Helen tells her nephew, Bernard, that she will pay him $100 if he will stop smoking for
six months. Helen was hopeful that if Bernard stopped smoking for six months, he
would stop altogether. Bernard stops smoking for six months but then resumed his
smoking. Helen will not pay him. She says that the type of promise she made cannot
constitute a binding contract and that, furthermore, it was at least implied that he would
stop smoking for good. Can Bernard legally collect $100 from Helen?
a. No, because under the law his stopping smoking was not adequate consideration.
b. No, because it was implied that he would stop smoking for good, and he only quit for
six months.
c. Yes, because his stopping smoking for six months, as agreed, was adequate
consideration for the contract.
d. Yes, because stopping smoking was good for his health even if he only did it for six
months.
Answer:
Which of the following allows rights-based moral theories to be compared to other
theories such as a utilitarian framework?
a. Deontology
b. Teleological theory
c. Comparative justice
d. Rawlsian moral theory
Answer:
Which of the following references the power of government to acquire private property
needed for a public use?
a. Adverse possession
b. Area plan
c. Eminent domain
d. Call
Answer:
The Clean Air Act does not require which of the following?
a. That the EPA must establish national ambient air quality standards.
b. That every state must meet their individual air quality standards.
c. That air quality in areas that already meet national standards cannot deteriorate.
d. That the EPA must preserve natural visibility in the wilderness areas.
Answer:
The requirement that the defendant in a 10b-5 action have used interstate commerce,
the mails, or a national securities exchange gives Congress the power to regulate the
defendant’s conduct under:
a. the due process clause of the U.S. Constitution.
b. the Commerce Clause of the U.S. Constitution.
c. the fifth amendment to the U.S. Constitution.
d. executive order 90210.
Answer:
A design dictated by function may be protected by a(n) __________ patent.
a. equivalents
b. design
c. utility
d. useful articles
Answer:
Under the __________ of the U.S. Constitution, a person can be convicted of a crime
only if his or her actions constituted a crime at the time they occurred.
a. Nolo Contendere Clause
b. Ex Post Facto Clause
c. First Amendment
d. Sentencing Clause
Answer:
According to the text, can an employer be held liable for negligence when an
intoxicated employee causes an automobile accident after drinking alcohol at a
company function? (See theLev v. Beverly Enterprises-Massachusetts, Inc., case.)
a. Yes, an employer can be liable to the plaintiff injured in the accident, based upon the
principle of vicarious liability.
b. Yes, an employer can be liable to the plaintiff injured in the accident,under an
aided-in-the agency theory.
c. Yes, the employer cannot be liable to the plaintiff injured in the accident,based upon
violations of its own alcohol-abuse policy.
d. No, the employer is never liable to the plaintiff injured in the accident.
Answer:
Many states have passed their own fair employment acts.
a. True
b. False
Answer:
Under the Clean Air Act, if a nonattainment area fails to develop an adequate plan to
attain the national standard, which of the following penalties may be imposed?
a. No penalties may be imposed by the federal government because only individual
states may impose penalties.
b. Limits on the use of federal highway funds.
c. Limits on drinking-water hookups.
d. Both limits on the use of federal highway funds and limits on drinking-water
hookups.
Answer:
__________ law legal systems primarily rely on case law and precedents.
a. Common
b. Civil
c. Statutory
d. Codified
Answer:
Which of the following is NOT a defense to a Robinson-Patman price discrimination
claim?
a. Predatory pricing
b. Not actual competitors for the same customer
c. Cost justification
d. Changing conditions
Answer:
In CASE 22.1SEC v. Texas Gulf Sulphur Co. (1971) the question was whether a press
release giving a misleading impression about the results of a drilling operation violated
Rule 10b-5. How did the court rule?
a. That the company acted only in response to rumors and had no obligation to set forth
additional facts regarding the drilling operation, thereby negating any basis for Rule
10b-5 liability.
b. That the company violated Rule 10b-5 by issuing the misleading press release.
c. That a press release standing alone may not violate Rule 10b-5 and that the company
could not be held liable because it made no actionable statements outside the press
release.
d. That the company could be held liable under Rule 10b-5 but only because it issued
other statements in addition to the press release.
Answer:
To recover for a defective product, an injured person must be in a contractual
relationship (privity) with the seller.
a. True
b. False
Answer:
A court order prohibiting a defendant from continuing a certain activity would be called
a(n):
a. injunction.
b. indictment.
c. edict.
d. due care order.
Answer:
Most states have __________ statutes, which can subject an out-of-state defendant to
jurisdiction within the state.
a. in personam
b. in rem
c. long-arm
d. diversity
Answer:
Susan, the CEO of ABC Company, which was involved in the production and sale of
hair care products, decided to hire new employees to develop new product lines for a
planned expansion into the dog shampoo arena. She was concerned, however, that the
employees specializing in canine products might leave at some point, taking company
secrets with them for use in competition with ABC. She, therefore, required that the
employees sign contracts containing covenants not to compete. Susan also consulted
her in-house counsel, Sam, regarding the effect of some new regulations involving the
use of certain chemicals in shampoo and conditioner. Sam told her, however, to ignore
the regulations until some type of investigation of the company was started. Sam says
that more than likely no one will ever check to see whether or not ABC is in
compliance. Susan disagrees with his advice and decides to seek other counsel.
Refer to Fact Pattern 1-1. The government regulations pertaining to the use of certain
chemicals involved which of the following types of law?
a. Public
b. Private
c. Circumscribed
d. Tangent
Answer:
Immanuel Kant argued that spending money in ways that are not consistent with
shareholder wishes is tantamount to imposing a tax and unilaterally deciding where the
money will be spent.
a. True
b. False
Answer:
Jury challenges for cause are called pretrial challenges.
a. True
b. False
Answer:
What must a plaintiff show to successfully sue for malicious prosecution?
a. That a prior proceeding was instituted against him or her maliciously and without
probable cause or factual basis.
b. That a prior proceeding was instituted against him or her maliciously and without
probable cause or factual basis, and that the earlier case was resolved in the plaintiff’s
favor.
c. That a prior proceeding was instituted against him or her negligently and that the
earlier case was resolved in the plaintiff’s favor.
d. That a prior proceeding was instituted maliciously, that the plaintiff was a public
official or public figure, and that the earlier case was resolved in the plaintiff’s favor.
Answer:
Under the UCC, the buyer may reject any or all of the goods if the goods fail to
conform to the contract.
a. True
b. False
Answer:
Which of the following is true regarding private suits to enforce the Sherman Act?
a. Private plaintiffs may recover three times the damages they have sustained as a result
of violations of the act.
b. Liability is joint and several among all conspirators.
c. There is no requirement of standing.
d. Private plaintiffs may recover three times the damages they have sustained as a result
of violations of the act, and liability is joint and several among all conspirators.
Answer:
Which of the following is not a type of U.S. patent?
a. Plant patent
b. Design patent
c. Service patent
d. Utility patent
Answer:
Fact Pattern 21-2
Alice and her general partner, Greg, own several businesses. Alice is very interested in
salt water aquariums and decides that a good venture for the partnership would be the
development of a business to raise tropical fish. She plans to issue stock to start the fish
business with the idea that she and Greg will purchase a majority of the stock. She has a
friend, Tony, a plastic surgeon with a good practice, who has expressed interest in the
venture because he believes that the presence of fish in waiting rooms reduces anxiety
and encourages patients to spend more money. Alice does not want to go to the expense
and trouble of a formal registration under the 1933 Act and seeks advice on how to
avoid that process should the partnership issue securities.
Refer to Fact Pattern 21-2. As far as Tony is concerned, which of the following is true?
a. Selling to Tony would not trigger registration requirements because of the
professional exemption.
b. Selling to Tony would not trigger registration requirements if it can be established
that his income or net worth meets amounts required to qualify him as an accredited
investor.
c. Selling to Tony would not trigger registration requirements so long as he purchases
under 5% of the stock.
d. Selling to Tony would trigger registration requirements.
Answer:
Rawlsian moral theory seeks to maximize the condition of the worst off person in
society.
a. True
b. False
Answer:
The Internal Revenue Service needs specific cause to order an audit of a company’s tax
records.
a. True
b. False
Answer:
Compliance with the law is just the baseline for effective and responsible managerial
action.
a. True
b. False
Answer:
Which of the following provides some protection to defendants in that they establish a
rebuttable presumption about how long consumers can continue to safely use a product?
a. Discovery-of-injury statutes
b. Statutes of limitation
c. Useful life statutes
d. Statutes of repose
Answer:
In the famous case of Sony Corp. of America v. Universal City Studios, Inc. (1984), the
U.S. Supreme Court ruled that the sale of copying equipment does not constitute
contributory infringement, provided that it has substantial non infringing uses.
a. True
b. False
Answer:
The Seventh Amendment gives the right to a jury trial in civil cases when the value in
dispute is greater than:
a. $20.
b. $40.
c. $1,000.
d. $5,000.
Answer:
Obscene material is protected speech under the First Amendment.
a. True
b. False
Answer: