The definition of business ethics includes which of the following points?
a. It is a branch of applied ethics.
b. It is fully codified in federal statutes.
c. It has a central authority and universal standards.
d. All of these are correct.
Under the common law, the __________ must be the mirror image of the __________.
a. acceptance; offer
b. offer; acceptance
c. contract; offer
d. contract; consideration
A solicitation of proxies from holders of stock:
a. is used by dissident shareholders attempting to change corporate policy by electing
their own directors.
b. includes any request not to execute a proxy.
c. registered under the 1934 Act requires the solicitor to disclose all material facts
concerning the corporate issues presented on the proxies.
d. All of these are correct.
Howard stole a word processor and then sold it to his friend Ivan for $100. Ivan has:
a. good title to the word processor, because he paid for it.
b. a voidable title to the word processor.
c. a void title to the word processor.
d. good title to the word processor, because he is a good faith purchaser for value.
Jonah, a businessman, has no connection with Harvard University, but he has a new line
of computer software that he would like to market to university students and faculty
under the name of “Harvard Software.”
a. Jonah may in all likelihood register the name “Harvard Software” under the Lanham
Act.
b. Jonah may in all likelihood be able to copyright the name “Harvard Software” under
the Copyright Act.
c. It is unlikely that Jonah will be able to register the name “Harvard Software,” because
it falsely suggests a connection to an institution.
d. It is unlikely that Jonah will be able to register the name “Harvard Software,”
because it has a secondary meaning.
If an agency order is appealed, the governing body of the agency may decide the case
de novo. In this context, the term de novo means:
a. agency hearings produce evidence of general conditions.
b. the agency may hear additional evidence and arguments in deciding whether to revise
the findings and conclusions made in the initial decision.
c. without regard to new evidence.
d. an agency may impose in its orders sanctions such as penalties.
Express contracts and implied in fact contracts:
a. are both genuine contracts.
b. are equally enforceable.
c. are not really contracts.
d. Both (a) and (b).
The best and most reliable tool for preserving a partnership business after dissolution is:
a. a court order.
b. the filing of a request with the secretary of state’s office in the state where the original
partnership was located.
c. a continuation agreement.
d. There is no tool for preserving a partnership after dissolution. A new partnership must
be formed after distributing all partnership property from the original partnership.
In most states, a trustee’s investment decisions are usually governed by:
a. the prudent investor rule.
b. judiciary determination.
c. the beneficiary’s intent.
d. The Uniform Principal and Income Act.
Which of the following would NOT require a writing under the statute of frauds?
a. Where the buyer agrees to pay $10,000 for a piece of real estate.
b. Where a renter agrees to rent a building for a five-year period.
c. Where a contract enters into an agreement for an easement across adjoining land to
run cables.
d. Where a landscaper agrees to landscape the lot surrounding an office building.
For how long is an oral stop payment order valid?
a. Fourteen calendar days.
b. Fourteen business days.
c. Thirty calendar days.
d. Six months.
The Securities Act of 1934 imposes sanctions for noncompliance with its disclosure and
antifraud requirements. These sanctions include:
a. civil liability to injured investors and issuers.
b. civil penalties.
c. criminal penalties.
d. All of the above.
State X passes legislation that requires that unless a mother of children under the age of
7 is found to be unfit, custody in divorce proceedings should be awarded to the mother
and not the father. If this statute is challenged, the court will:
a. defer to the legislature and will not determine whether such a classification of
persons is constitutionally permissible.
b. determine that fundamental rights and suspect classification are involved in this
legislation.
c. only require that the legislation conceivably bears some rational relationship to a
legitimate governmental interest.
d. review the legislation to see if the preference to mothers bears a substantial
relationship to an important governmental objective.
Harold hired Blake Painters to paint his house. Blake decides he has too many jobs and
delegates the duties to the Andrews Company. Andrews does a poor job, and drips paint
on Harold’s flowers and windows. Harold:
a. can sue both Blake and Andrews.
b. can sue Blake, but he cannot sue Andrews.
c. can sue Andrews, but he cannot sue Blake.
d. cannot sue, because he has accepted the benefits of the assignment.
Which of the following is INCORRECT regarding zoning?
a. Zoning restrictions can be used to regulate, but not to take, private property.
b. A variance permits an otherwise impermissible use of the property.
c. A zoning ordinance needs no reasonable relationship to public health, safety, or
morals to be upheld.
d. A nonconforming use may be permitted where property was so used prior to adoption
of the zoning ordinance.
Match each statement with the correct term below.
a. Each shareholder having one vote for each share owned; directors elected by a
plurality of votes.
b. Authorization to vote another’s shares at a shareholder meeting.
c. Right of a dissenter to receive fair value of his shares.
d. Alter a corporation’s basic structure; charter amendments, mergers, dissolution.
e. Entitles each shareholder to give one candidate as many votes as the number of
directors to be elected multiplied by the number of shares owned.
f. Minimum number necessary to be present at a meeting in order to transact business.
g. Brought by shareholder on behalf of the corporation to enforce a right belonging to
the corporation.
h. Brought by a shareholder against the corporation based upon his ownership of shares.
i. Permission under the Revised Act for a corporation to change its state of
incorporation.
j. Fiduciary obligation of faithfulness; subordination of self-interest.
k. Device designed to concentrate corporate control in one or more persons by
transferring voting rights to them.
l. The combination of assets of two or more corporations into one of the corporations.
m. Permission under the Revised Act for a business entity to change its form to another
type of entity.
n. Precludes imposing liability on directors and officers for honest mistakes in judgment
if they act in good faith with due care.
o. A general invitation to all the shareholders of a target company to sell their shares at a
specified price.
26) cumulative voting
27) direct suit
28) appraisal remedy
29) domestication
30) merger
31) conversion
32) tender offer
33) straight voting
34) proxy
35) derivative suit
36) fundamental changes
37) business judgment rule
38) duty of loyalty
39) quorum
40) voting trust
Which of the following is untrue of a limited partnership?
a. Limited partnerships must be formed under a state statute.
b. Limited partners’ surnames ordinarily cannot be used in the partnership business
name.
c. Partners in limited partnerships must contribute services to the partnership.
d. Limited partners in a limited partnership are generally not responsible for the debts of
the partnership beyond their investment.
The definition of “discharge by breach” is:
a. performance that is incomplete but that does not defeat the purpose of the contract
but entitles the injured party to damages.
b. wrongful failure to perform the terms of a contract that gives rise to a right to
damages by the injured party.
c. a breach that prevents performance by either party.
d. None of the above.
The __________ precludes imposing liability on directors and officers for honest
mistakes in judgment if they act with due care, in good faith, and in a manner
reasonably believed to be in the best interests of the corporation.
a. duty of diligence
b. duty of obedience
c. business judgment rule
d. None of the above.
Which of the following is true of warranty liability as it affects negotiable instruments?
a. Warranty liability applies to any persons who transfer an instrument and receive
consideration.
b. A drawee of an unaccepted draft who pays in good faith receives a presentment
warranty from the person obtaining payment and from all prior transferors of the draft.
c. A drawee who accepts an instrument in good faith receives a presentment warranty
from the person obtaining acceptance that the draft has not been altered.
d. All of the above.
Indorsements with ineffective restrictions include which of the following?
a. The indorser makes the rights of the indorsee subject to the happening or
non-happening of a specified event.
b. An indorsement “For Collection.”
c. An indorsement stating “Pay to Melanie for Sharon.”
d. All of the above.
“Attachment” occurs when a secured party gives value, the debtor has acquired rights in
the collateral, and:
a. the debtor has completed his obligation to pay.
b. the collateral is delivered to the borrower.
c. the debtor and secured party have an agreement.
d. Both (a) and (b).
In an installment contract, if the contract is silent about payment, the Code provides that
the seller may demand the price, if it can be apportioned, for each lot.
Cheryl is a 17-year-old high school student who was elected homecoming queen and
does part-time modeling to earn money for college. She has an important interview with
a modeling agency and wants to make a good impression, so she withdraws $5,000
from her savings and buys a designer outfit and a fur coat for the interview. A week
later, she returns the coat to the department store and says she would like her money
back. The store is reluctant to take the items. What are Cheryl’s rights? Explain.
Bill paid $500,000 for the purchase of a “franchise” in a new professional soccer
league. The franchise is in the form of a limited partnership under which Bill is not
permitted to actively participate in the management of the team. The promoters of the
league are to do all of the management and to make all of the decisions regarding that
management. Bill will receive 15 percent of all gate receipts and revenue generated
from the sale of licensed items such as jackets and coffee mugs. Is the “franchise” a
security within the meaning of the federal securities laws?
The terms “nuisance” and “trespass to real property” refer to the same tort.
On April 2, Derrick hires JoAnn to work for ten months starting on June 10. Does the
employment contract have to be written? Explain.
A pledge used to secure a loan must be signed by all parties to the agreement.
When compared to a court trial, arbitration has the advantage of privacy.
Private tort actions may not be used to recover for environmental damage.
Ed, Vivian, and Pablo enter a partnership. Identify the source of the duties among the
partners and whether these can be waived or varied. Name the principal duties Ed,
Vivian, and Pablo have to each other and to the partnership.
Petrol Corp. owns several drilling operations in the Gulf of Mexico, refineries, service
stations, and tanker trucks for transporting their products. Petrol Corp. hires an
environmental manager to keep the company in compliance with various environmental
laws. What laws will the environmental manager need to study and why?