BMGT510-1900-Legal Environment for Business.

BMGT510-1900-Legal Environment for Business.

Question 1
Marks: 1
1. Which of the following statements about international law is/are true, according to what we have studies in this course?
I. The WTO (World Trade Organization) creates a free trade zone around the world.
II. The WTO is to international commerce what the Unites Nations is to international politics.
Choose one answer.
a. I only.
b. II only.
c. Both I and II.
d. Neither I nor II.

Question 2
Marks: 1
Jesse rents an apartment from Slumlords, Inc. Two months into a one-year lease, Jesse discovers a hole in the ceiling of his premises is causing a leak from the bathroom of the apartment above into his unit. Jesse notifies the landlord of the hole, which is growing larger by the day and is making use of Jesse’s own bathroom impossible. A month goes by and the landlord has not responded to Jesse’s complaint or made repairs. Jesse’s options at this point are all of the following EXCEPT:
Choose one answer.
a. Withhold the rent due and deposit it in an escrow account until repairs are made.
b. Sue the landlord for damages or termination of the lease.
c. Withhold the rent due and apply it to a security deposit on a new apartment in another building.
d. Hire repair people to make the necessary repairs and deduct the reasonable expense for these repairs from the rent.

Question 3
Marks: 1
Owen takes a Paisley-made pinball machine to Quality Games, Inc., for repair. Lacking certain parts, Quality ships the game to Regal Repair Company. While in Regal’s possession, the game is damaged. Quality can recover for the damage from
Choose one answer.
a. Owen.
b. No one.
c. Regal.
d. Paisley.

Question 4
Marks: 1
Chita owns the land on which Downwind Farm is situated, plus the farmhouse, barn, and other structures permanently attached to the land. Chita’s brother Elvin owns everything else on the farm – implements, seed, and so on. The real property is owned by
Choose one answer.
a. Chita only.
b. Downwind Farm.
c. Elvin only.
d. Chita and Elvin.

Question 5
Marks: 1
Rita is a surety for Stu’s loan from Total Finance Company. Rita’s right to “step into the shoes” of Total Finance, after paying Stu’s debt, and exercise any of Total Finance’s rights against Stu is the right of
Choose one answer.
a. Reimbursement
b. Subrogation
c. Redemption
d. Contribution

Question 6
Marks: 1

Fancee Furniture Store sells household consumer goods. To create a purchase-money security interest, Fancee must
Choose one answer.
a. Extend credit for all or part of the purchase price for the goods.
b. Assign, to a collecting agent, a portion of its accounts payable.
c. Refer purchasers to a third party lender.
d. Assign, to a collecting agent, a portion of its accounts receivable.

Question 7
Marks: 1
Vijay is a member of Watchit, LLC, a limited liability company. Vijay is liable for Watchit’s debts
Choose one answer.
a. in proportion to the total number of members.
b. to the extent of his investment in the firm.
c. to the extent that the other members do not pay the debts.
d. to the full extent.

Question 8
Marks: 1
Rusty and Sylvia are shareholders of Triad Hotel Corporation. Triad’s directors fail to declare a dividend. Rusty and Sylvia could succeed in asking a court to order the directors to meet and declare a dividend
Choose one answer.
a. If Triad has sufficient earnings available to pay a dividend.
b. If Triad has cash reserves, even if earmarked for a different purpose.
c. Under no circumstances.
d. If withholding a dividend is an abuse of the directors’ discretion.

Question 9
Marks: 1
Kit, manager of Long-Term Care Company’s office in Metro City, decides to replace the office’s male employees with females. Nia, an assistant manager transferred from a different Long-Term Care office, refuses to cooperate. Kit retaliates against Nia, who quits. Within a year, the male employees also quit.
Kit’s conduct is most likely a violation of
Choose one answer.
a. the Age Discrimination in Employment Act.
b. Title VII of the Civil Rights Act.
c. no law.
d. the Americans with Disabilities Act.

Question 10
Marks: 1
Refer back to question #13. When Donald completes and signs the application, he gives the insurance agent for Equity a check as a deposit on the first year’s premium, upon which Equity’s agent gives Donald a “conditional receipt” for the premium deposit, binding the application. Donald gets hit by a bus upon leaving the agent’s office that same day, and unfortunately, dies, before Equity completes its medical underwriting of Donald’s application. Donald’s beneficiary files a claim for the policy proceeds. The most likely outcome is
Choose one answer.
a. Donald’s beneficiary can recover only the deposit paid on the policy application, as the policy was not in force at the time of death.
b. Donald’s beneficiary can recover the policy proceeds, less the premium deposit.
c. Donald’s beneficiary can recover the entire policy proceeds, as the policy was bound and in force, pending the completion of underwriting by Equity Insurance.
d. Donald’s beneficiary cannot recover the policy proceeds because the policy application had not yet been approved by Equity Insurance.

Question 11
Marks: 1
Sam works for Acme Consultants, Inc. He has no written contract of employment with Acme, but the employee manual given to him when he begins his employment states an encouragement to employees that as part of their ethical responsibilities, employees are to report illegal or unethical activity of anyone in the firm. Sam witnesses illegal activity going on at work by other employees of the firm. He reports the illegal activity to the proper law enforcement authorities. Sam is then dismissed from his employment, apparently as a response to Sam’s reporting the illegal activity. All of the following statements about this situation are true, EXCEPT:
Choose one answer.
a. Sam may have a tort claim against Acme for bad faith due to the retaliatory firing.
b. Sam’s dismissal from Acme is justified under the employment at will doctrine because Sam went directly to outside authorities before reporting the illegal activity to the Human Resources Department of Acme.
c. Sam is considered a “whistleblower,” who has some degree of protection from termination by a public policy exception to employment at will.
d. Sam has a claim of wrongful termination against Acme under an implied contract exception to employment-at-will.

Question 12
Marks: 1

Kelly signs an instrument in favor of Len that states it is “subject to a certain agreement between Kelly and Mona.” This instrument is
Choose one answer.
a. nonnegotiable, because it refers to a separate agreement.
b. negotiable.
c. nonnegotiable, because Kelly and Mona are not the same person.
d. nonnegotiable, because it is made subject to a separate agreement.

Question 13
Marks: 1
Joey, in good faith and for value, gets from Kit a negotiable bearer instrument. Joey does not know that Kit stole the instrument. Joey is
Choose one answer.
a. Not an HDC because the instrument is a bearer instrument.
b. An HDC (holder in due course)
c. Not an HDC because Kit did not acquire the instrument in good faith.
d. Not an HDC because Kit did not acquire the instrument for value.

Question 14
Marks: 1
Clearwater Irrigation Systems, Inc. employs Daphne as an agent. During the agency, Daphne acquires new skills. After termination of the relationship, Daphne uses those skills in a new job. Daphne has breached
Choose one answer.
a. the duty of performance.
b. the duty of notification.
c. no duty.
d. the duty of loyalty.

Question 15
Marks: 1
Sedate Investment Corporation (SIC) hires Tiger, a real estate agent, to locate investment properties for SIC. Tiger learns of a warehouse available for $100,000, buys it himself, and offers to sell it to SIC for $110,000. Tiger
Choose one answer.
a. Should have offered the property for sale to others to avoid the appearance or a conflict of interest.
b. Should have made the offer to sell through a neutral third party to avoid any conflict of interest.
c. Breached his duty of loyalty.
d. Did nothing wrong.

Question 16
Marks: 1
Which of the following statements about wills is/are true?
I. A will controls the disposition of all property that is considered part of the testator’s probate estate.
II. Dying without a will means that the state will dictate the disposition of property according to its intestacy laws.
Choose one answer.
a. I only.
b. II only.
c. Both I and II.
d. Neither I nor II.

Question 17
Marks: 1
Caine takes a check out of Able’s checkbook, fills in payment of $1000 to himself, and forges Able’s signature to the check. Able discovers the missing check, and informs his bank of this fact. The bank wants to issue a stop payment order on the check and charge Able’s account $30 for the stop payment order. Able refuses the charge. When Caine shows up at Able’s bank to cash the check, the Bank has all of the following options, EXCEPT:
Choose one answer.
a. honor the check but be unable to debit the $1000 from Able’s account as it is responsible for knowing Able’s signature
b. honor the check and debit Able’s account for the $30.
c. dishonor the check and have Caine arrested for forgery
d. dishonor the check for no charge to Able’s account.

Question 18
Marks: 1
Hal’s Hardware Store defaults on a debt to Intrastate Bank, which takes possession of the collateral securing the debt. Intrastate sells the collateral. The proceeds from the sale are applied first to
Choose one answer.
a. Hal’s debt to Intrastate.
b. Payments Hal’s made on the debt to Intrastate.
c. Hal’s debts to other creditors.
d. Intrastate’s fees for the sale.

Question 19
Marks: 1
Tab stores video equipment with U-Store-It, Inc., under a contract that excuses the warehouse from liability for any damage. A fire due to U-Store-It’s negligence destroys the equipment. The loss is most likely to be imposed on
Choose one answer.
a. Tab and U-Store-It.
b. U-Store-It only.
c. Tab only.
d. Neither Tab nor U-Store-It.

Question 20
Marks: 1
John executes a will in his own handwriting, and signs it. He then takes the document to three different people, including a notary, pointing to his signature and stating that it is his. The witnesses and the notary attest to witnessing John’s signature. This document
Choose one answer.
a. Is not a valid will because no state recognizes a will handwritten in the testator’s own writing.
b. Is not a valid will because John did not sign in the presence of the witnesses.
c. Is a valid will because John appeared before the notary and witnesses testifying that the signature on the document was his.
d. Is a valid will because the notary’s signoff removes what would otherwise be invalidity of the witnesses signatures.

Question 21
Marks: 1
To acquire the ownership of a mountain cabin by adverse possession, Cody must occupy the cabin exclusively, continuously, and peaceably for a specified period of time
Choose one answer.
a. With the state’s permission.
b. Until the owner files a suit.
c. Without the owner’s knowledge.
d. In an open hostile, and adverse manner.

Question 22
Marks: 1
Flo-Thru Corporation is poised to issue securities that, under the Securities Act of 1933, are “exempt.” This means that the securities can be sold
Choose one answer.
a. on the basis of nonpublic information.
b. on the basis of a material omission or misrepresentation.
c. without being registered.
d. within any 6-month period by certain insiders.

Question 23
Marks: 1
Riley, an engineer for Shur-2-Gro Seed Corporation, learns that the company has developed a corn hybrid to triple the output of any farm. Riley buys 20,000 shares of Shu-2-Gro stock. He tells Tess, who buys 15,000 shares. After the new hybrid is announced publicly, the price of Shur-2-Gro stock increases. Riley and Tess sell their shares for a profit. Under the law regarding insider trading (Securities Exchange Act of 1934), liability may be imposed on
Choose one answer.
a. None of these parties.
b. Riley only.
c. Riley and Tess only.
d. Riley, Tess, and Shur-2-Gro.

Question 24
Marks: 1
Donald applies for a life insurance policy on his own life with Equity Insurance Company. The application for insurance is considered to be
Choose one answer.
a. A completed policy contract between Donald and Equity Insurance.
b. An acceptance of a policy from Equity Insurance to Donald.
c. An offer from Donald to Equity Insurance.
d. A request for an offer from Equity Insurance to Donald.

Question 25
Marks: 1
Call Center Corporation, a U.S. firm, owns property in India. The Government of India seizes the property for a proper public purpose and pays Call Center just compensation. This is
Choose one answer.
a. confiscation.
b. defalcation.
c. dumping.
d. expropriation.

Question 26
Marks: 1
Thalia is an employee of Universal Insurance Company. Universal’s employee manual states that workers will be dismissed only for good cause. With respect to the employment-at-will doctrine, this is
Choose one answer.
a. An exception based on public policy.
b. An exception based on tort theory.
c. An exception based on contract theory.
d. An example of the doctrine.

Question 27
Marks: 1
Bryan organized, and owns and operates, Bryan’s Heating and Air Conditioning Service in the simplest form of business organization. This is
Choose one answer.
a. A sole proprietorship.
b. A limited liability company.
c. A franchise.
d. A partnership.

Question 28
Marks: 1
Kit, manager of Long-Term Care Company’s office in Metro City, decides to replace the office’s male employees with females. Nia, an assistant manager transferred from a different Long-Term Care office, refuses to cooperate. Kit retaliates against Nia, who quits. Within a year, the male employees also quit. Liability for Kit’s conduct most likely rests with
Choose one answer.
a. Long-Term Care male employees, who should have acted themselves.
b. Nia, who did not cooperate.
c. no one, because no law was violated.
d. Long-Term Care, which should have known, and Kit, who acted.

Question 29
Marks: 1
The term LLP refers to
Choose one answer.
a. The establishment of a limited liability partnership.
b. A professional services firm set up as a partnership but protecting the partners from personal liability for firm debts.
c. A firm that does not exist as a tax entity separate from its owners.
d. All of the above.

Question 30
Marks: 1
Jill introduces Kelly to her friends as “my associate.” Kelly purports to act as Jill’s agent in several business transactions with those friends. If Jill is liable for Kelly’s actions, it will be under
Choose one answer.
a. the fiduciary principle.
b. the equal dignity rule.
c. the doctrine of estoppel
d. the good faith statute.

Question 31
Marks: 1
Rikki writes a check “pay to the order of Scholar University” drawn on Rikki’s account in Town Bank to pay her tuition. Rikki is
Choose one answer.
a. The drawee.
b. The drawer.
c. The payee.
d. The certifier.

Question 32
Marks: 1
General Leasing Company (GLC) buys equipment for use as inventory, borrowing $1 million from Helpful Finance Corporation for a security interest in the equipment. The next day, GLC borrows $500,000 from Interstate Bank, also for a security interest in the equipment. GLC defaults on the loans. Suppose that Helpful perfects its security interest when GLC takes possession of the equipment. In that circumstance, the party with priority to the collateral on GLC’s default would be
Choose one answer.
a. Helpful and Interstate, proportionately.
b. GLC.
c. Helpful only.
d. Interstate only.

Question 33
Marks: 1
Esme hires Franz to do some remodeling work in her office. The relationship between Esme and Franz is client and independent contractor. While working, Franz drops a tool on Gregor, Esme’s customer, causing an injury. Esme is
Choose one answer.
a. Liable to Gregor unless Franz’s act is intentional.
b. Not liable to Gregor because Franz is Esme’s employee.
c. Not liable because Franz is an independent contractor.
d. Liable to Gregor because he was injured on Esme’s property.

Question 34
Marks: 1
Superior Home Products, Inc. is a corporation. Superior’s implied powers enable it to
Choose one answer.
a. Perform all acts reasonable appropriate and necessary to accomplish its corporate purposes.
b. Amend the articles of incorporation.
c. Declare dividends.
d. Bring a derivative suit.

Question 35
Marks: 1
Clyde issues a check payable to Discount Mart. Elle, Discount’s cashier, forges the store’s endorsement and deposits the check in her bank account. Clyde’s bank, Fab Bank, pays the check. Clyde can recover from
Choose one answer.
a. Elle, but not the bank.
b. The bank, which can recover from Elle.
c. No one.
d. The bank, which cannot recover from Elle.

Question 36
Marks: 1
Michael, a citizen of Ireland, and Nina, a citizen of the United States, enter into a contract. When Nina breaches the contract, Michael obtains an award of damages in an Irish court. He asks a U.S. court to enforce the award. The U.S. court defers to and enforces the Irish court’s decree. This is
Choose one answer.
a. a travesty of justice.
b. The principle of comity.
c. The doctrine of sovereign immunity.
d. The act of state doctrine.

Question 37
Marks: 1
General Leasing Company (GLC) buys equipment for use as inventory, borrowing $1 million from Helpful Finance Corporation for a security interest in the equipment. The next day, GLC borrows $500,000 from Interstate Bank, also for a security interest in the equipment. GLC defaults on the loans.
Suppose that two weeks after GLC takes possession of the equipment, Helpful and Interstate file financing statements, with Interstate filing first. In that circumstance, the party with priority to the equipment is
Choose one answer.
a. GLC.
b. Helpful only.
c. Interstate only.
d. Helpful and Interstate, proportionately.

Question 38
Marks: 1
Julie signs a check payable to the order of Kwik-Mart Stores, Inc., that does not include a date. This check is
Choose one answer.
a. Negotiable.
b. Nonnegotiable, because it is payable to Kwik-Mart.
c. Nonnegotiable, because it is signed by Julie.
d. Nonnegotiable, because it does not include a date.

Question 39
Marks: 1
Coast-to-Coast Distribution, Inc., is a direct-mail distribution company. Like most corporations, Coast-to-Coast’s employees include its
Choose one answer.
a. All of the above
b. Officers
c. Incorporators
d. Board of directors

Question 40
Marks: 1
Pruit performs a contract with Quint to reshingle the roof on Quint’s house, but Quint does not pay. Pruit notifies Quint that Pruit will foreclose on the house and sell it to satisfy the debt. This is
Choose one answer.
a. A violation of most state laws.
b. An artisan’s lien.
c. A judicial lien.
d. A mechanic’s lien.