A contract is __________ when one party is induced to enter a contract without having
any meaningful choice.
a. substantively unconscionable
b. procedurally unconscionable
c. procedurally impracticable
d. substantively impracticable
Answer:
In theCitizens United v. Federal Election Commission case referenced in the
text,regarding the constitutionality of corporate political expenditures, the U.S.
Supreme Court:
a. upheld federal laws banning corporate independent expenditures on political
candidates and also upheld the federal prohibition on the use of corporate treasury funds
for electioneering communications or express advocacy.
b. upheld federal laws banning corporate independent expenditures on political
candidates but struck as unconstitutional the federal prohibition on the use of corporate
treasury funds for electioneering communications or express advocacy.
c. struck down as unconstitutional federal law banning corporate independent
expenditures on political candidates but upheld the federal prohibition on the use of
corporate treasury funds for electioneering communications or express advocacy.
d. struck down as unconstitutional federal law banning corporate independent
expenditures on political candidates and also struck down as unconstitutional the
federal prohibition on the use of corporate treasury funds for electioneering
communications or express advocacy.
Answer:
Generally, if Tom’s factory unforeseeably burns down through no fault of his own, Tom
is discharged from his contractual obligation to manufacture widgets for Jerry.
a. True
b. False
Answer:
A controlling shareholder has a duty not to transfer the power of management to a
purchaser that he knows or has reason to believe will use that power to the detriment of
the corporation.
a. True
b. False
Answer:
The Deontological theory focuses on the consequences of an action rather than on the
motivation of the individual.
a. True
b. False
Answer:
According to Exhibit 1.6, which of the following is true regarding typical requirements
placed on employers mandating the provision of employee benefits?
a. Employers are typically required to provide workers’ compensation, to pay
unemployment insurance, and to pay social security and Medicare taxes.
b. Employers are typically required to pay unemployment insurance and to pay social
security and Medicare taxes, but employers are not required to pay workers’
compensation insurance.
c. Employers are typically required to pay workers’ compensation insurance and to pay
social security and Medicare taxes, but employers are not required to pay
unemployment insurance.
d. Employers are typically required to provide workers’ compensation and to pay
unemployment insurance, but employers are not required to pay social security and
Medicare taxes.
Answer:
In CASE 17.1 Federal Communications Commission v. Fox Television Stations, Inc.
(2012), the U.S. Supreme Court held that the FCC had given adequate notice to
broadcasters required bythe Fifth Amendmentconcerning fleeting expletives and brief
nudity.
a. True
b. False
Answer:
Private law provides the legal rules within which firms compete.
a. True
b. False
Answer:
Sally purchased a used toaster at a yard sale. The seller told Sally that although the
toaster was over ten years old, she had not had any problems with it. Sally takes the
toaster home and uses if for a few months. One day, however, as Sally was using the
toaster, it malfunctioned and caused a small fire in Sally’s kitchen along with significant
smoke damage. Sally decides that she wants to sue the manufacturer of the toaster and
that she is going to do so within one month of the fire. What would likely be the
manufacturer’s best defense in a strict liability in tort action brought by Sally?
a. The statute of limitations
b. The statute of repose
c. The fact that Sally bought the toaster at a yard sale, not from a recognized retailer
d. There would be no viable defense.
Answer:
In theMonsanto Co. v. Geertson Seed Farms case discussed in the text, plaintiff-farmers
sought a court order declaring that Monsanto was negligent in manufacturingRoundup
Ready Alfalfa (RRA), an alfalfa plant genetically engineered to be tolerant of the active
ingredient in Roundup. On appeal, how did the court rule?
a. That the plaintiffs lacked standing to sue and that the case was subject to dismissal on
that ground alone.
b. That the district court properly issued a permanent injunction prohibiting the
deregulation of RRA in whole or in part.
c. That the plaintiffs had standing but that the district court improperly issued an
injunction prohibiting any deregulation whatsoever of RRA.
d. That the plaintiffs lacked standing and that the district court properly issued a
permanent injunction prohibiting the deregulation of RRA in whole or in part.
Answer:
Yolanda, a ballroom dance instructor, was recently asked to be a director of ABC
Company which is publicly traded. She is very honored and excited. Her friend, Joe,
asked her if she had any experience in accounting, business, or SEC requirements.
Yolanda told him no, but that the president of ABC had assured her that the only
responsibility of a director was acting as a figurehead because the officers took care of
all detailed corporate business. Yolanda says that she is accepting the position because it
will get her exposure in the community and perhaps increase her dance clientele. Is
Yolanda correct regarding her responsibilities, and why or why not?
a. Yes, Yolanda is correct that the primary job of a director is to serve as a figurehead.
b. Yolanda is correct that the primary job of an outside bank director is to serve as a
figurehead, but that is not true of inside directors.
c. Yolanda is not entirely correct, but she has no affirmative responsibility to ensure the
accuracy of any reports because that is entirely the responsibility of officers of the
corporation.
d. Yolanda is incorrect, and the SEC emphasizes the responsibility of directors to ensure
the accuracy and completeness of public company filings with the SEC.
Answer:
Environmental laws establish minimum standards to which companies must adhere.
a. True
b. False
Answer:
The number of U.S. federal criminal offenses is in the range of:
a. 300.
b. 1,000.
c. 5,500.
d. 19,500.
Answer:
According to St. Thomas Aquinas, only laws that followed __________ were true and
just.
a. reasoned law
b. customary law
c. eternal law
d. localized law
Answer:
Which of the following is true regarding uniform state regulation of securities?
a. Federal law has entirely preempted the area, and there is no state regulation of
securities.
b. Many states have adopted the Uniform Securities Act.
c. Many states have adopted the Proposed Uniform Trading Act.
d. There is no proposed uniform act in regard to securities, and state regulation is
inconsistent.
Answer:
The __________ is the primary enforcer of civil rights legislation in the United States.
a. Department of Commerce
b. Department of the Treasury
c. Equal Employment Opportunity Commission (EEOC)
d. Section 1981 requirement
Answer:
The tort of malicious prosecution protects the right to enjoy the benefits of legally
binding agreements.
a. True
b. False
Answer:
The __________ is the disclosure document that an issuer of securities provides to each
prospective purchaser under the 1933 Act.
a. registration statement
b. prospectus
c. investment contract
d. placement memorandum
Answer:
Under the Americans with Disabilities Act (ADA) a person who is only regarded as
having an impairment that substantially limits one or more of that person’s major life
activities cannot qualify as disabled.
a. True
b. False
Answer:
Under the preemption defense, certain federal laws and regulations that set minimum
safety standards are held to preempt state-law product liability claims.
a. True
b. False
Answer:
Most courts require that a plaintiff prove reliance on an express warranty in order to
recover damages.
a. True
b. False
Answer:
Around half the states originally followed the employment-at-will rule.
a. True
b. False
Answer:
Insurance policies may help firms manage risk.
a. True
b. False
Answer:
A creditor of a sole proprietorship may seek recovery only from business assets of the
sole proprietorship, not from personal assets of the sole proprietor.
a. True
b. False
Answer:
According to Exhibit 1.2, which of the following is NOT one of “Porter’s Five Forces”
that affect the competitive environment?
a. Threat of Entry
b. Direct Competition
c. Logistics and Component Supply
d. Buyer Power
Answer:
Which of the following is not usually considered an independent contractor?
a. A delivery driver working for a delivery service
b. A lawyer working for a client
c. A plumber working for a homeowner
d. An architect working for a developer
Answer:
Fact Pattern 12-1
Ricardo, an Italian citizen, who is trained in a specialized form of computer
programming that is highly in demand, is interested in coming to work in the U.S. A
friend of his told him that he could come to the U.S., but that he would not be protected
by U.S. employment laws and regulations. Ricardo also understands that a strictly
enforced rule is that he could only work in the U.S. for three years. Ricardo is inclined
to come to the U.S. but would like additional information regarding his rights and the
process.
Refer to Fact Pattern 12-1. If Ricardo comes to the U.S. to work with appropriate
documentation, for how long will he generally be authorized to work?
a. For up to two years
b. For up to three years
c. For up to six years
d. For up to ten years
Answer:
Which of the following is true regarding a mistake of judgment?
a. It is a valid defense to enforcement of a contract.
b. It is not a valid defense to enforcement of a contract.
c. Whether it is a valid defense to enforcement of a contract depends upon the
substantiality of the mistake.
d. Whether it is a defense to enforcement of a contract depends upon: (1) the
substantiality of the mistake, (2) whether the risks were allocated, and (3) timing.
Answer:
In CASE 16.1 Federal Trade Commission v. Actavis, Inc. (2013), Actavis sought to
market a generic version of AndroGel, which was owned by Solvay. The parties entered
into a settlement agreement which required Solvay to pay Actavis millions as
compensation for “other services.” The FTC sued all parties, alleging violations of the
Sherman Act. The caseinvolved a question of whether __________ should be
analyzedunder the __________ standard.
a. reverse payment settlements, rule of reason
b. vertical conspiracy, rule of reason
c. horizontal conspiracy, rule of reason
d. group boycotts, per se
Answer:
The __________ prohibits employers from using genetic information to make decisions
about hiring, firing, or compensation.
a. Family Medical History Act
b. Genetic Prohibition and Protection Act
c. Privacy in Testing Act
d. Genetic Information Nondiscrimination Act
Answer:
The __________ theory recognizes that firms have relationships with many constituent
groups which both affect and are affected by the actions of the firm.
a. stakeholder
b. stockholder
c. relational
d. cohesive
Answer:
A secondary offering is the subsequent offering of securities by the original issuer.
a. True
b. False
Answer:
A lawsuit may be resolved before trial by the judge granting a(n):
a. judgment notwithstanding the verdict.
b. interlocutory judgment.
c. motion to dismiss.
d. request for production of documents.
Answer: