
In general, consumer protection law at the state level is more stringent than federal law.
a. True
b. False
Answer:
The U.S. Supreme Court has held that in order for a public official or public figure to
recover damages for defamation by a media defendant, there must be a showing of:
a. intent.
b. negligence.
c. actual malice.
d. invasion of privacy.
Answer:
Fact Pattern 22-1
Trudy was hired by Food Corporation to handle a products liability lawsuit brought
against it alleging that it distributed dangerous dog biscuits. Trudy's investigation
brought to light facts establishing that the biscuits were not defective and that the
problem actually involved improper retention policies on the part of retailers. Trudy is
aware that this information will result in the stock of Food Corporation increasing
dramatically. Trudy immediately buys shares of Food Corporation and tells her fiancé,
Frank, about the expected increase as well. Trudy tells Frank because she wants to
borrow money from him for the trade and also because she believes that his investment
will enable them to take a nicer honeymoon. Frank initially resists because of his
training in business law and his concern that trading on the information would violate
federal law, but he ends up going along with Trudy because he too wants a nice
honeymoon. Trudy's suspicions come true. The lawsuit is dismissed, the stock increases
dramatically, and she and Frank go on a great honeymoon. The day after they return, an
investigator from U.S. Attorney's Office interviews her regarding her trades and those
of Frank.
Refer to Fact Pattern 22-1. Is there a basis upon which to hold Trudy liable for a
securities violation for disclosing to Frank the information regarding the likely
dismissal of the lawsuit?
a. Not unless she had signed a confidentiality agreement with Food Corporation.
b. Yes, she could be held liable as a tipper.
c. Yes, she could be held liable as a tippee.
d. Yes, she could be held liable as a remote tippee.
Answer:
The main issue in CASE 19.3Burwell v. Hobby Lobby Stores, Inc.(2014) involved a
question of whetherthe requirements for contraception under the Affordable Care Act
(Obamacare) violated the due process rights of Hobby Lobby Stores.
a. True
b. False
Answer:
The __________ concludes that market forces defeat most anticompetitive practices.
a. Chicago School
b. Antitrust School
c. Contra-antitrust School
d. Economic Forecasting Model
Answer:
Federal law governs the obligations, if any, that members of a limited liability
partnership owe to creditors.
a. True
b. False
Answer:
Actions of administrative agencies often affect businesses but rarely affect individuals.
a. True
b. False
Answer:
In theUnited States v. O'Hagan case referenced in the text, O'Hagan was a partner in the
law firm of Dorsey & Whitney who represented Grand Met. Grand Met revealed to
O'Hagan that Grand Met intended to make a tender offer to Pillsbury. Based on this
confidential material information form his client O'Hagan purchased stock and options
in Pillsbury prior to a public announcement of Grand Met's tender offer for Pillsbury.
O'Hagan realized over $4million in profits but was later convicted of insider trading.
The U.S. Supreme Court upheld O'Hagans criminal conviction based on the:
a. Derivative Insider Theory of Insider Trading.
b. Classical Theory of Insider Trading.
c. Missappropriation Theory of Insider Trading.
d. Bespeaks Doctrine of Insider Trading.
Answer:
