58) The Robinson-Patman Act focuses on:
A) price discrimination.
B) product warranty.
C) product liability.
D) unsafe products.
59) The FTC forbade the practice of:
A) interlocking directorates.
B) mergers.
C) acquisitions.
D) price discrimination.
60) In 1938, Congress passed the ________ creating an agency responsible for establishing
standards for drugs, inspecting food and drug manufacturers, performing food-and drug-related
research, etc.
A) Miller-Tydings Act
B) Consumer Product Safety Act
C) Agricultural Marketing Act
D) Food, Drug, and Cosmetics Act
61) The ________ requires lenders and sellers who extend credit to disclose fully the terms and
conditions of credit arrangements to enable consumers to “shop around.”
A) Fair Credit Reporting Act
B) Truth-In-Lending Act
C) Consumer Product Safety Commission
D) Equal Credit Opportunity Act
62) The Truth-In-Lending Act:
A) applies to all installment contracts with more than two payments.
B) prohibits discrimination in granting credit.
C) requires a lender to disclose the total cost of credit or a loan.
D) prohibits certain behavior on the part of a lender when trying to collect bad debts.
63) Under the Truth-In-Lending Act, the owner of a stolen credit card who notifies the credit
card company of the theft before any unauthorized use of the card is liable for:
A) none of the unauthorized charges.
B) only $50 of any unauthorized charges.
C) a total of $100.
D) all of the charges. The owner has unlimited liability.
64) It is possible for a small business to win a lawsuit but still go out of business due to the costs
of the suit.
65) A contract is simply a promise or set of promises regarding a duty and for which there is a
remedy if the agreement is breached.
66) Courts judge a party’s subjective, personal intentions to enter into a contract when a dispute
about a contract’s existence arises.
67) The more terms that are specified in a proposed offer, the more likely it is that an offer
exists.
68) A missing quantity term in an offer usually defeats a contract.
69) Common law requires that an acceptance of an offer be made by the means specified by the
offeror and it must reach the offeror in order to be effective.
70) Generally, the absence of consideration does not affect the obligation, i.e., the contract is still
binding, even if there’s no apparent consideration.
71) If two parties exchange promises to form a contract, valuable consideration exists.
72) A minor can void a contract at the minor’s option but the adult cannot void a contract simply
because it is with a minor.
73) The courts hold that a contract entered into by an intoxicated person or an insane person is
always voidable.
74) For a contract to be enforceable, it must be legal.
75) Only mistakes of fact permit a contract to be voided.
76) In the 1950s, a group of legal scholars compiled the Uniform Commercial Code to replace
the hodge-podge collection of confusing, often conflicting state laws that government basic
commercial transactions with a document designed to provide uniformity and consistency.
77) To be enforceable, a contract must be written.
78) Failure to perform as agreed in a contract constitutes breach.
79) In breach of contract, the injured party may only recover compensatory damages, moneys
which place him/her in the same position he/she would have been had the contract been
performed.
80) The Uniform Commercial Code has been adopted, at least in part, by all 50 states.
81) The Code does not cover contracts for the sale of services.
82) Under the UCC, a person is considered a professional merchant if he/she “deals in goods of
the kind” and has a special knowledge of the business or of the goods, uses a merchant’s agent to
conduct business, or presents him/herself as a merchant.
83) Under the Code, as long as an offeree’s response indicates a sincere willingness to accept, it
will be an acceptance although the terms of the acceptance may be somewhat different.
84) Under the Code, a new consideration is required if an existing contract is modified.
85) Under the UCC, delivery of goods does not necessarily mean physical delivery, but simply
making the goods available to the buyer.
86) The buyer must indicate acceptance of goods verbally or in writing for the acceptance to be
binding.
87) The legal remedies for breach of contract are designed to put the nonbreaching party in the
same position as if the contract had been carried out.
88) Today, the marketplace follows a policy of caveat venditor—“Let the seller beware.”
89) An express warranty can be created by words or by actions.
90) Every seller who offers goods for sale implies a warranty to title for those goods.
91) A manufacturer of power saws who fails to place a safety guard on products would likely be
liable for negligence if a customer is injured.
92) Patents are a grant from the federal government for the life of the inventor plus fifty years
and cannot be renewed.
93) A device cannot be patented if it has been publicized in print anywhere in the world.
94) Filing for a patent is a simple process the small business owner can handle himself.
95) George Washington signed the first patent law in 1790.
96) Any type word, phrase, symbol, design, name, logo, etc., may be a patent.
97) A company must establish its right to a trademark by actually using it.
98) An entrepreneur may lose the exclusive right to a trademark if it loses its unique character
and becomes a generic name or if the company abandons its trademark by failing to market the
brand adequately.
99) A valid copyright lasts the lifetime of the author plus fifty years after death.
100) Once a business owner acquires a patent, copyright, or trademark, his/her product or service
is protected by the federal government, which will watch for and prosecute infringements.
101) Employees are agents of their employers when performing job-related activities.
102) Employees cannot bind a company to an agreement unless the owner intended for them to
do so.
103) An agency remains valid until the principal and the agent mutually agree to dissolve it.
104) Liquidation bankruptcies are handled under Chapter 7 of the Bankruptcy Reform Act of
1978.
105) Bankruptcy proceedings can be filed by the owner or his/her creditors.
106) In a bankruptcy proceeding, all assets are subject to court attachment.
107) When a company files for Chapter 11 bankruptcy, every creditor must approve its plan for
reorganization.
108) Reorganization is covered by a Chapter 7 bankruptcy.
109) A Chapter 11 bankruptcy provides a second chance for success.
110) The regulations and restrictions the government imposes on businesses place a
disproportionate burden on small companies.
111) In 1996, passage of the Small Business Regulatory Enforcement Fairness Act provided
small businesses with some relief from government regulation.
112) The Sherman Anti-Trust Act outlaws the restraint of trade and any attempt to monopolize.
113) Contemporary society places great value on monopolies in the marketplace, and antitrust
laws reflect this.
114) The Clayton Act permits suppliers to charge customers different prices for the same product
based on what the market will bear.
115) The Robinson-Patman Act focuses on preventing unfair labor practices.
116) Recent amendments have expanded the FTC’s powers.
117) Recent consumer protection laws have reduced the required information on product labels
to relieve the financial burden on small business.
118) The CPSC has the power to ban the production of any product it considers hazardous to
consumers.
119) Congress has created a number of laws to establish standards pertaining to product labeling
for consumer protection.
120) Sam’s Appliance Shop turns a past due account over to Jake’s Collection Agency. Jake calls
the customer at 4 a.m. every day and threatens him. This is illegal behavior on the part of Jake.
121) What constitutes an agreement? What are the two key elements to agreement? Offer an
example of each.
122) What is contractual capacity and who cannot legally enter into a contract?
123) What is assent in a contract and what invalidates it?
124) Briefly explain the concept of breach of contract and the type of damages that can be
collected for breach of contract.
125) Outline and briefly explain the concepts of sales and sales contracts, breach of sales
contract, sales warranties, and product liability as described in the Uniform Commercial Code.
126) What part do patents, trademarks, and copyrights play in protecting intellectual property
rights?
127) Explain the law of agency, who is an agent, what constitutes the relationship between an
agent and a principal, and under what conditions can the relationship be terminated?
128) Describe the key features of bankruptcy proceedings under Chapter 7 and Chapter 11.
129) Explain the basic prohibitions on trade practices of the Sherman Anti-Trust Act, the
Clayton Act, and the Robinson-Patman Act.
130) The government has created a number of laws and regulations in the area of consumer
protection. Discuss.
131) Discuss government regulation in the area of consumer credit, identifying key legislation
and what rights it grants consumers.