1) Which clause in the U.S. Constitution is most used in terms of regulating business activities?
A. The Bill of Rights
B. The Commerce Clause
C. The Supremacy Clause
D. The First Amendment
2) The Federal Trade Commission is an example of
A. a temporary commission created by executive order that has become permanent
B. a branch of the U.S. Supreme Court
C. a federal agency created by the federal government
D. a corporation subsidized by the federal government
3) Barry owns a small software development firm. Barry has an employee who needs special accommodations in order to be able to perform the functions of his job. These accommodations would cost $10,000; an amount Barry believes is more than he should have to spend. The Americans with Disabilities Act provides that an employer is required to make “reasonable accommodations” for an employee with a disability, but does not define what constitutes a “reasonable accommodation.” Assume that size of the employer (by some measure) determines the maximum amount that would be considered reasonable for a particular employer to spend. Under the principles of stare decisis, which of the following is true?
A. If a similar-size employer had not been required to spend $15,000 in the past, then Barry would be required to spend $10,000.
B. If a similar-size employer had not been required to spend $15,000 in the past, then Barry would not be required to spend $10,000.
C. If a similar-size employer had been required to spend $15,000 in the past, then Barry would be required to spend the $10,000.
D. If a similar-size employer had been required to spend $15,000 in the past, this would not be relevant in Barry’s case because it happened in the past.
4) Which of the following statements is true?
A. A course of action can be legal but not ethical.
B. Practices that are ethical in the United States are considered ethical everywhere else in the world.
C. If something is legal, it is always ethical.
D. Practices that are legal in the United States are legal everywhere in the world.
5) Marion owns a dress shop, where she personally makes all the dresses she sells. Marion sees a beautiful dress at a designer shop and buys it. She examines the dress carefully, so she can design a dress pattern to duplicate it. She duplicates the dress exactly, and sews the dress in several sizes to sell in her store for a lower price. Then she returns the dress to the store where she bought it for a full refund. Has Marion acted ethically?
A. No, because she is asking a lower price for her dress
B. Yes, because she is competition is fair in a capitalist society
C. Yes, the store was not hurt because the designer store’s customers would not go to her store anyway.
D. No, Marion is undercutting the designer shop with merchandise that is deceptively similar.
6) Utilitarianism is a moral theory, which states
A. ethics requires acting according to the Bible or some outside source
B. ethics requires actions which use the most efficient tools
C. ethics requires a decision-maker to take actions which result in the greatest good to society
D. ethics requires following the Golden Rule (do unto others as you would have them do unto you)
7) A court can enter a judgment notwithstanding the verdict when the following has happened?
A. The jury was sequestered.
B. The judge’s personal opinion is that the jury made the wrong decision.
C. A jury could not reach an agreement on what the verdict would be.
D. The court finds that the jury acted out of a bias or after jury misconduct.
8) If a defendant files a motion for summary judgment in a civil case, what is the defendant saying?
A. That even if what the plaintiff says is true, there is no basis for judgment against the defendant
B. That the case is ready to go to the jury
C. That the plaintiff’s claims are false
D. That the court has no jurisdiction to decide the case
9) An appellate court reviews what information to decide on appeal?
A. Only briefs provided by the lawyers plus the documentary evidence admitted at trial.
B. Only a transcript of the trial testimony plus briefs of the lawyers.
C. All witnesses have come to court to testify again like they did at the trial.
D. Documentary evidence that was admitted at trial, plus a transcript of the witnesses’ testimony.
10) Damages intended to punish a defendant and deter the defendant and others from engaging in the same tortious conduct in the future are called
A. nominal damages
B. punitive damages
C. penalty damages
D. retribution damages
11) Monica owed Bob $500, which was more than a year overdue. Bob got drunk at a party and told everyone that Monica had owed him $500 for over a year. Can Monica recover from Bob for defamation?
A. No, because Bob had been drinking
B. Yes, because Bob communicated the statement to third persons
C. Yes, because Bob abused his conditional privilege
D. No, because Bob was telling the truth
12) What is the definition of a tort?
A. Any civil wrong that allows the injured person to recover damages
B. Any crime or misdemeanor
C. Any violation of an ethical duty
D. Any action done in violation of a prior agreement, which allows the victim to recover damages
13) Mary’s mother agrees to give her a new car if Mary maintains an A average for her senior year of college. Mary does in fact earn an A average, but when she asks for the car, Mary’s mother tells Mary that she just told Mary that to motivate her and she will not be getting a car. Mary sued her mother alleging a breach of contract. Who will win this suit?
A. Mary wins but only if she can prove that the fair market value of the time she spent studying was equal to the value of the car.
B. Mary’s mother wins because Mary had a preexisting obligation to do her best.
C. Mary’s mother wins because there was no consideration for her promise.
D. Mary wins because her actions in reliance upon her mother’s promise constitute consideration.
14) Which of the following best describes how e-mail contracts are viewed under the law?
A. E-mail contracts are generally treated similarly to contracts negotiated by other means.
B. E-mail contract are valid only for contract less than $500.
C. E-mail contracts for goods can be valid, but not email contracts for services.
D. E-mail contracts are valid so long as both parties sign a written copy printed out from the e-mail.
15) Where a contract calls for action that violates a statute, in a breach of contract case the court will
A. order payments so that the parties to the illegal contract share any losses equally
B. ignore the contract and leave the parties where they are
C. impose the appropriate criminal penalty
D. order both parties to return any consideration received
16) Articles 2 and 2(A) of the UCC cover which types of transactions?
A. Sales of goods and leases of goods
B. Sales of goods and leases of goods and real property
C. Sales of goods and sales of real property
D. Sales of goods and contracts for the providing of services
17) Melinda is home one afternoon, when a PaverSaver truck pulls up outside her house. Several workers exit the truck and proceed to dig up her driveway. They completely remove her old driveway and pour a new concrete driveway. She observes the entire process, but says nothing to the workers. Later, Melinda’s next door neighbor complains that the workers who were supposed to come and replace her driveway failed to arrive. How much will PaverSaver be able to recover in court if Melinda refuses to pay the bill they send her for the driveway?
A. PaverSave will not recover anything, and will have to pay Melinda for destroying her driveway.
B. PaverSaver will be able to recover its regular fee for a new driveway.
C. Nothing—Melinda did not order a driveway replacement.
D. Paver Saver will be able to recover the reasonable value of the driveway.
18) Ted’s Gifts and Sweets enters into a written contract with Bannon Candies to supply Ted’s with 60 dozen boxes of coconut clusters each month for sale to the public. The agreement contained an integration clause. Before the first delivery under the contract, Ted and his warehouse manager called Debbie, the Bannon’s account representative, to request that the candies be delivered in special Valentine boxes. Debbie told Ted, “Don’t worry, I’ll tell the shipping department to take care of that.” When the candies were delivered, they were in standard cardboard boxes. Ted called Bannon and threatened to sue for breach of contract. Will Ted prevail in his suit?
A. No, Ted will not prevail because his attempt to modify the agreement was not effective.
B. No, Ted should have written a letter to change the type of boxes in the contract.
C. Yes, Ted made a valid modification to the parties’ original agreement.
D. Yes, Ted will prevail because he has a witness to the telephone call.
19) Mary and George are a husband and wife who reside in a community property state. For 30 years, George has been the sole provider while Mary cared for the children and home. George dies, leaving a will that leaves his estate to their three children, now adults. How is the ownership of the house affected?
A. Mary and the adult children each own a quarter interest in the house.
B. Mary owns half interest in the house, and the adult children own the other half.
C. Mary owns the entire house, as the community survivor.
D. Mary and the adult children become tenant in the entirety.
20) Huey, Dewey, and Louie own a building as tenants in common. Huey lives in the building. Without consulting the other two owners, Dewey deeds his interest in the building to Joe. What will be the outcome of this situation?
A. Joe will make Huey pay rent.
B. Huey and Louie will still own the property as tenants in common, but Joe will have a reversionary interest.
C. Huey will own the property as tenants in common with Joe and Louie.
D. The transfer of the interest to Joe will be ineffective because the other two did not consent.
21) An easement can be defined as
A. an option to purchase the land of another
B. a relaxation of the borderlines between two parcels of land
C. a limited right to use another person’s land for a particular purpose
D. a life estate in the property of another
22) Ricardo and Robert operate a hardware store as general partners. Robert is unmarried, while Ricardo is married to Jenna. Ricardo is killed in an accident and his will leaves all his property to Jenna. What happens to Ricardo’s interest in the partnership?
A. Ricardo’s interest is divided equally between Robert and Jenna.
B. Robert becomes sole owner of the hardware store and owes Jenna nothing
C. Jenna inherits Ricardo’s partnership interest and becomes Robert’s partner in running the business.
D. Robert becomes sole owner of the hardware store, but owes Jenna the value of Ricardo’s interest in the business.
23) Which of the following is true when a general partnership is converted to an LLC?
A. The members will retain unlimited personal liability for obligations incurred while the business was a partnership.
B. The conversion can be made retroactive for up to two years.
C. The property must be sold to a third party who then immediately sells it to the LLC.
D. The profit and loss sharing terms must remain the same as they were in the partnership.
24) Which is true of a limited partnership?
A. A partnership is limited to doing business in the state of incorporation.
B. The liability of all owners is unlimited.
C. The liability of all owners is limited to the amount of their contribution to the business.
D. At least one of the partners must be a general partner with unlimited personal liability.
25) In the Northeast Ethanol, LLC case, the court pierced the corporate veil after making a determination that
A. the ethanol plant was an unwise investment, against the best interest of the stockholders
B. the shareholders could not find financing to build the ethanol plant
C. the shareholders failed to capitalize the business adequately
D. the corporate directors were engaging in ultra vires activities
26) Rita is the sole shareholder of an auto repair shop that is incorporated. She is at work one day when her sister comes in and tells her she needs $100 for schoolbooks. Rita looks in her wallet, and seeing that it contains no money, opens the cash register and takes out $100, which she hands to her sister. The sister looks worried, but Rita tells her, “Don’t worry; I take money out of the cash register all the time for my personal expenses. It’s my business, so I can take money out whenever I want.” Her customer, who is waiting to pick up his car, tells Rita that she is risking the piercing of the corporate veil. Is the customer correct?
A. No, the customer is wrong.
B. No, Rita is the only shareholder and can do what she wants.
C. Yes, Rita is not the board of directors.
D. Yes, Rita is co-mingling personal assets with corporate assets.
27) A corporation is required to maintain a separate identity because
A. corporations have perpetual existence
B. corporations are entities created by statute to limit the personal liability of investors
C. corporations can act only through officers
D. if they do not maintain the separate identity, they become alien corporations
28) Rover Corporation is a regular corporation that has not elected S corporation status. In 1992, Rover earned $100,000; in 1993, Rover distributes $50,000 to its shareholders. Which of the following best describes the tax consequences to rover and its shareholders?
A. Rover is taxed on $100,000 in 1992; the shareholders are taxed on $50,000 in 1992.
B. The shareholders are taxed on $100,000 in 1992; Rover is not subject to tax.
C. Rover is taxed on $100,000 in 1992; the shareholders are not subject to tax.
D. Rover is taxed on $100,000 in 1992; the shareholders are taxed on $50,000 in 1993.
29) The uniform law, issued in 1984 by the Committee on Corporate Laws of the American Bar Association, that regulates the formation, operation, and termination of corporations is
A. The Revised Model Business Commercial Code
B. The Model Business Corporation Act
C. The Uniform Commercial Code
D. The Standard Incorporation Act
30) If a corporation is properly incorporated in one state and wants to do business in second state, the corporation
A. must register with the Interstate Commerce Commission
B. must incorporate in the second state
C. must do nothing because being incorporated in one state entitles the corporation to do business in all states
D. may be required to obtain a certificate of authority from the second state
31) Which of the following people is protected from employment discrimination on the basis of age?
A. A 30-year-old person who wants a job as a waitress
B. A 90-year-old person who wants a job as an airline pilot
C. A 50-year-old person who wants a job as an accountant
D. A 10-year-old person who wants a job as a bartender
32) What is the primary purpose of the Occupational Safety and Health Act?
A. Its purpose is to compel employers to provide a work environment that is free from recognized hazards that could cause death or serious injury.
B. Its purpose is to protect the safety of workers and the safety of those who purchase the employer’s products or services.
C. Its purpose is to reduce the application of industry standards to workplace conditions.
D. Its purpose is to promote the provision of healthcare benefits by employers having more than 15 employees.
33) Which is true about the two kinds of discrimination that are actionable under Title VII?
A. Disparate treatment refers to individuals and disparate impact refers to protected classes.
B. Disparate impact and disparate treatment are both based on how an employer treats a specific individual.
C. Disparate impact and disparate treatment are both based on how an employer treats a protected class.
D. Disparate impact refers to individuals and disparate treatment refers to protected classes.
34) What is generally the effect when an exception to the employment at will doctrine applies?
A. The Fair Labor Standards Act will set the terms, such as pay, for the employment relationship.
B. The employer is required to hire a certain employee.
C. There is some sort of limitation on at least one party’s ability to terminate the employment relationship.
D. Employees can be prohibited from quitting a job.
35) Which of the following statements best describes the workers’ compensation rules?
A. The employee will collect for all work-related injuries, and will not need to prove negligence on the part of the employer.
B. The employer can avoid liability if the injured employee was contributory negligent.
C. The employer is liable for employment related injuries only if negligent.
D. The employee has the choice to sue or proceed under the workers’ compensation statute.
36) Which of the following is a correct statement of the requirements for a bona fide occupational qualification?
A. Job related and a business necessity
B. Job related and cost effective
C. Job related and nondiscriminatory
D. Rationally based and evenly applied
37) The Biosafety Protocol provides as follows:
A. Vaccinations must contain live virus.
B. Employees must wash hands when preparing food.
C. Medical waste must be safely disposed.
D. Genetically engineered food must state that it may contain modifications.
38) Brian visits an office supply store after reading an advertisement, which shows a computer for sale at an incredibly low price. He asks to see the advertised computer. The sales person tells him that, although the ad just came out, the store has already run out of that particular computer. The salesman gets a different computer, and tries to interest Brian in this computer. The salesman is guilty of the following deceptive trade practice:
A. False description of the product
B. Selling unsafe products
C. Deceptive advertising
D. Product recall
39) In general, trademark protection is granted based on whether the trademark is
A. understandable to the general public
C. the original creation of the trademark registrant
D. novel and useful
40) Peter has a bus company, and hires drivers to drive his buses. He does not take any taxes out of their paychecks. The bus drivers have to drive the buses according to a particular schedule, and must follow a certain route, and follow the driving rules that are listed in the Driver’s Manual that Peter has provided. What is the employment status of the drivers?
A. They are principals.
B. They are partially disclosed agents.
C. They are employees.
D. They are independent contractors.
41) Rachel and Roy are married. Phillip is a private investigator, who is following Rachel at Roy’s request, to see if she is involved in another relationship. At one point, Rachel enters a “women only” gym, where Phillip cannot follow. Phillip calls his friend Sue and tells her that if she will enter the gym and observe Rachel, Roy will pay her $25 an hour for her services. Sue goes to the gym and observes Rachel for 3 hours, after which she bills Roy for $75. Must Roy pay Sue’s bill?
A. Yes, because Sue is entitled to collect on a quasi-contract basis
B. No, because Sue is not a licensed private investigator
C. No, because Roy is not liable for contracts entered into by Phillip
D. Yes, because Phillip was acting as Roy’s agent when he hired Sue
42) Patricia owns a Mexican restaurant, famous for home-made tortillas. The tortillas are made by several women, who make the tortillas in their homes and sell them to the restaurant. Some of the women have been making tortillas for Patricia for years, while others have just started. Patricia pays for the tortillas by the dozen. What is the nature of the employment relationship between the women and Patricia?
A. The women are independent contractors.
B. The women are agents of the restaurant.
C. The women are part-time employees of the restaurant.
D. The women are employees of the restaurant.
Patricia owns a Mexican restaurant, famous for home-made tortillas. The tortillas are made by several women, who make the tortilla