A bank’s __________ rate is the lowest published rate of interest at which the bank
lends to its best and most creditworthy commercial customers.
a. lien
b. term
c. prime
d. secured
Answer:
Under the efficient market hypothesis, in an open and developed securities market, the
market price of a company’s stock equals its true value.
a. True
b. False
Answer:
Fact Pattern 13-1
Sam, who is age 60, was told by Big Company that he was being laid off. Sam was
offered a severance package of $5,000 if he would waive his rights to sue for age
discrimination under the Age Discrimination in Employment Act. Sam believed that his
age was a factor in the decision to lay him off; but he really needed the money, so he
signed an agreement whereby Big Company agreed to pay him $5,000 and he agreed to
waive his rights against Big Company for age discrimination. Sam was given seven
days to consider whether to enter into the agreement, and the agreement provided that it
was final the date it was signed.
Refer to Fact Pattern 13-1. Did the agreement Sam signed comply with the Older
Workers’ Benefit Protection Act?
a. No, because it did not give Sam at least twenty-one days to consider whether to enter
into the agreement.
b. No, because it did not give Sam at least seven days following execution of the
agreement during which he could revoke it.
c. No, because it did not give Sam at least twenty-one days to consider whether to enter
into the agreement, and also because it did not give Sam at least seven days following
execution of the agreement during which he could revoke it.
d. Yes, it complied with the act.
Answer:
In CASE 4.2Brown v. Entertainment Merchants Association (2011),involving the issue
of whether a California statute could prohibit the sale or rental of graphically violent
video games to minors,what was the holding of of U.S. Supreme Court?
a. That the law was valid because the video games did not qualify for First Amendment
protection.
b. That the law was valid because minors are not entitled to First Amendment
protection.
c. That the law was invalid because the state could not establish a rational basis for it.
d. That the law was invalid because the state could not satisfy the strict scrutiny test
applied.
Answer:
__________ purport to give an employer the right to recoup some or all of an
employee’s stock option gain if he or she goes to work for a competitor within a certain
period of time following exercise of the option.
a. Climb back provisions
b. Incline clauses
c. Let loose clauses
d. Clawback provisions
Answer:
In CASE 1.1Sorrell v. IMS Health Inc., drug manufacturers challenged as
unconstitutional a Vermont statute prohibiting pharmacies form selling
prescriber-identifying information for marketing prescription drugs without the consent
of prescribers. The U.S. Supreme Court ruled that:
a. although speech promoting marketing was not protected by the First Amendment, the
law was unconstitutional based on the due process clause.
b. the statute regulated commercial speech which was evaluated under an
“intermediate” standard and that the law was, therefore, constitutional.
c. the statute did not involve constitutional issues and was, therefore, a permissible type
of regulation.
d. the conduct prohibited by the law was protected by the First Amendment and that the
law was unconstitutional.
Answer:
A __________ defect occurs when, even though the product is manufactured according
to specifications, it is unreasonably dangerous to users.
a. design
b. contractor’s
c. manufacturing
d. state of the art
Answer:
Drug Company X reports the introduction of a new pill that is guaranteed to cause
weight loss with no side effects. The information was advertised in connection with a
public offering of stock of the company’s stock. Later, it becomes apparent through
additional testing that unfortunately the new pill also results in premature hair loss, a
material issue. Monika is the president of Company X and is very pleased with sales of
the drug. She recognizes that she can no longer advertise the drug as having no side
effects, but she does not believe she has made any misrepresentations because she was
not aware of the hair loss side effect when previous statements were made. She decides
to do nothing. Has she made the correct decision as far as Rule 10b-5 is concerned?
a. Yes, because she has no duty to disclose later test results.
b. Yes, because she has no duty to disclose later test results that involve only cosmetic
issues.
c. Yes, because she has no duty to disclose later test results that involve issues that are
not life threatening.
d. No, she made the wrong decision because she has an obligation to disclose the
results.
Answer:
__________ of a contract occurs when one party knows ahead of time that the other
party will __________.
a. Anticipatory repudiation, breach the contract
b. Anticipatory repudiation, perform the contract
c. Mutual performance repudiation, breach the contract
d. Conditional performance, breach the contract
Answer:
The famous case of Marbury v. Madison(1803) gave federal courts the power to review
acts of the other two branches of the federal government to determine the existence of
constitutional violations.
a. True
b. False
Answer:
According to Exhibit 1.8, what is one of the ways U.S. law promotes public welfare.?
a. Protecting fundamental rights
b. Preventing deceptive practices
c. Regulating terms and conditions of employment
d. Allocating risks
Answer:
Mandy purchased a business law book and used it during her business law class. She
later loaned the book to Steven, and then to Christen. Another student accused her of
copyright violation and threatened to report her to the book publisher and also to her
school’s ethics board. Did Mandy violate the copyright laws?
a. Yes.
b. No, because her loans would be covered by the fair use doctrine.
c. No, because her loans would be covered under the first sale doctrine.
d. No, because her loans would be covered under the equivalency doctrine
Answer:
The Delaware Supreme Court has held that, regardless of the circumstances, a majority
shareholder may never freeze out the minority shareholders.
a. True
b. False
Answer:
Which of the following types of immunity prohibits any criminal prosecution of a
witness that relates to any matter discussed in his or her testimony?
a. Transactional
b. Use
c. Nolo contendere
d. Plea
Answer:
If two individuals aged 25 and 35 apply for the same position, under federal law the
employer may not lawfully reject either applicant on the basis of age.
a. True
b. False
Answer:
Programs in effect in some states requiring employers to pay employees wages
approximating the real cost of living in the locality are called __________ ordinances.
a. real cost
b. estimated expense
c. living wage
d. accurate wage
Answer:
Minerva told Prudence that Prudence could park her farm tractor on Minerva’s land but
only for one month. Two months later, Minerva is annoyed because the farm tractor is
still on her land; and Prudence refuses to move it. Which of the following causes of
action, if any, would Minerva have against Prudence?
a. Trespass
b. Nuisance
c. Negligence
d. Trespass and nuisance, but not negligence
Answer:
Which of the following is true regarding the 2011 Food Safety Modernization Act?
a. It developed an electronic tracking system to follow food from the farm to the dinner
table.
b. It is one of several major overhauls of the FDA in the last several years.
c. It recognizes that importers are not required to verify food safety in regard to food
from other countries.
d. It is one of several major overhauls of the FDA in the last several years, and it
recognizes that importers are not required to verify food safety in regard to food from
other countries.
Answer:
Which of the following have been identified as valid uses of a state’s police power?
a. Efforts to address threats to the public health and safety, such as fires and unsanitary
conditions.
b. Rent control within constitutional limits and efforts to address threats to the public
health and safety, such as fires and unsanitary conditions
c. Rent control within constitutional limits; efforts to address threats to the public health
and safety, such as fires and unsanitary conditions; and restrictions on off-site
advertising signs.
d. Only efforts involving legislation addressing the conduct of police officers both on
and off the job because the state’s police power is limited to supervision of law
enforcement officers within the state’s jurisdiction.
Answer:
The Employee Polygraph Protection Act completely bans the use of polygraph exams.
a. True
b. False
Answer:
The __________ controls the disclosure of credit terms so that the consumer will be
able to compare more readily the various credit terms available and avoid the
uninformed use of credit.
a. Fair Credit Billing Act
b. Equal Credit Opportunity Act
c. Fair Credit Reporting Act
d. Truth-in-Lending Act
Answer:
__________ damages compensate a party for losses that occur as a foreseeable result of
the breach.
a. Quantum meruit
b. Reliance
c. Restitution
d. Consequential
Answer:
Which of the following is NOT a theory on which a product liability claim can be
based?
a. Negligence
b. Breach of warranty
c. Ultrahazardous activity
d. Strict liability
Answer:
Under the doctrine of __________, a court may invalidate an agreement if one party
had sufficient influence and power over the other as to make genuine assent impossible.
a. fraud
b. mistake
c. undue influence
d. detrimental reliance
Answer:
Fact Pattern 3-1
Bruce lived in Tennessee and had an appliance store in Tennessee. Bruce’s residence
and the appliance store, however, were within twenty miles of the Virginia state line.
Bruce advertised heavily in both Tennessee and Virginia. Susan, one of his customers
from Virginia, had an unfortunate experience with a refrigerator purchased from Bruce
in that the refrigerator caught on fire and burned down Susan’s house which was worth
$200,000. Susan obtained proof that the refrigerator had actually been returned to Bruce
because it malfunctioned and that, rather than repair the refrigerator and sell it as used,
Bruce sold the refrigerator to her as new without repairs. Susan sued Bruce in federal
district court in Virginia on a number of theories. Bruce opposed the lawsuit on the
basis that it could only be filed in a state court and also on the basis that he was not
subject to jurisdiction in Virginia.
Refer to Fact Pattern 3-1. Which of the following is the most likely result in regard to
Bruce’s claim that he was not subject to jurisdiction in a court located in Virginia?
a. Bruce would not be subject to jurisdiction in a Virginia court because he did not live
there nor was his store located there.
b. Bruce would not be subject to jurisdiction in a Virginia court because a consumer
complaint was involved, not a dispute involving two business entities.
c. Bruce would be subject to the jurisdiction of courts in Virginia because Tennessee
borders Virginia, and federal courts have jurisdiction over citizens from any
surrounding state.
d. Bruce would be subject to the jurisdiction of courts in Virginia because his contacts
with the state were such that maintenance of the suit would not offend traditional
notions of fair play and substantial justice.
Answer:
Because of sufficient federal protection, states have not enacted laws addressing illegal
immigration.
a. True
b. False
Answer:
A corporation can conduct business as a(n) __________ in states other than its state of
incorporation.
a. domestic corporation
b. foreign corporation
c. pass through entity
d. alien
Answer:
According to the SEC, a hyperlink embedded within a prospectus causes the
hyperlinked information to be treated as part of the prospectus.
a. True
b. False
Answer:
Which of the following is NOT true regarding the Dodd-Frank Wall Street Reform and
Consumer Protection Act?
a. Dodd-Frank will bring about a multi-tier system of banks in which the larger banks
are highly regulated but the smaller community banks are not.
b. Dodd-Frank created the Financial Stability Oversight Council.
c. Dodd-Frank significantly curtailed certain powers of the Federal Reserve Board.
d. Dodd-Frank consolidated the Securities and Exchange Commission and the
Commodity Futures Trading Commission into one agency.
Answer:
Horizontal price-fixing, such as an agreement between retailers to set a common price
for a product, is the classic example of a(n) __________ violation of Section 1 of the
Sherman Act.
a. per se
b. intentional
c. rule of reason
d. willful
Answer:
Kentucky unveiled the first statewide cap-and-trade program to reduce greenhouse
gases in the U.S.
a. True
b. False
Answer:
If an insider resigns before trading, he or she cannot be held liable for improper insider
trading.
a. True
b. False
Answer:
A judge will grant a motion to dismiss the complaint on any of the following grounds,
EXCEPT:
a. the plaintiff has failed to state a claim on which relief can be granted.
b. the court lacks jurisdiction over the subject matter or the parties involved.
c. the plaintiff has failed to offer the defendant an offer of settlement.
d. the plaintiff has failed to properly serve the complaint on the defendant.
Answer:
Under the UCC, the implied warranty of merchantability guarantees that the goods are
reasonably fit for the general purposes for which they are sold, and that they are
properly packaged and labeled.
a. True
b. False
Answer:
What factors do courts consider in determining whether an act of an agent was within
the scope of employment?
Answer:
Discuss in detail the response of the EEOC in regard to the protection from
discrimination of temporary workers supplied by an employment agency along with
remedies available to temporary employees suffering discrimination.
Answer:
Melody just got out of law school and went to work at Big Law Firm. One of her first
assignments is to help a partner who just got reassigned to the employment law section
of the firm. The partner asks her to provide information regarding the legality of drug
testing. What four factors should Melody tell the partner are considered in determining
whether drug testing will be deemed permissible in a particular situation?
Answer:
Between merchants, what is the affect of an acceptance that includes additional terms
without expressly making the contract subject to the offeror’s agreeing to those terms?
Answer:
John owns a 20-acre parcel of land in Smallville. Bob is a developer that wants to build
a subdivision in Smallville. He offers John $1,000 for a 30-day option to purchase the
land for $1 million. John agrees. Clara is John’s sister and has a valid right of first
refusal on the same land. Bob has been told by his bank that the bank will provide a
construction loan for the development. What rights did Bob legally obtain when he
purchased his option? What effect will Clara’s rights have on Bob’s option? Explain the
three types of loans⎯construction, gap, and take-financing⎯that could be involved to
complete the development. Discuss fully.
Answer:
Describe the three standard measures as listed in the text that courts have developed to
measure monetary damages in contract cases. Explain how each would be measured.
Answer:
What are the four basic elements necessary for a valid contract?
Answer:
Set forth what a manufacturer of products under contract to the government must show
in order to avoid product liability based on the government-contractor defense along
with the rationale for the government-contractor defense.
Answer:
What are the seven key factors that directors should consider in deciding whether to sell
a company?
Answer:
What is the act-of-state doctrine, and how is it generally applied by U.S. courts?
Answer:
Discuss ways in which laws and regulations promote economic growth.
Answer:
Your company has asked you to write a code of ethics. What should you include and
why?
Answer:
Who are potentially responsible parties under CERCLA?
Answer:
Explain the different types of warranties that exist under the UCC.
Answer:
What must be established in order for goods to be considered merchantable under the
UCC?
Answer:
Jill invented a new type of device to control dog barking without harming the dog. A
month later, Sam independently invented an almost identical type of device. Sam filed
for a patent immediately. When Jill became aware of his filing, she also filed for patent
protection. Assuming that there is no statutory bar, between Jill and Sam, who should
be awarded the patent prior to September 16, 2003 and why? What about after
September 16, 2013? What law affects the result after September 16, 2013? What
would the result be in most other countries?
Answer:
Discuss and explain the ethical business leader’s decision tree referenced in the text.
Answer: