If a sole proprietorship loses money, the principal may deduct the losses from her or his
own personal tax liability, if any.
Business ethics is a recent phenomenon not recognized or considered prior to the mid-
to late 1900s.
Assignments require the consent and agreement of all parties to the contract.
An employee has filed a claim of discrimination with the EEOC. If the EEOC
investigates and determines that it will not follow through with a lawsuit representing
the employee, the employee has no recourse and cannot file a private lawsuit.
Blue-sky laws are federal security laws that preempt state security laws.
Not all courts have the authority to hear all cases.
Regarding defamation, a qualified privilege exists in courtrooms and legislative
hearings.
Mediation is an involuntary process that involves a third-party decision maker.
An advantage of operating as a sole proprietorship is that personal liability for any
business losses is limited to the owner’s investment in the business.
Specific performance is almost always available when a real estate contract is
involved.
If a seller has delivered nonconforming goods that have been rejected, upon notice of an
intent to cure, the seller automatically then has 15 days to deliver conforming goods.
The terms morals and ethics are synonymous.
Certain businesses are classified as pervasively regulated, and there is an exception to
the warrant requirement when the agency is conducting regularly scheduled
inspections.
A start-up business planning to incorporate must file for incorporation in the state in
which it originally plans to do business.
The power of courts to establish law in matters not specifically addressed by statutes is
very limited in common law countries.
If Annie borrows money to pay for her kitchen upgrades from her aunt Bethany,
Bethany does not need to provide required disclosures under the Truth in Lending Act.
A fee tail is an ownership interest in land, recognized in only a minority of states, that
limits succession of the property to members of the owner’s family only.
The First Amendment prohibits individuals from encroaching on or prohibiting another
person’s freedom of speech.
FDA regulations do not apply to the labeling of food packages.
When an employee takes leave pursuant to the Family and Medical Leave Act, seniority
continues to accrue and will be applied as if the employee were not on leave.
You can be guilty of bribery even if the party you have made the offer to turns the offer
down.
Because there is no general duty to act or assist others, a store is not liable if, after
washing a floor, it fails to notify the public of the slippery condition and someone is
injured. Stores give such notification as a convenience to customers but not because of
a legal duty.
Under the Robinson-Patman Act, businesses that are considering mergers that are over a
certain dollar amount are required to give advance notice to the FTC and Department of
Justice.
The only way to obtain protection for a trademark is by registering the trademark with
the U.S. Patent and Trademark Office.
All American taxpayers are allowed to bring any case they want to in federal court at
any time.
The Federal Circuit Court of Appeals, located in Washington D.C., has exclusive
jurisdiction to hear appeals from federal courts of appeals throughout the country prior
to their appeal to the U.S. Supreme Court.
Whether someone is an agent or not depends on what is said in the agreement between
the principal and the agent.
Duress must be based on a physical threat and not an economic one.
A motion for a judgment as a matter of law is called a motion for a judgment non
obstante veredicto in some states.
The use of treaties as a modern source of international law dates to World War I and the
Treaty of Versailles.
Placing conditions on the use of federal money given to states is most often
accomplished by interpreting the Commerce Clause.
Securities may not be sold or marketed to the public until the SEC has completed its
review phase and the registration becomes effective.
The EEOC is a ____-member commission.
A. 5
B. 10
C. 15
D. 20
The International Chamber of Commerce abbreviation indicating that goods are to be
picked up by the buyer and not delivered is:
A. EXW.
B. FAS.
C. FOB.
D. FCA.
In Discover Bank v. Owens, Owens received a Discover credit card with a limit of
$1,900 and charged $1,460. The credit card agreement allowed Discover to add fees
and increase her interest rate when Owens paid her bill late or did not pay in full.
Owens became disabled and experienced severe financial difficulty. She stopped using
the card and made regular payments but continued to accrue fees. She eventually paid
$3,492 toward her original debt but still owed Discover $5,564 when Discover brought
a collection suit against her. The court held that in this situation:
A. Owens owed $5,564 because she agreed to the terms of the credit card agreement
when she used the card the first time.
B. Owens owed $5,564 because Discover did not have a duty to mitigate its damages
over the six years.
C. Owens did not owe the $5,564 because her disability prevented her from having the
financial means to pay the money.
D. Owens did not owe the $5,564 because the terms of the agreement were manifestly
unconscionable in these circumstances.
Dissolving a limited partnership requires:
A. a unanimous vote among all partners.
B. a unanimous vote of the general partners and a majority vote of the limited partners.
C. a unanimous vote of the general partners and consent of any limited partner who
owns a majority of the rights to receive a distribution as a limited partner.
D. a unanimous vote of the limited partners and consent of any general partner who
owns a majority of the rights to receive a distribution as a general partner.
Which act was designed to prevent monopolies from being created through mergers?
A. Clayton Act
B. Celler-Kefauver Antimerger Act
C. Sherman Act
D. Federal Trade Commission Act
Lindsay is Jon’s manager and calls him into her office after everyone else has gone
home for the day. She closes the door and tells Jon that he is a thief and that he must
return items that he stole from the company. In fact, Jon is extremely honest and has
never stolen anything in his life. He is extremely upset and starts to feel sick.
A. Lindsay has committed libel.
B. Lindsay has committed disparagement.
C. Lindsay has committed slander.
D. Lindsay has not committed a defamation tort.
The Employee Retirement Income Security Act establishes rules regarding each of the
following except:
A. how much company stock may be held in a pension plan.
B. minimum interest rate returns on investments by pension and retirement savings
plans.
C. record keeping.
D. maintenance of standardized vesting rules.
Sally works an hourly office job from 8 a.m. until 4:30 p.m., Monday through Friday,
with an hour each day for lunch. Lunch is unpaid, so her weekly hours total 37½. One
Friday, her boss Harry asks her to stay an extra hour to complete a project. If she stays
the extra hour, she will be entitled to overtime pay for that hour.
Which of the following is not a primary source of law?
A. uniform model law
B. administrative law
C. federal common law
D. state common law
Sadie is shopping for a new pair of running shoes. She tells the salesperson that she is a
marathoner and needs shoes for distance. The salesperson suggests that Sadie buy a pair
of Mercury running shoes. Mercury shoes are actually designed for walking rather than
running. On mile 21 of her first training run, the shoes start to wear through in the heel.
What type of warranty has been breached?
A. express
B. merchantability
C. fitness for a particular purpose
D. none (No warranty was made in this situation.)
A delegation will be allowed in which of the following situations?
A. a surgeon performing brain surgery
B. an actor hired to perform in a play
C. a sculptor hired to sculpt your bust
D. a painter hired to paint your home
An agreement between two adults to pay $300 cash for a bicycle is an example of a
contract that is:
A. valid.
B. void.
C. voidable.
D. unenforceable.
In California, courts determine independent contractor status by considering each of the
following except:
A. whether the worker is engaged in a distinct occupation or business.
B. whether the work is usually done under the principal’s direction or by a specialist
without supervision.
C. the skill required.
D. what the parties agreed to.
Amanda works in an office environment with 50 employees. Once or twice a week, her
boss Alan tells her she has great legs and that she should wear shorter skirts. He also
tells her to let loose and open another button on her blouse once in a while. She asks
him to stop and continues to wear knee-length skirts and keep her blouse buttoned to
the neck. He never touches her and he never makes these comments when someone else
can hear. When she gets her performance appraisal from Alan, he gives her an excellent
evaluation and a raise. After listening to Alan for six months, she files a complaint with
the EEOC.
A. She has a valid quid pro quo claim.
B. She has a valid hostile environment claim.
C. She may choose either a valid quid pro quo claim or a hostile environment claim, as
both are valid.
D. She has suffered no economic or other job detriment, so she has no cause of action.
The NEPA procedures require that an environmental assessment be performed:
A. for actions whose environmental impact is unknown.
B. for actions whose environmental impact is significant.
C. for actions whose environmental impact is little.
D. in all instances.
Faber College, founded in 1904, is an integral part of its surrounding community.
Which of the following is a primary stakeholder in Faber College?
A. the students
B. the authors of the textbooks sold to the bookstore for student purchase
C. the local bar that students frequent when they are not studying
D. the community newspaper that runs a weekly column discussing the events at Faber
The Americans with Disabilities Act applies to employers with ________ employees.
A. 10 or more
B. 15 or more
C. 20 or more
D. 25 or more
If an agent acts in a disloyal manner and realizes a personal profit from his or her acts,
the court may order a return of the funds, which is called:
A. replenishment.
B. disgorgement.
C. restoration.
D. reinstatement.
In U.S. v. LaGrou Distribution Systems, the defendant company suffered from an
extremely serious rat infestation. Stewart, the president of LaGrou, defended, saying he
had no specific knowledge of meat contamination and therefore he was not culpable.
A. Stewart was found guilty because he knew of the rat problem and didn’t do all that
could be done to control the problem.
B. Stewart was found not guilty because he recognized the problem and instructed
employees to work daily to control the problem.
C. Stewart was found guilty because even though his subordinates hid the problem
from him, they did so in the normal course of business, thus making senior management
liable.
D. Stewart was found not guilty because the court recognized that when 20 million
pounds of meat are stored in a facility, it is impossible to control rats that target the
meat.
Christine is a resident of Delaware and, while shopping in Pennsylvania, is assaulted by
Puuki, a New Jersey resident. Ordinarily, venue in this case would originally be in:
A. Delaware.
B. Pennsylvania.
C. New Jersey.
D. the state chosen by Christine because multiple states are involved.
The National Park Service is considering expanding one of its ranger stations at
Yellowstone National Park. The ranger station is located on the side of a mountain and
is primarily used for tracking animal populations. The National Park is unsure what the
expansion would do to the environment. Before it is able to start construction, the
National Park must categorize the expansion under the NEPA as:
A. no category required.
B. environmental impact statement.
C. categorical exclusion.
D. environmental assessment.
Mike has written a novel.
A. The novel is copyrighted automatically after completion.
B. The novel does not receive copyright protection unless it is registered with the U.S.
Copyright Office.
C. Mike may sue in court to enforce his rights whether the novel is registered or not.
D. The novel must be published before it can be eligible for copyright protections.
Aiden says to Bob, “I’ll sell you this rare book for $1,000.” Aiden is the:
A. assentor.
B. assentee.
C. offeror.
D. offeree.
Big Time Appliance advertised 46-inch plasma TVs for $10 to the first 50 buyers on
Friday. This ad is:
A. not a valid offer because it is not a specific commitment to sell.
B. not a valid offer but, rather, invites the buyer to make an offer.
C. a valid offer because it is specific enough to constitute a unilateral contract.
D. a valid offer because it requires a certain manner of acceptance.
Pete has been fired from his job and believes that he has been wrongfully terminated.
As he decides how to fight the perceived injustice, how can he best mitigate damages?
A. file his suit as soon as possible while the evidence is available and witnesses’
recollections are fresh
B. file for unemployment insurance as quickly as possible so that he doesn’t sink too
far into debt
C. call his former employer to determine the real reason he was fired
D. actively seek new employment as soon as possible
Unsafe workplace conditions are monitored and regulated under:
A. ERISA.
B. COBRA.
C. HIPAA.
D. OSHA.
Which of the following is not a defense to defamation?
A. conditional privilege
B. absolute privilege
C. publication
D. truth
An agreement to buy cocaine from a dealer is:
A. a valid contract.
B. a void contract.
C. a voidable contract.
D. an unenforceable contract.
Why does the Paris Convention still leave inventors at risk?
A. Very few countries have signed it.
B. Many member countries do not comply with it.
C. It does not specify common standards for patentability.
D. It is limited to only patents.
Which of the following is not a procedural due process issue?
A. Police must obtain a search warrant to enter and search a citizen’s home for drugs.
B. The state of Massachusetts has raised the drinking age to 25 years old.
C. The state of Oklahoma passes a statute prohibiting citizens from presenting evidence
in drunk-driving trials.
D. The state of California passes a statute allowing relatives of victims of violent
crimes to sit on the jury in the general trial court.
Under the emergency escrow provisions created by the Sarbanes-Oxley Act:
A. the SEC may require corporate payouts into a government-controlled emergency
escrow fund after the SEC investigation has uncovered wrongdoing by the corporation.
B. the SEC may require corporate payouts into a government-controlled emergency
escrow fund during its investigation and before the SEC has uncovered wrongdoing by
the corporation.
C. the PCAOB may require corporate payouts into a government-controlled emergency
escrow fund after the PCAOB investigation has uncovered wrongdoing by the
corporation.
D. the PCAOB may require corporate payouts into a government-controlled emergency
escrow fund during its investigation and before the PCAOB has uncovered wrongdoing
by the corporation.
Each of the following is personal property except:
A. a car.
B. a house.
C. a computer.
D. business inventory.
Amanda is driving toward a busy intersection. As she approaches the intersection, she
looks down and reaches to adjust the radio in her car. She runs a red light and hits
another car, which then crashes into a utility pole, knocking it down and causing a
power loss in a 3-mile radius. It takes the utility company 48 hours to restore electricity
to the area because of a strike by the utility union. Kimberly sues Amanda because all
the food in her refrigerator and freezer spoiled due to the power outage. What will the
result be?
A. Amanda will be liable to Kimberly because a person is liable for all consequences of
his or her negligence.
B. Amanda will not be liable to Kimberly because she could not have actually foreseen
that it was dangerous to take one’s eyes off the road when approaching an intersection.
C. Amanda will be liable to Kimberly because she should have foreseen that taking her
eyes off the road could cause Kimberly’s food to spoil.
D. Amanda will not be liable to Kimberly because her conduct was not the proximate
cause of Kimberly’s damages.
In general, contracts for the sale of goods are governed by:
A. state common law.
B. state statutory law based on the Uniform Commercial Code.
C. federal regulations.
D. the Uniform Commercial Code.
Depositions are:
A. oral questions, answered orally, asked of parties and witnesses.
B. oral questions, answered orally, asked only of parties.
C. written questions, answered in writing, asked of parties and witnesses.
D. written questions, answered in writing, asked only of parties.
Under Sarbanes-Oxley, requiring the payback of corporate bonuses that were awarded
and later found to be based on false disclosures is called a ________ provision.
Since a trademark can gain protection by being used in commerce, what would the
advantages be of registering the trademark with the U.S. Patent and Trademark Office?
Explain the origin and justification of judicial review.
Kathy runs a business from her home. Not only is she the sole employee, but she never
leaves her home, performing all business functions in her pajamas in front of her
computer. Her business consists of buying and then reselling various goods over the
Internet. She is very successful, with thousands of customers. In terms of regulation of
commerce, how would you characterize her business?
Violations of safety statutes are sometimes referred to as negligence ______.
Mountain Stuff is a Colorado corporation selling mountain-climbing equipment. It
maintains a website that provides information about its products as well as general
information about mountain climbing. A consumer cannot purchase equipment directly
from the site but can request order forms to purchase equipment directly from Mountain
Stuff. Mountain Stuff maintains no offices outside Colorado, and no products are sold
by retailers outside Colorado. After an accident involving climbers using the equipment
of a competitor, Utah Mountain Sports, Mountain Stuff prints an article on the
general-information portion of its website that accuses Utah Mountain Sports of
intentionally manufacturing and selling defective and substandard equipment. There is
no direct proof referenced in the article and in fact the article is incorrect. Nevertheless,
other articles are written referencing the Mountain Stuff statements, and Utah Mountain
Sports has seen an otherwise unexplained 10 percent decline in its typically $1
million-a-month sales in each of the three months since the Mountain Stuff article was
published. If Utah Mountain Sports sues in federal court in Utah, will the court be able
to find personal and subject matter jurisdiction under these circumstances?
In Chattler v. U.S., a passport applicant claimed that the government breached its
contract with her when it failed to process her application in a timely manner, even after
she paid a fee for expedited processing. Chattler asserted that the expedited process was
a valid offer that she accepted by paying the $60 fee. How did the court rule, and what
must be present to find mutual assent?
Clyde has been hired to deliver a truckload of hogs to a cross-state slaughterhouse. On
the way there he stops to visit his girlfriend Samantha, who lives five minutes off his
prescribed route. He spends five minutes with her. During those five minutes he is
considered to be on a _____.
Name the three essential functions of the U.S. Constitution.
Artisan Tools Inc., manufactures and sells quality hand tools to commercial and
consumer users. Due to an excellent marketing campaign, the business is growing
quickly. After careful consideration the board decides that a new factory needs to be
built to accommodate current and future business. This factory will cost millions of
dollars. In order to fund this project, the board has decided to issue and sell bonds and
debentures. What is the difference between a bond and a debenture, and why might they
be more advantageous than simply obtaining a commercial bank loan to finance the
factory?
When a buyer rejects nonconforming goods and purchases the appropriate goods from a
different seller, the buyer is said to be _______.
In Palsgraf v. Long Island Railroad Co., would the case have turned out differently if
the package held by the man being pulled onto the train had been clearly and
distinctively marked “DANGEREXPLOSIVES”? Why or why not?
The ________ Commission is responsible for preventing unfair and deceptive acts or
practices in commercial transactions.
An employee with a salary in the top 10 percent of the company’s payroll is classified
as a ________ employee for FLSA purposes.
When one party has failed to perform his or her duties under a contract, that party is
said to be in total _______.
________ provisions are part of many environmental statutes that allow third parties to
file a lawsuit.
Explain how the Patient Protection and Affordable Care Act of 2010 and Health Care
and Education Reconciliation Act of 2010 have affected the U.S. health care system
since their provisions took effect?
Companies sometimes make a strategic decision not to patent a particular invention or
process. Why might a company sometimes choose not to seek a patent?
When ownership in land is subject to being canceled it is said to be ______.