MGT Midterm

The categorical imperative has been criticized by commentators on the practical grounds that benefit and harm are difficult to measure.

False

The officers of a corporation are elected by shareholders.

False

Which of the following methods of administrative agency rulemaking requires a public hearing?

Formal rulemaking

Our system of government follows federalism which means what?

Having two levels of government, each with specified powers

Henry is an employee of an agency called Make My World Inc. The company provides residential interior décor for high net worth individuals. Henry works on decorating a famous basketball player's house. Henry's client likes his work so much that he gifts him a Ferrari. Which of the following is true with regard to this scenario?

Henry can keep this gift only with the agency's permission.

An agency relationship can be created by:

the implied conduct of the parties. an oral agreement. a written agreement.

The federal courts have interpreted to be a security any transaction that involves:

the investment of money in a common enterprise and expects to earn a profit predominantly from the efforts of others.

The Securities Act of 1933 was passed with the purpose of regulating:

the issuance of securities.

Mike is a staunch opponent of the death penalty, which is permitted in his state. He wishes to distribute pamphlets promoting the abolition of the death penalty, but a local law forbids the distribution of literature that advocates abolishing valid laws in that state. That law against distributing such literature cannot be enforced if:

the law violates the Constitution.

The United States was the first nation in modern history founded on the idea that:

the people could govern themselves.

When interpreting a statute, courts first use:

the plain meaning rule.

Which Harvard professor has written that CSR often benefits a company?

Michael Porter.

When a judge refers to the doctrine of precedent, he is referring to:

the principle that decisions in current cases should be based on previous rulings.

Frank was pulled over for running a red light. However, Frank insists that the light was yellow. The officer issues him a citation anyway. Which court would settle this dispute?

Municipal court

When a defendant in a lawsuit answers with a second lawsuit against the plaintiff, he is said to file a counterclaim.

true

When the potential criminal penalty includes six months or more in jail, the defendant has a right to a jury trial.

true

To become a socially conscious organization, typically _____ of the shareholders must first give approval.

two-thirds

Each co-owner of a partnership is called a _____.

general partner

Arbitration differs from mediation in that arbitration:

gives the arbitrator the power to impose an award.

Constitutional rights generally protect only against ___________ acts.

governmental

Georgia buys a large amount of a company's stock in an attempt to get it to buy it back at a premium price. What is Georgia engaging in?

greenmail

While jogging, Steve saw a man who was severely injured on the side of the road. Steve did not know the man. According to the bystander rule of most states, Steve:

has no legal duty to assist the man.

We have had laws, in the past, that we now clearly regard as ___________.

immoral

Tony was stalking Jane. Jane asked the court to help and stop Tony from stalking her. Jane is asking for a(n) ______, which is a ___________ to stop doing something.

injunction, court order

Being sincere, honest and loyal is referred to as having:

integrity.

Political speech is protected unless it is:

intended and likely to create imminent lawless action.

A woman wishes to attend an all-male, publicly supported college. She claims the college is violating the Equal Protection Clause of the Constitution by not admitting her. What level of scrutiny will the court use when deciding this case?

intermediate scrutiny

A limited liability partnership:

is made up of partners who are not liable for the debts of the partnership, although they are liable for their own misdeeds.

Which of the following is true of an appellate court?

it does not have juries

In a case, often both parties have __________, opposing arguments.

legitimate

A(n) _____ is a party who employs another to act on his or her behalf. principal

principal

If the principal and the agent agree in advance how long their relationship will last, they have a(n) _____.

term agreement

Which of the following is true about corporate social responsibility (CSR)?

CSR is the company's obligation to contribute positively to the world around it.

What is the general path taken by a bill on its way to becoming a law?

Can start in either the Senate or the House of Representatives, in the appropriate committee, then to both houses of Congress for a general vote, then to the President to sign.

Andrea, the vice president of production, is in the process of purchasing a new piece of equipment. She has narrowed the decision down to equipment from Westvo and Sontox. Westvo's equipment includes more safety features but costs 10% more. In making the decision, Andrea decided that she would not want to work on the Sontox equipment herself and she would not want others to base a decision on cost rather than safety. Consequently, she purchased the equipment from Westvo. What approach to ethical decision making did Andrea use?

Categorical imperative

Dylan breaks into an electronics store and steals $50,000 worth of merchandise. When he is arrested, the store owner also sues Dylan for the cost of the merchandise that was not recovered. What type of lawsuit is this?

Civil lawsuit.

What motivates managers to care about ethics?

Feeling good about themselves and the decisions they make

In American society, we expect _____ to resolve many problems.

Courts

The Securities Act of 1933:

Primarily regulates the original issuances of securities.

The privilege against self-incrimination extends to which of the following?

Requiring a defendant to testify in their own court hearing.

The Fourth Amendment protects people from unreasonable searches of:

Residences, persons and businesses.

An appellate court judge decides that the trial court made a gross error of law. The appellate court judge should do which of the following:

Reverse and remand the trial court's holding.

Oliver pays someone to steal his boat and his car in order to collect the insurance money on them. Is this a crime?

Yes, because he is defrauding the insurance company.

Can a party share in profits and not be a partner?

Yes, sharing profits is necessary but not sufficient by itself to constitute a partnership.

Megan is a freshman at her local public high school. She is angry because her school prohibits her from joining the wrestling teams, where only boys are allowed. She sues based on ___________________________.

constitutional law

Once a _____ goes public, it loses its favorable tax status and is taxed as a corporation, not as a partnership.

cooperative

Organizations are responsible for their_______.

employees, stockholders and communities

In the U.S. legal system, the purpose of precedent is to:

ensure predictability of law.

A _____ is a partnership for a limited purpose.

joint venture

Common Law is also called

judge made law

Sadly, Liam and Bethany have decided to divorce after 15 years of marriage. Much to Bethany's dismay, Liam wants sole custody of their children. In which court would Liam file suit?

Domestic relations court

The primary origin of the American legal system is:

English law

What is the standard justification to allow a plaintiff to "pierce the corporate veil" and sue corporate officials and/or stockholders personally for liabilities that occurred through the actions of the corporation?

The corporate officials and the corporation benefited from the injury to the plaintiff.

Money laundering refers to:

The use of illegal money to promote crime

Which of the following is one of the restrictions of S corporations?

There can be only one class of stock in an S corporation.

A business corporation can be incorporated only under state law.

True

The most common form of punishment for a corporation is:

a fine.

Octane Industries and Shalero Petroleum are in litigation. Octane requests sensitive documentation from Shalero, who doesn't want the jury or Octane to see the documents. Shalero should request:

an in-camera inspection.

The Iroquois Native Americans had a league that had authority over what?

any matters common to all

The party who files an appeal is called the _____.

appellant

Ethical companies tend to have all of the characteristics but one of the following:

are less profitable

NAFTA is an example of a:

treaty

National Lobbyists Group (NLG) strongly believes that regulation of the internet is necessary to ensure long-term national prosperity. If NLG wants a new federal agency created to regulate online activity, what could it do?

petition Congress to pass enabling legislation to create an administrative agency to regulate the internet

ATC, Inc. offered health insurance benefits to unmarried same-sex domestic partners but not to unmarried, cohabiting heterosexual couples. Ray, an employee of ATC, Inc., challenged the benefit plan, claiming that it was in violation of Title VII of the Civil Rights Act. Under the Civil Rights Act, an employer may not discriminate against any individual on the basis of sex. What tools may a court use in interpreting the Civil Rights Act?

plain meaning rule legislative history and intent public policy

In a civil case, the burden of proof falls on the _____.

plaintiff

An executive agency seldom strays from the preferred policies of the _____.

president

The Eighth Amendment to the Constitution:

prohibits cruel and unusual punishment.

Embezzlement differs from money laundering in that embezzlement:

begins with the culprit legally possessing the money or property.

A type of stock that serves as a shark repellent is:

blank check preferred stock

At the end of the nineteenth century, years before the great stock market crash, states had already begun to regulate the sale of securities. These state laws are called _____.

blue sky laws

Leslie, a scientist, invented shoes that can detect the presence of land mines safely with the help of special sensors. She started a large-scale organization for manufacturing such shoes, as these could be of use to the police department, secret agencies, and defense personnel. Leslie decides to incorporate her business activity and begins planning to transfer all assets and contracts over to the soon-to-be corporation. In the given scenario, Leslie is rightly called the _____.

promoter

Someone who organizes a corporation is called a _____.

promoter

If Southern Yalee University wishes to have someone else vote for it in an annual shareholder meeting, it should appoint a __________?

proxy

Cindy signs a two-year agreement to be Mark's agent. Three months into the agreement, Cindy receives an opportunity out of state. Meanwhile, Mark believes that he can hire an agent for less money than he is paying Cindy. The agency agreement can be terminated

by mutual agreement.

The rules and regulations enacted to govern the affairs of the corporation, its shareholders, directors, and officers are called its:

bylaws

Two-thirds of the shareholders of Permablend, Inc., approve of the company becoming a social enterprise. The company hires an independent third party to create the standards which will be used every year to determine whether Permablend is successful. What other action must Permablend take to make sure it is operating as a social enterprise?

regularly assess and report on its societal and environmental impact.

A motion for summary judgment:

can be made by the plaintiff or the defendant

Challenges for cause differ from peremptory challenges in that a challenge for cause:

can be used any number of times.

Olivia is approached on the street by a man with a gun. The gunman tells Olivia that if she does not go into the bank and hand them the robbery note that he has written, that he will kill her. Olivia does as the gunman tells her and is then arrested, along with the gunman, as they try to escape the bank. Who is likely to be found guilty?

only the gunman

Laurie is incorporating her business. The business's headquarters is located in Wisconsin. The corporation will conduct business in California, Michigan, Pennsylvania, and Virginia. Laurie:

can incorporate the business in any state.

Careful Carol was the driver of a car that was hit on South Padre Island, Texas by another car driven by Reckless Rick during Spring Break. Rick lives in Oklahoma, but was on South Padre Island to enjoy the fun 'n sun. Carol sustained $65,000 in damages. Carol:

can only file a suit in state court because federal courts require $75,000 in damages for diversity jurisdiction.

The heart of the law, is _____________?

cases

According to the concept of _____, an act is only ethical if it would be acceptable for everyone to do the same thing.

categorical imperative.

Creditors can attach partnership profits through a(n) _______ order.

charging

A Ku Klux Klan group is suing the City of Brownsville, claiming the city improperly denied them a permit to participate in the annual Hispanic Day parade. Brownsville denied a Klan branch, the Church of the American Knights, a permit to participate in the annual parade because the group planned to wear its traditional white robes and hoods. The permit was denied on the grounds that the hoods violate a state statute that prohibits groups from congregating in public places while wearing masks or disguising their faces, except at authorized masquerade parties or other entertainment. A lawsuit was filed in federal court on behalf of the Klan by the American Civil Liberties Union. In the lawsuit, the Klan contends its members wear the hoods to protect their identities because they've been subject to retaliation. In order to determine whether the City violated the KKK's constitutional rights, the court would apply the:

compelling government interest test.

"Enabling legislation" is passed by Congress to:

create a new federal agency.

Thomas Manufacturing, Inc. is a social enterprise. Last year proved to be one of its most profitable earning periods ever, and the organization must decide what to do with the unexpected windfall. Which of the following is the best option for remaining true to its objective of being socially conscious?

retrofitting the assembly line to incorporate low emission components

Chris and Sarah, divorcees, are in court to settle the issue of custody of their children. The trial court rules in favor of Sarah, with Chris not even allowed visitation rights. Chris appeals. The appeals court examines the case and concluded that there was an error in law in Chris's case and sent the case back to a lower court for a new trial. In this scenario, the judge _____ the original decision.

reversed and remanded

A writ of certiorari is a petition to:

review a lower court ruling by the Supreme Court.

Which of the below may partners not change by agreement?

right to ample information

The idea that each branch of government can act as a check on the power of the other branches is known as:

separation of powers.

Edward has filed a lawsuit against Jenny for injuries he received in a car accident. The court has sent Jenny a summons, and she must reply within 20 days. If Jenny does not respond to the complaint and summons served by the court within the prescribed time limit, Edward can obtain a _____ on the case.

default judgment

The party being sued is called the

defendant

A _____ lawsuit is brought by shareholders to remedy a wrong that the board of directors has committed against the corporation.

derivative

Two different mechanisms that shareholders who are in serious conflict with the management have for enforcing their rights are _____.

derivative lawsuit and direct lawsuit

Principles and rules of law come from ________________ sources.

different

A _____ lawsuit can be brought by shareholders against the corporation only if their own rights have been harmed.

direct

Mark and Diana, two licensed dentists, started a dental clinic together. According to the written agreement, Mark and Diana held 50 percent of the business and equally shared the profits and liabilities. Two years later, Diana quit the partnership as she planned to start a new business. This event is called _____.

dissociation

What are the three steps to ending a partnership business, in order?

dissolution, winding-up and termination

A corporation that does business in the state in which it was incorporated is called a(n):

domestic corporation.

During discovery, Haskins Co. has been asked to produce all e-mails relating to a current lawsuit against it. Haskins Co. will not have to produce:

e-mails that contain privileged material.

The Franchise Disclosure Document (FDD) does NOT have to provide information on _____.

earnings

Joey is in a bar and is approached by a stranger who offers to sell him drugs. Joey refused several times and asked the stranger to leave. Finally, after the stranger followed Joey to his car, Joey agreed to buy the drugs and was promptly arrested. The "stranger" was actually an undercover policeman. Joey's best defense would be:

entrapment.

Article I, Section 8 of the Constitution:

enumerates the issues on which Congress may pass statutes. If an issue is not on the list, Congress has no power to legislate.

Law is _____.

essential

A co-worker is coming in the door with a large stack of papers but if you stop to help them, you may be late for your meeting. This is an example of which of the following?

ethical decision.

An American company's ethical obligations end at the U.S. border.

false

By creating four independent and equal branches of the federal government, the U.S. Constitution limited the federal government's power.

false

Courts generally defer to an agency's fact-finding but will not defer to an agency's interpretation of the law.

false

Domestic relations courts focus on settling the estates of deceased persons.

false

Every criminal defendant has a right to a jury trial.

false

If the President vetoed a bill and both the House and Senate re-passed the bill by a 51% margin, the bill would become law.

false

In order for the government to obtain a criminal conviction, it must prove its case by clear and convincing evidence.

false

Martha sued her employer claiming she was denied a promotion because of her age. This is a criminal lawsuit.

false

Mediation involves a neutral third party with the power to render an award.

false

Nick and Jessica are in a vicious contract dispute. In an attempt to keep their business relationship amicable, they agree to hire Jon to settle their dispute for them. Jon's decision will not be binding on Nick and Jessica and both parties reserve the right to take the dispute to trial, if need be. In this scenario, Jon is an arbitrator.

false

On the federal level, bills must be originated in the House of Representatives and then must be voted on and approved by both the House and the Senate.

false

Robin sneaks onto a train without paying the fare. Matt picks up a magazine, slips it under his jacket, and leaves the store without paying. Robin and Matt have both committed larceny.

false

The categorical imperative approach to ethical decision making is to ask the following question: "Which alternative causes the greatest good (or least harm) to the most people?"

false

The term harmless error refers to a mistake by the trial judge that results in an unfair verdict.

false

While at the park, Tasha saw a small child fall into the lake. Tasha did not know the child. Under the common law of most states, Tasha has a legal duty to take reasonable steps to assist the child if Tasha is able to provide positive assistance and the assistance will not jeopardize Tasha's well-being.

false

The federal system of government in the United States means that there are two systems of government, the:

federal and state

A _______________ is a serious crime, for which defendant can be sentenced to one year or more in prison. ______________ is a less serious crime, often punishable by a year or less in a county jail.

felony, misdemeanor

Which of the below is not a way to acquire control of a company?

file a Schedule 13D

Quick Supply House breached a contract with MegaCorp. The breach resulted in the loss of a great deal of money to MegaCorp. The board of directors for MegaCorp vote not to sue the supply house, because the board believes the legal costs would be more than it would probably recover. If a group of shareholders wish to sue the supply house, the shareholders would have to take the following actions?

file a derivative lawsuit

The exclusionary rule, found in the ________ Amendment, excludes evidence from trial if obtained illegally.

fourth

Which of the below is not a type of authority?

frequent

Which of the below typically has the most short-term interest in a company?

shareholders

Antitakeover devices are commonly called ____________.

shark repellents

Under the duty of care, partners are liable to the partnership for which of the following?

gross negligence knowingly breaking the law reckless conduct

The Bill of Rights was adopted to:

guarantee liberties directly to individual citizens.

An attempt by an outsider to acquire a company in the face of opposition from the target corporation's board of directors is a(n) __________.

hostile takeover

Hank hires Bailey, a licensed real-estate agent, to sell his house. Before the house is sold, Bailey's real-estate license is revoked by the estate. The agency agreement between Hank and Bailey terminates

immediately.

A judge was asked to decide if a plaintiff could see the interrogatories asked of the defendant. The judge viewed the documents alone, with no lawyers present, and decided that they should not be made available to the plaintiff as they violated certain privacy issues and were irrelevant to the case. The legal device used by the judge is referred to as a(n) _____.

in camera inspection

The Privacy Act's ability to curb an agency's powers is an example of _____.

informational control

An ethical trap:

is a factor that creates a temptation to engage in unethical behavior.

If the President signs a bill passed by Congress, it becomes law; if the President vetoes the bill, Congress can:

override the veto with a two-thirds majority in each House.

Wanting to save the money she would have to pay for a commission, Marsha asks her friend Howard to check on the Internet and see if he can find a five-day cruise to the Bahamas for under $400 and if he does, to book it for her. He agrees, but later tells her he doesn't have time to check for her. Howard:

is not liable to Marsha because he was a gratuitous agent and had both the power and the right to quit any time he wanted.

The Framers of the U.S. Constitution realized that the Constitution can last for a long time only if:

it is permitted to be interpreted and adapted by later generations.

The distinctive trait of a Subchapter S corporation is:

its treatment of shareholders for income taxation purposes.

Stare decisis means what?

let the decision stand

Thomas, an employee of Virgo, LLC, failed to stop at a stop sign while delivering a Virgo order and hit a pedestrian, breaking her leg. Virgo is:

liable for the damages because Thomas was an employee and the negligence occurred in the scope of employment.

What happens if the partners of an LLP do not comply with the technicalities of the LLP statute?

partners will lose protection against personal liability.

In a _____ partnership, the partners are not liable for the debts of the partnership.

limited liability

To organize a _____, a person must have a charter.

limited liability company

By creating three independent and equal branches of the federal government, the U.S. Constitution:

limited the federal government's power.

Precedent is binding only on ______ courts.

lower

Because of pressure from shareholder activists, 90 percent of large companies now require:

majority voting, that is, directors must resign if more than half the shares that vote in an uncontested election withhold their vote from them.

Widget, Inc. wants to see the information that the Consumer Product Safety Commission (CPSC) has collected on its toys. To obtain this information, Widget should:

make a Freedom of Information Act request.

Milton Friedman, a Nobel Laureate in economics, famously observed, that corporations have two primary responsibilities. One is to comply with the law. The second is to _______________."

make as much money for shareholders as possible.

According to John Stuart Mill, a correct decision is one that:

maximizes overall happiness and minimizes overall pain.

On the cover of its catalogue, J-Mart Department Store used a picture from a book entitled, "The Changing Land." "The Changing Land" was written and copyrighted by Jennifer Wood in 1987. Jennifer still holds the copyright to the book. J-Mart and Jennifer are citizens of North Carolina. If Jennifer sues J-Mart for $45,000 in damages for copyright infringement in violation of the federal Copyright Act, she:

may bring her lawsuit in either federal or state court.

On the cover of its catalogue, Land's End Store used a picture from a book entitled, A Summer's Evening, that was written and copyrighted by Lisa Arredondo in 1995. Lisa still holds the copyright to the book. Land's End and Lisa are citizens of Wisconsin. If Lisa sues Land's End for $45,000 in damages for copyright infringement in violation of the federal Copyright Act, she:

may bring her lawsuit in either federal or state court.

The process by which a third party attempts to lead disputing parties to a voluntary agreement is called:

mediation.

Anyone who owns enough stock to control a corporation has a fiduciary duty to ____________ and is subject to the business judgment rule.

minority shareholders

The official record of a corporation in which the written consents and any records of actual meetings are kept is called a _____.

minute book

Leah has been making personal copies on the company copy machine. When her boss realizes that someone has been misusing the machine, he calls a meeting and asks who has been using the machine for personal copies. What would Leah say if she were employing a categorical imperative view?

"I was using the machine to make personal copies."

Utilitarian thinkers believe that:

moral actions produce the greatest good for the greatest number.

The United States has _____________ system(s) of courts.

more than 50

Most legal disputes are settled by _________ between the parties.

negotiation

James and Neal have been trying to resolve a dispute over the right to use a certain character to represent Neal's business. They have talked directly with each other and through lawyers, but have not taken the dispute to court or involved a third party who is neutral to the situation. Neal and James are engaged in:

negotiation.

Joe, a manager of a large publicly traded company, wanted to enter a new market for the company's products. It was a risky move. Thus, he decided to have disinterested members of the board of directors form a special committee to evaluate a transaction to enter a joint venture with another company. The committee thoroughly vetted the proposed transaction and approved it. Within three months, the joint venture failed miserably. The company suffered significant losses. If shareholders sue, who will be liable?

no one

During jury selection, each attorney is allowed to request that a prospective juror be excused without stating a reason. This is called:

peremptory challenge.

No one school of jurisprudence is likely to seem __________.

perfect

A bidder filed a Schedule D with the SEC on the day a tender offer for $93 per share began. A shareholder, Simon, accepted a tender offer on the next day. On the eleventh day, the bidder raised the price offered to $95. In the end, the takeover effort was successful. How much will Simon be paid and why?

$95, because all shareholders must be paid the same price.

Some of the nine hundred shareholders of Novatech, Inc., decide that the corporation should become a social enterprise. How many shareholders must agree to commit itself to changing the corporation to a social enterprise?

600

David and Gill share profits from their partnership 70/30. Last year, the partnership made $250,000 in profits. The $250,000 is net after Gill's salary of $50,000. If David and Gill have no written agreement about losses, how will the law presume they are to share losses, if any, in the future?

70/30

Which of the below is not a requirement under the Williams Act if a target company's stock is publicly traded?

A bidder must keep a tender offer open for at least 30 days initially.

Which of the following is true under the bystander's rule in the U.S. law?

A bystander has no duty to assist someone in peril unless he or she created the danger.

Which of the following would be a project that Harvard Professor Michael Porter might recommend based on his views of Corporate Social Responsibility (CSR)?

A company providing job opportunities to unemployed people in the community thus creating a new market for its product.

Which of the following statement is not accurate?

A corporation cannot be dissolved if it is successful.

Which of the following is most likely to be a utilitarian business practice?

A cost-benefit analysis

Which of the following is required to create an agency relationship?

A fiduciary relationship between the agent and principal

Lance sued Mega Corp. for negligence, and a jury awarded him $1.2 million. Mega Corp. filed a motion for judgment NOV, and the trial court denied that motion. Mega Corp. then appealed the case. When is a judgment NOV appropriate for a judge to grant such a judgment?

A judgment NOV is appropriate when a judge is convinced that the evidence presented does not equate to the verdict reached by the jury.

Which of the following describes a direct examination during a trial?

A lawyer asks questions to his or her own witness.

Which of the following illustrates an ethical trap?

A man stealing a book by convincing himself that the library can afford more

Which of the following statements is true about mediation?

A mediator is a neutral party whose primary job is to help the two parties come to an understanding and agreement.

Kendall had sued St. Ashton Hospital for negligence and decided to begin his discovery against the hospital with interrogatories. Before St. Ashton sent a reply to the interrogatories, it sent a notification of deposition to Kendall and 20 other people related to Kendall's case. Now, Kendall is afraid that the depositions are going to skyrocket his expenses and potentially hurt his case. Which of the following should Kendall file in order to limit St. Ashton's discovery by depositions?

A motion for a protective order

In which of the below scenarios would a court case be necessary before dissociation could occur?

A partner engages in behavior harmful to the partnership.

The Sisters of Charity was an order of nuns in New Jersey. Faced with growing health care and retirement costs, they decided to sell off a piece of property. The nuns soon found, however, that the world is not always a charitable place. They agreed to sell the land to Linpro for nearly $10 million. But before the deal closed, Linpro signed a contract to resell the property to Sammis for $34 million. However, it turned out that the nuns' law firm also represented Linpro. Their lawyer at the firm, Peter Berkley, never told the sisters about the deal between Linpro and Sammis. What is required to establish an agency relationship?

A principal and an agent Principal and agent mutually consent that the agent will act on behalf of the principal and be subject to the principal's control Fiduciary relationship.

In which of the following scenarios is lying acceptable behavior?

A professional poker player gets his opponent to fold his hand by bluffing through the game.

Which of the following is not a requirement for legal corporate formation?

A store or office or other place of business

What is a palter?

A truthful statement that is nonetheless misleading

Wanda was scheduled to fly from Houston to Miami on Cheap-Flight Airlines (CFA). As she arrived at the airport, Wanda discovered that CFA's plane had a "mechanical problem." CFA personnel told Wanda that they had booked her on Anti-Union Air (AUA). Wanda took the flight to Miami on AUA. However, Wanda was chagrined to learn that AUA workers did not have her luggage. Wanda sued both CFA and AUA for the loss of her luggage. What is the best defense for CFA?

AUA was not the agent of CFA.

Judge Bartlett sits for the Court of Appeals in Buckley, Ohio. After reviewing the trial court's findings, Judge Bartlett concluded that the trial court's jury instructions were wrong. However, Judge Bartlett believes that these instructions had no bearing on the verdict. Judge Bartlett should:

Affirm the trial court's decision.

The Sisters of Charity was an order of nuns in New Jersey. Faced with growing health care and retirement costs, they decided to sell off a piece of property. The nuns soon found, however, that the world is not always a charitable place. They agreed to sell the land to Linpro for nearly $10 million. But before the deal closed, Linpro signed a contract to resell the property to Sammis for $34 million. However, it turned out that the nuns' law firm also represented Linpro. Their lawyer at the firm, Peter Berkley, never told the sisters about the deal between Linpro and Sammis. An agent owes a duty of loyalty to its principal. What does the duty of loyalty include?

Agent should not compete with their principal. Agent may not act for two principals whose interests conflict. An agent must keep confidential information confidential.

Which of the following is an example of insider trading?

Alfred is Winston's butler, in whom Winston often confides. Winston tells Alfred that he is worried about an impending merger at the company that Winston founded. Alfred buys stock in the potential acquiring company. A few days later, the merger happens, and the stock price soars.

Which of the following are alternatives in dealing with issues of ethics in advertising?

All of these are alternatives in dealing with issues of ethics in advertising.

Under which of the following could a court be persuaded to pierce the corporate veil?

All of these are circumstances in which the court could be persuaded to pierce the corporate veil.

Oxtron, Inc. is considering establishing a program that actively encourages ethical behavior. What reasons would not support Oxtron's adoption of an ethics program?

All of these are reasons for an adoption of an ethics program.

Loco-Motion, Inc. has adopted an ethics program. Why would Loco-Motion actively encourage ethical behavior?

All of these are reasons that corporations actively encourage ethical behavior.

What information must be contained in a registration statement?

All of these items are required in a registration statement.

Which of the following is a disadvantage of using arbitration to settle disputes?

An arbitrator may not provide a written, public decision for the dispute.

In response to corporate scandals, what aspect of Section 13 disclosures is required by the Securities Exchange Act of 1934?

An attestation to their truth.

While drunk, the driver of a subway car plows into the back of the car ahead of him, killing a passenger. It was against the rules for the driver to be drunk. Which statement is correct?

An employer is liable for a tort committed by its employee acting within the scope of employment or acting with authority.

Which of the following qualifies as prosecutable under RICO?

An insurance firm colludes with doctors to create false reports to cut people from claiming their insurance.

Someone who adheres to the tenets of Natural Law would believe in which of the below?

An unjust law is no law at all.

In which of the following scenarios would the company be liable for the actions of the individuals?

Anna is changing the accounting logs for her company to make it appear that the company has more profits than they actually have.

What is insider trading?

Any corporate insider who trades while in possession of non-public material information in violation of his fiduciary duty to his company is liable under Rule 10b-5.

Which statement is true?

Any statements a defendant makes after arrest are inadmissible if the police do not read him his Miranda rights.

What is an appeals court?

Appeals courts generally accept the facts given to them and only review the record to see if there have been errors of law.

Dawson and Morgan decide to bring in James, a neutral third party, to help settle a dispute between them. James gives each of them two days to present their case. After the presentation, James takes some time to deliberate and then awards the case in favor of Morgan. Which of the following alternate dispute resolution methods do Dawson and Morgan use here?

Arbitration

Daniel Cowin was a minority shareholder of a public company that developed real estate in Washington, D.C. He alleged numerous instances of corporate mismanagement, fraud, self-dealing, and breach of fiduciary duty by the board of directors. He sued the corporation seeking damages for the diminished value of his stock. How must Cowin bring this lawsuit?

As a derivative lawsuit.

Megan is a freshman at her local public high school who believes her rights have been violated by her school. Her older sister Jenna attends a nearby private high school and believes her rights have been violated by her school, too. One girl goes to private school and one to public school. Why might that matter under the Constitution?

Because the constitution offers protection from acts of the government.

Why is it important that managers make ethical decisions?

Because the decisions affect people's lives.

Beth is the owner of a small computer programming business. She has a single employee named Carla. Beth decides that she wants to incorporate her business and directs Carla to begin preparing the business for incorporation. Carla approaches all of the current clients and signs contracts in the name of the future corporation for continued services once the business incorporates. Who is the promoter of the corporation?

Beth, whether the business incorporates or no.

Rich, a waiter at Le Monde Restaurant in New York, took a knife and stabbed and injured a waitress. What burden of proof is required by the government while prosecuting this criminal case?

Beyond a reasonable doubt.

Carolyn is in a unique position to know that her boss was stealing money from the company but she ignored it and didn't report him because she was afraid of losing her job. Later, her boss had stolen so much money that the company ended up in bankruptcy. What type of ethical reasoning did Carolyn use?

Blind spots

Alfred's Drugs and Walkabout Fitness enter into a joint venture for a fitness awareness wristband with the Alfred's logo. The supplier of the rubber used to make the wristbands has not been paid for the last three shipments of rubber. Which of the parties is responsible for the unpaid bills?

Both Alfred's Drugs and Walkabout Fitness

Alfred's Drugs is a national drugstore chain. Alfred's Drugs enters into an agreement with Walkabout Fitness for a fitness awareness wristband with the Alfred's logo. Which of the parties is responsible for the taxes on the profits earned from the sale of the wristbands?

Both Alfred's Drugs and Walkabout Fitness

Braydon is an accountant and has been stealing money from his employer for 3 years. If caught, what type of prosecution could he face?

Both criminal and civil prosecution.

An accountant has decided to steal money from her company in order to help pay for her child's hospital bills. What type of consideration would go into this decision?

Both ethical and legal consideration.

The schedule for annual shareholder meetings is laid out in the:

Bylaws

Jindal Investment Fund owns 3 percent of a publicly traded company, PAD Co. Jindal wishes to nominate its own candidate to the board. What must happen before Jindal will be able to do so?

Cause a proxy statement to be distributed to other shareholders.

What is civil law?

Civil law deals with the rights and duties between parties. One party files a suit against the other.

Which of the following is a feature of a civil lawsuit?

Civil lawsuits allow monetary damages to be awarded to private individuals.

In the event of lying, witnesses are convicted of _____.

perjury

Wanda works for "Holy Rollers" skating rink. Her work uniform says "Holy Rollers" in large gold letters on the front and back. One day, after work, while still wearing her shirt, she walks past a large pond and sees a religious service hosted by the "Holy Roller Church" (not affiliated with the skating rink). A stranger, Clarissa, walks up to Wanda and gives her $2,000 to receive a blessing. Wanda tells the stranger to go jump into the pond, and then Wanda continues home. Later Clarissa informs church personnel that she made a donation of $2,000 and wants a receipt for tax purposes. The church has no record of her donation. What is true?

Clarissa cannot win a suit against Holy Roller Church.

The _____ is the specific part of the Constitution that gives Congress the power to regulate commerce with foreign nations and among states.

Commerce Clause

A federal statute prohibits the broadcasting of lottery advertisements, except by stations that broadcast in states permitting lotteries. The purpose of the statute is to support efforts of states that outlaw lotteries. Truth Broadcasting operates a radio station in State A (a nonlottery state) but broadcasts primarily in State B (a lottery state). Truth wants to advertise State B's lottery but is barred by the statute. This case involves a particular kind of speech. What kind?

Commercial speech

The accumulation of precedent, based on case after case, makes up the __________.

Common Law

In the 1980s, the Supreme Court ruled that it is legal for protesters to burn the American flag. This activity counts as free speech under the Constitution. What kind of law is this?

Common law

Which of the following types of laws emphasizes the importance of precedents?

Common law

Several times per month, Riley, a paper supplier, comes by Hayley's to see if she needs to place an order. Riley often gives Hayley a small token such as a pen or a keychain with the paper company's logo. When it comes time to re-order, Hayley gives the order to Riley without realizing that she has favored the paper company over another, less expensive supplier. What ethical trap has Hayley fallen into?

Conflict of interest

Katie has just been hired at a new job. In the first week, several colleagues show her how to report her expenses so that she gets back about $50 extra each month that she didn't actually spend. Katie reasons that if everyone else is doing it, then it must be okay. What ethical trap did she fall into?

Conformity

Which of the following terms best represents an ethical trap?

Conformity

Preemption occurs when:

Congress demonstrates that it intends to exercise exclusive control over an issue.

Which of the following is an example of separation of powers in the federal government?

Congress has the power to pass statutes, but the President can veto those statutes.

Which of the following is a major criticism of Congress' power to create federal administrative agencies?

Congress is delegating to another body powers that only the legislative or judicial branches of government are supposed to exercise, thereby putting administrative agencies beyond the control of voters.

Which of the following is true about Congress' power under the Commerce Clause?

Congress may regulate any activity that has a substantial effect on interstate commerce.

Criminal laws in the United States are statutes generally passed by:

Congress or by a state legislature.

The board of directors may act by the following methods:

Consent Orders

H. B. Fuller Co. is a leading manufacturer of industrial glues. Its mission statement says the company "will conduct business legally and ethically." But now it is under attack for selling its shoemakers' glue, Resistol, in Central America because many homeless children in these countries have become addicted to the fumes. Glue manufacturers in Europe have added a foul-smelling oil to their glue that discourages abusers. Fuller fears that the smell may also discourage legitimate users but wants to continue selling its product into Central America. From an ethical point of view, what should Fuller do?

Consider working with retailers in Central America to sell only to professionals.

The _____ is considered as the supreme law in the United States.

Constitution

A news report breaks a story that Martin Manufacturing is using poor quality parts to make their products resulting in the products being more likely to break. What does research suggest the result of this news report on Martin Manufacturing sales will be?

Consumers will likely look for a better made product, even if they have to pay more.

What is a term used to describe a company's obligation to contribute positively to the world around them?

Corporate social responsibility.

Drexel operated his construction and remodeling business as a sole proprietorship. His business has been growing and he has several employees. Of the following, what is the best form of business for Drexel?

Corporation

Which of the following is true about corporations?

Corporations have perpetual existence.

Jimmy fell and injured himself at a Super Toy store in Arizona. He claims that the store's faulty stair banisters gave way and led to his injury. The store is incorporated in the state of Delaware. Jimmy is a resident of Nevada, which does not have a Super Toy store. In this case, if Jimmy wants to file a lawsuit in a court which has personal jurisdiction over Super Toy stores, which of the following courts could he approach?

Courts in either Delaware or Arizona

Which of the below is incorrect about a partner's liability?

Creditors can go after an individual partner's personal assets without restriction.

________________ Law prohibits and punishes conduct that threatens public safety and welfare.

Criminal

The government itself prosecutes the wrongdoer in a case involving behavior so threatening that society outlaws it altogether. This kind of case involves:

Criminal Law

Jill and Grover entered a partnership together to grow and deliver flowers. Jill used her own car to deliver the flowers. After work one day, Jill drove to a bar. She got into a fight and injured someone. Is the partnership liable?

Definitely no.

One of the most popular states for corporations to use as a "home" state, due to favorable laws, is:

Delaware

Diane is hiking in the woods and walks down a hill to fetch fresh water. Diane, heading back to camp with the water, meets Freddy, a motorist whose car has overheated. Freddy is late for a meeting where he expects to make a $30 million profit; he's desperate for water for his car. He promises to pay Diane $500 tomorrow if she will give him the pail of water, which she does. The next day, Freddy refuses to pay for Diane's water. What can happen to Freddy?

Diane may sue Freddy for $500, the amount he promised her for the water. In that civil lawsuit, a court will decide whether Freddy must pay what he promised; however, even if Freddy loses, he will not go to jail.

Which of the following individuals sets corporate policies and then appoints officers to implement corporate goals?

Directors

Star-crossed lovers, Tony and Samantha, were married in Massachusetts in 2001. Unfortunately, their romance quickly cooled in 2002 and Samantha asked Tony for a divorce. In which court would Samantha file suit?

Domestic relations court

Caleb notices that his co-worker is using his company cell phone to call his wife at lunch every day even though company policy clearly states that company equipment should not be used for personal activities. Which of the following is the most ethical response for Caleb to make?

Don't report his co-worker because the choice to act unethically is the co-worker's alone.

Which of the following would be an example of a company exhibiting positive corporate social responsibility (CSR)?

Donating food to a homeless shelter.

June employed Cindy, a real estate broker, to help sell her mansion. Cindy was given express authority to place ads, accompany prospects to the mansion, and negotiate price. Cindy was not allowed to finalize any deal without June's consent. While June was away, Cindy met a potential buyer, Liam, and negotiated the price. June was informed of the offer and consented. But before the contract could be made for the sale, the mansion was flooded due to faulty plumbing. Cindy employed a plumbing agency to fix the issue. The mansion was then sold to Liam. June returned from her trip and paid Cindy for expenses incurred from fixing the plumbing. What duty of the principal did June fulfill by paying Cindy for the plumbing fix?

Duty to indemnify

Which of the following is a duty of the principal to his agent?

Duty to reimburse for reasonable expenses

Unlimited Rays, an automotive sunroof manufacturer, teamed up with Dynamic Car Manufacturers to provide Dynamic with sunroofs for its automobiles. Dynamic did not pay the supplier of the vents used for the air conditioning system in its cars. The supplier sues both Unlimited Rays and Dynamic. Which of the two organizations is liable to the supplier for the unpaid a/c vents?

Dynamic only because this is not an obligation which arose as part of the joint venture's activities.

The Equal Protection Clause ensures that, generally speaking, governments must treat people equally. Unfair classifications among people or corporations will not be permitted. Yet clearly, governments do make classifications every day. People with high incomes pay a higher tax rate than those with low incomes; some corporations are permitted to deal in securities, while others are not. To determine which classifications are constitutionally permissible, we need to know what is being classified. There are three major groups of classifications. Which of the following is not within these classifications?

Economic and Social Relations. Minimal Scrutiny: Government actions that classify people or corporations on these bases are almost always upheld. Gender. Intermediate Scrutiny: Government classifications are sometimes upheld. Race, Ethnicity, and Fundamental Right. Strict Scrutiny: Classifications based on any of these bases are almost never upheld.

Chris, the Chief Financial Officer (CFO) of PC Inc., was responsible for paying the store's bills. Occasionally Chris would write a check from the stores account to pay her car payment. Eventually the owner of PC Inc. found this out and wants to sue Chris. What is the owner's best cause of action against Chris?

Embezzlement

Congress creates a federal agency by passing:

Enabling legislation.

The American legal system is largely based on the _____ model.

English

Which of the following is a false statement about acting ethically?

Ethical behavior guarantees higher profit.

Which of the following ethical traps involves the use of incorrect terminology to rationalize unethical behavior?

Euphemism

Hunter really wanted the job as manager of the local bank but he had been fired from a previous job for excessive absenteeism so he left that job off of his resume and reasoned that he had only fudged his job experience. What type of ethical trap did he fall into?

Euphemisms

Jackson knows that the car manufacturer he works for is using cheaper parts to make its cars, which have been shown to endanger customer safety. Jackson loves his job, but he chooses to quit because he doesn't like feeling guilty about the product he is making. What type of response did Jackson make?

Exit

Madelyn felt that she was being harassed at work by her supervisor. She was worried that he might be harassing others so when Madelyn quit, she also reported the supervisor to the Human Resource department. What type of response did Madelyn have to the unethical behavior?

Exit and Voice

A partnership is a separate, taxable entity.

False

A state trial court of general civil jurisdiction may hear shareholders' derivative lawsuits involving only up to $50 million, employment cases involving freedom of association or privacy, and cases involving the settling of the estates of deceased persons.

False

A summons is a written argument on the case.

False

Accredited investors are only banks or insurance companies.

False

Actual authority arises when the principal leads a third party to believe a person has authority to act.

False

Alternative dispute resolution is one form of litigation.

False

Any stock offering is considered to be an IPO (initial public offering).

False

Appellate courts conduct new trials, disregarding the trial court's findings of fact.

False

April loaned Thomas $7,000 so that Thomas could purchase a vintage Fender guitar. Thomas promised to pay April back in full within one month. However, Thomas never paid back the money to April and April wants to sue. The best place for April to file her suit is small claims court.

False

As a good neighbor, Lou gratuitously agreed to try to sell Haley's aquarium while she was on vacation. Since there is no consideration for this agreement, there can be no agency relationship between Lou and Haley.

False

Bud ran a red light and hit Monica, breaking her leg. Monica can sue Bud for her injuries in criminal court.

False

Congress creates a federal administrative agency by passing a constitutional amendment.

False

Drake and Holly agree to jointly run the hospital's fundraiser. Even if they don't have a formal, written agreement, they have formed a partnership.

False

Ethics is the study of jurisprudence, the philosophy of law.

False

Eugene, a shareholder in Xtreme, Corp, claimed that Xtreme was being mismanaged by the board of directors. Eugene is considering a lawsuit. Eugene's lawsuit would be a direct action.

False

Henry is the Manager of Sales at ByteBits, Inc. Henry's believes that African Americans should not be traveling sales representatives. Thus, despite the Civil Rights Act of 1964, which prohibits discrimination on the basis of race in employment, Henry refuses to hire African Americans as traveling sales representatives. The natural law theory of jurisprudence supports Henry's actions.

False

If the principal is partially disclosed, the agent cannot be liable on a contract.

False

In most states, there is an absolute right to an appeal to the state supreme court.

False

In trial courts, there is always a jury.

False

Kelvin gratuitously agreed to house-sit for Bridget while she was on a business trip. Kelvin will be liable for ordinary negligence in caring for Bridget's house.

False

LLCs are regulated by the Uniform Limited Liability Company Act which has been enacted by all of the states.

False

Pearl is on trial for allegedly embezzling money from her former employer, BigCo. At Pearl's trial, the jury will be instructed that they must find Pearl guilty by a preponderance of the evidence.

False

Shareholders generally manage the day-to-day operations of a corporation.

False

Shareholders have the authority to manage the corporate business.

False

Sharon is on trial for the murder of her husband. Sharon is claiming self-defense. At trial, Sharon's lawyer puts her on the stand to testify. This is a form of cross-examination.

False

The New York legislature passed a law requiring kids to wear helmets while riding horseback at stables or other commercial operations. This law is common law.

False

The quality of the franchise is guaranteed if the franchisor follows the FTC's rules in its franchise disclosure document to prospective franchisees.

False

The shareholders decide how much directors will be paid, because the Model Act prohibits directors from setting their own compensation.

False

When a new corporation adopts a contract that was signed by the promoter before the corporation is actually formed, the corporation is liable on the contract and the promoter no longer has any liability on the contract.

False

Which of the following is an Executive-Independent agency?

Federal Communications Commission

Administrative agencies exist at which of the following levels of government in the United States?

Federal, state and local

Eric mails glossy brochures to 25,000 people, offering to sell them a one-month time-share in a stylish apartment in Las Vegas. The brochure depicts an imposing building, an opulent apartment, and spectacular pools. To reserve a space, customers need only send in a $2,000 deposit. Three hundred people respond, sending in the money. In fact, there is no such building. Eric, planning to flee with the cash, is arrested and prosecuted. His sentence could be as long as 20 years. What type of prosecution is involved in this scenario?

Felony.

Administrative agencies use three kinds of power to do the work assigned to them. Which of the following is NOT one of them?

Financing new businesses.

Logan saw that his fellow employee Caitlin had fallen down in an unlit stairwell and broken her leg. After the company refused to pay Caitlin's medical bills, Logan was called to court to testify that he knew the stairwell was unlit. Logan's boss told him he had better say that the lights were working in the stairwell or he would be sorry. Logan decides to lie out of fear for his boss. What ethical trap did Logan fall into?

Following orders

There are three primary steps in a court's statutory interpretation. Which one below is NOT one of them?

Formal Rulemaking.

Eric mails glossy brochures to 25,000 people, offering to sell them a one-month time-share in a stylish apartment in Las Vegas for a deposit of $2,000. Three hundred people respond, sending in the money. In fact, there is no such building. Eric, planning to flee with the cash, is arrested and prosecuted. His sentence could be as long as 20 years. With what crime is he charged?

Fraud

_____________ refers to various crimes, all of which have a common element: the deception of another person for the purpose of obtaining money or property from him.

Fraud.

Freeport Foods has an opportunity to give back to the community by providing food for several local homeless shelters. While this donation would only cost them a minimal amount of money, it would not increase their profits because the people they are feeding do not have money to spend in their grocery stores. What would Harvard Professor Michael Porter's response be to this opportunity?

Freeport should not provide the food because it will not generate profit.

After the Sandy Hook Elementary School shootings, how did General Electric (GE) respond?

GE stopped lending funds to shops that sell guns.

Wanda wants to sell her house. She hires Galindo the real estate agent and will pay him $4,000 if he finds a buyer, ready, willing and able. Galindo tells Wanda that the house will not sell at the list price, but she must come down about $20,000. Wanda ultimately agrees. What if true, is Wanda's best argument that she does not owe Galindo any money?

Galindo's real estate license expired before the title to the house was transferred.

Which of the following is true of professional corporations (PC)?

Generally, the members of a professional corporation are not personally liable for the contract debts of the organization.

George, the president of Plumbers, Inc., signs a contract with Susan, which calls for Susan to receive $10,000 for her performance to Plumbers, Inc. Though Susan performs, she does not receive payment from George or Plumbers, Inc. Which of the following, if true, will grant Susan the greatest chance of recovery from George personally?

George commingled most of his personal assets with corporate assets.

Caitlin has just been hired by Holder Bank. She observes several co-workers, as well as her supervisor, behaving unethically over the first month of her employment. After a few weeks, a co-worker asks her to cover for him because he's going to the back to take a nap. She thinks about telling her boss, but she knows that he regularly naps at work, too. What is she likely to do after seeing their behavior?

Go along with the behavior.

Which of the following types of agents has both the power and the right to quit any time he wants from an agency relationship, regardless of an agreement?

Gratuitous agent

Riley used her computer skills to get access to the college administrative system and changed all her grades to "A". What crime has Riley committed?

Hacking.

Which of the following scenarios would be considered shilling?

Harper bid on his own car that was for sale on eBay in order to drive up the price.

George owns a sole proprietorship. What is true?

His personal assets are reachable in the bankruptcy of the business.

The system of government used by the Iroquois Native Americans was the inspiration for our government in what way?

How to have a two-level government, each with its own specified powers.

Kimberly knows that her co-worker Maria is late for work this morning because she stayed out late last night at a party and overslept. When their boss comes by asking where Maria is, what would Kimberly say to her boss if she were employing the Kantian tactic of palter?

I haven't seen her since we left work yesterday.

The Sisters of Charity was an order of nuns in New Jersey. Faced with growing health care and retirement costs, they decided to sell off a piece of property. The nuns soon found, however, that the world is not always a charitable place. They agreed to sell the land to Linpro for nearly $10 million. But before the deal closed, Linpro signed a contract to resell the property to Sammis for $34 million. However, it turned out that the nuns' law firm also represented Linpro. Their lawyer at the firm, Peter Berkley, never told the sisters about the deal between Linpro and Sammis. What is an agency relationship?

In an agency relationship, someone (the agent) agrees to perform a task for, and under the control of, someone else (the principal).

As argued by St. Thomas Aquinas, where do we find the moral basis that would justify a law?

In laws that promote good

Generally, there are four primary methods of limiting the power of an administrative agency. Which of the following is NOT a method of limiting control?

Increasing their taxes.

Which of the following countries has NOT welcomed "sweatshops" - factories with long hours and low wages (and usually poor working conditions) during the past 50 years?

India

Which of the following methods of administrative agency rulemaking does not require a hearing?

Informal Ruling

Rich wanted some information about the university he is currently attending. He contacted the United States Office of Patents and Trademarks and requested this information. He also contacted the Internal Revenue Service to get records that they may have on him. Rich is entitled to all of the following except:

Information that relates to national security, criminal investigations, and internal agency matters such as personnel or policy discussions, trade secrets or financial institutions, or an individual's private life.

Which of the following is a requirement of section 16 of the Securities Exchange Act of 1934?

Insiders who buy and sell or sell and buy company stock within a six-month period must turn over to the corporation any profits from the trades. They must also disclose any trades they make in company stock.

Acme Manufacturing Corp. believes the agencies that regulate it are too powerful and abuse their authority. Which of the following is not a control that limits agency powers?

Insubordinate control, such as an employee refusing to do his job at the agency if he thinks the agency is too powerful.

The first administrative agency to be created was the:

Interstate Commerce Commission

Richard, the President of Widgets, Inc., is considering relocating a manufacturing facility to Asia. He knows that factory workers in the country he is considering receive only $50 a week for 60+ hours of work, but he also knows that there are few other choices of work for these people, and that they are eager and willing to work under these conditions. Which of the following is NOT an ethical consideration for Richard to ask himself?

Is this choice likely to eliminate my competition?

Which of the following did the Articles of Confederation allow?

It allowed the state governments to impose tax on goods entering from other states.

The Environmental Protection Agency (EPA) denies Pure Petroleum, LLC's permit application to construct a new petroleum refinery in Texas. Pure Petroleum, LLC believes the agency's denial of its permit application is unreasonable and that the agency relied upon false information about the company that is contained in the agency's files. How might Pure Petroleum, LLC determine whether the agency is in possession of false information about the company?

It can file a Freedom of Information Act request to obtain the documents and information about the company in the agency's files.

Why might improving economic and social conditions overseas be good for a company?

It could create new customers with money to spend.

Which of the following is true of the Freedom of Information Act?

It does not apply to Congress.

Which of the following is conferred by Article I of the U.S. Constitution?

It gives the Congress the power to create new laws.

Advantages of Alternative Dispute Resolution (ADR) include which of the following:

It is faster than litigation. It keeps the parties talking rather than fighting. It is less expensive than litigation.

Which of the following is true of the basis of the U.S. legal system?

It is largely based on the English model with contributions from other societies

What does it mean when an appellate court affirms the lower court's decision?

It means the lower court's decision is unchanged

Which of the following would be found in the "legal citation" when analyzing a lawsuit?

It points out where to find the case in a law library

Which of the below is not a goal of the business judgment rule?

It prevents corporate liability for director's illegal acts.

Which of the following is true about the Securities Act of 1933?

It prohibits fraud in any security transactions.

What does it mean when an appellate court remands a case?

It sends the case back down to the lower court for additional steps

Which of the following is true of the "enabling legislation" of an administrative agency?

It should establish an agency for an intended regulation.

What happens when a court reverses a lower court's decision?

It turns the loser into the winner

Which of the following options would an appellate court most likely decree in the case that it finds a harmless error in a trial court decision?

It will affirm decision of the trial court.

Joe and Bill are interested in working together to buy, remodel and sell houses for a profit. Which of the below would be good advice?

It would be a bad idea to form a general partnership, because of the absence of liability protection.

How would a person apply the Utilitarian principle to telling lies?

It's acceptable to lie if it benefits the greater good for the majority of people.

What is a problem with legal realism?

Its denial that nay lawmaker can overcome personal bias

Jackie learned of insider trading information while talking to Mark, a director of a large corporation. She took advantage of the information to buy stock and make a huge financial gain. If she is accused of violating securities law, what must the government prove in order to gain a conviction against Jackie?

Jackie knew the information was confidential. Jackie knew it came from an insider who was violating his fiduciary duty. The insider, Mark, expected some personal gain as a result of giving Jackie the insider information.

Which of the following bribery scenarios would NOT be a violation of the Foreign Corrupt Practices Act (FCPA)?

James, a U.S. citizen, gave a clerk in Mexico $100 to mail their approved contract right away.

In accordance with their written partnership agreement, Joshua and Bertha expelled Cathy for stealing $25,000 from the business. The business overall is worth $150,000. Which of the below is true?

Joshua and Bertha must pay Cathy $25,000.

Judge Thompson presides of the Jessamine County Court of Appeals. After reviewing a trial court decision, Judge Thompson sends the case back to the trial court. What decision has Judge Thompson exercised?

Judge Thompson reversed and remanded the trial court's decision.

Common law is:

Judge-made law handed down by centuries of tradition.

In most nations, television coverage of what is not allowed?

Judicial Proceedings

_____ refers to a court's willingness, or even eagerness, to become involved in major issues and to decide cases on constitutional grounds.

Judicial activism

__________ is the Supreme Court's willingness to ________.

Judicial activism, become involved with major political issues and decide cases on constitutional grounds

_____ refers to the power of federal courts to declare a statute or governmental action unconstitutional and void.

Judicial review

Richard told his co-worker Meredith that he had made an error on the report due in 5 minutes. He asked Meredith to stall while he fixed the error. When the boss showed up to get the report, Meredith told him "I'm sure Richard will be here in a few minutes." What type of ethical reasoning did Meredith use?

Kantian evasion.

What became the most valuable commodity in all of England?

Land

________________is the trespassory taking of personal property with the intent to steal it.

Larceny

Which of the following correctly describes the relationship of law and ethics?

Law and ethics are not always compatible.

What is a statute?

Law created by a legislative body

Which of the following differentiates between law and ethics?

Law dictates how a person must behave, while ethics deals with how a person should behave.

Which of the following statements best summarizes the philosophy of legal positivism in jurisprudence?

Law is what the sovereign says.

What are some of the advantages for a business to incorporate in Delaware?

Laws that favor management. An efficient court system. An established body of precedent.

Misha, Gretchen, and Sam were stranded on a mountainside after their plane went down in a snow storm. They had no means of radio communication and virtually no food or other supplies. After 18 days, Misha and Gretchen killed Sam, the weakest survivor. Misha and Gretchen ate Sam. This allowed them to survive until they were rescued. After they were rescued, they were charged with premeditated first degree murder under the relevant state statute. Misha and Gretchen were found guilty and must pay the consequences. Which of the following theory of jurisprudence would find them guilty with the rationalization that the law is the law?

Legal Positivism

Someone who believes that a juror's background will dictate how she votes believes in:

Legal Realism

_____ is the school of jurisprudence based on the philosophy that what matters is not what is written as law, but who enforces the law and by what process.

Legal Realism

Under the _______ theory of jurisprudence, the law is what the sovereign says it is.

Legal positivism

How did Immanuel Kant feel about lies when applying his Kantian theory of ethics?

Lies are always unacceptable.

Lila wishes to learn what records the Internal Revenue Service (IRS) has about her. If she files an FOIA request:

Lila is entitled to all information the IRS has about her.

Which of the following is not a characteristic of an LLP?

Limited liability of the partnership.

Lindsay hires John to be her financial advisor. John informs Lindsay that he needs $2500 to invest in an opportunity that would benefit her financially. Despite promising to provide the money, Lindsay fails to do so. As a result, John does not invest. Six months later, Lindsay learns that her investment would have increased by $1000. If Lindsay sues John for missing out on the opportunity, what is John's best defense?

Lindsay breached her duty to cooperate with the agent.

Michael Mudd, a former executive vice-president of Kraft Foods had this to say about his fellow executives:

Little by little, they strayed from the honorable business of feeding people appropriately to the deplorable mission of "increasing shareholder value".

Chris is walking down a crowded street when he sees someone running with a purse and a woman chasing after him yelling that he has stolen her purse. Chris decides not to stop the thief, even though he had an opportunity to trip him up, because someone else will probably stop the thief before he gets away. What ethical trap has Chris fallen into?

Lost in the crowd

Jackson knows that the car manufacturer he works for is using cheaper parts to make its cars, which have been shown to endanger customer safety. Jackson loves his job so he chooses to respond to this unethical behavior by ignoring it and hoping that no one gets hurt. What type of response did Jackson make?

Loyalty

Noah noticed that his co-worker was taking an extra 10 minutes for lunch every day. While Noah felt it was unethical, he chose not to report his co-worker because they had just been assigned to the same team project and he wanted to get along with the other team members. What response did Noah have to his co-workers unethical behavior?

Loyalty

Julian mails letters to potential investors saying that he is selling a newly discovered oil field in Alaska at an advance of $2,500. He receives eight responses in a month, and three of them send cash by post. Julian, never having owned an oil field, takes the cash and leaves the state. Which of the following crimes has Julian committed?

Mail/Wire fraud.

Madison is a clerk at Valley Manufacturing. When she was questioned by government officials about the company's business dealings she lied and told them that she was unaware of any illegal activity. In fact, it was later found that Madison had overheard her supervisors discussing a money laundering scheme but she did not actively participate in it. What, if anything, can Madison be charged with?

Making false statements.

Managers making corporate decisions have the right to consider the interests of which of the following?

Managers may take into consideration all of these stakeholders.

Which of the below is not true of fiduciary duties?

Many states prohibit a company from expelling shareholders unless the expulsion satisfies the business judgment rule.

Maureen, a shareholder of Metra, Inc., was unhappy with how the corporation was being managed. Maureen wanted to be a member of Metra's board of directors. Which statement is correct?

Maureen cannot require that the company put her name in the proxy statement; she must prepare and distribute her own proxy.

Jill and Grover entered a partnership together to grow and deliver flowers. One day, as Jill was delivering flowers to a residence, she was surprised to find her husband with another women there. She threw the flowers and their vase container at her husband. He suffered a laceration to his face that required plastic surgery. Is the partnership liable?

Maybe.

Roxanne was injured when she fell in a hole while walking across her landlord's parking lot. Roxanne suffered severe injuries and files a lawsuit against her landlord. Roxanne has lived in the same place under the same landlord for the last ten years. Roxanne would like to maintain this relationship but she needs to be compensated for her injuries, medical bills, lost wages and pain and suffering. Which of the following is her best course of action to meet her objectives?

Mediation

Michael dissociated from a partnership he had entered with Lisa to sell specialty bicycles they designed and sold together. He gave her notice one month before his planned exit. They had a written partnership agreement, which did not state how the partnership would end. Which of the below is most likely true?

Michael's dissociation was rightful.

To encourage similarity among state corporate statutes, the American Bar Association drafted the _____ Act as a guide.

Model

Conley owned video poker machines. Although they are outlawed in Pennsylvania, he placed them in bars and clubs. He used profits from the machines to buy more machines. What crime is he guilty of?

Money Laundering

Which of the following cases would be considered a felony in most states?

Money laundering.

Bentley lied to her teacher by telling the teacher she had left her homework at her grandmother's house when she had not actually completed the assignment. In which of the following ethical theories would this lie be acceptable?

Moral relativism.

Daniel's son had to use the internet to do his homework but Daniel's home computer was broken. So he took his work laptop home even though it is against company policy and he could be fired if anyone found out. When his boss saw him coming in with the laptop, he asked him why he had it. Daniel replied that he was taking it to his co-workers office so they could work together on a project. What ethical reasoning did Daniel use?

Moral relativism.

Tom and Bill live on neighboring farms. Tom has been growing corn in the field next to Bill's property for many years because he thinks the field is part of his own property, but recently Bill discovered that the field is actually part of his property. He has told Tom to stop using this field, even though he doesn't plan to use it himself. Tom answers by telling Bill he'll share some of the profits from the corn if Bill will allow him to use the land. Which of the following alternate dispute resolution methods do Tom and Bill use here?

NEgotiation

Which jurisprudential theory argues that an unjust law is no law at all?

Natural Law

Ned has agreed to perform some work for Alpha Co. Which of the following would be more likely to indicate that Ned is an employee and not an independent contractor?

Ned is going to use equipment provided by Alpha Co. while performing the work

Fluor, an engineering and construction company, was awarded a $1 billion project to build a coal gasification plant in South Africa. Fluor signed an agreement with a South African client that prohibited them both from announcing the agreement until March 10. Accordingly, Fluor replied "no comments" to all inquiries about whether a major transaction was pending. Between March 3 and March 6, the State Teachers Retirement Board pension fund sold 288,257 shares of Fluor stock. After the contract was announced, the stock price went up. Did Fluor violate Rule 10b-5?

No, because "no comment" is not misleading nor untrue.

Faith, as promoter, signs a contract with Bob's, LLC, to provide services to ABC, Inc. ABC, Inc., later enters into a novation with Bob's LLC. Faith is the sole officer and director of the corporation. ABC, Inc., later breaches the contract. Is Faith liable for the breach?

No, because ABC, Inc., and Bob's LLC entered into a novation.

Ronald Clay Co. would deliver clay to Jan, Bud and Cameron Pottery Partners, and then Bud would immediately place a new order for the following week. Last week, Ronald Clay Co.'s delivery driver informed only Jan that Ronald Clay Co. would no longer be able to deliver a special clay the potters require. Jan forgot to tell Bud and Cameron. The following week, Bud and Cameron were surprised that Ronald Clay Co. did not make its usual delivery. Is Ronald Clay potentially liable for breach of contract?

No, because Jan had a duty to pass on the information to the partnership.

John and LaShonda work together to raise money to help the homeless in Topeka, Kansas. They raised $25,000 last year, which they used to buy food and blankets and pay for hotel rooms to help the homeless in the city. They both consulted each other on every purchase except one. John signed a contract for a "tiny house" for $12,000, which could not be covered within the $25,000 budget. Is LaShonda potentially liable?

No, because John and LaShonda did not intend their efforts to make a profit.

Janine was an assistant manager at a small, boutique hotel run as a partnership. She had authority to enter into contracts up to $10,000. One day, Janine had an opportunity to buy beautiful, highly discounted used furnishings for the dated lobby for $12,000. The offer would not have been available had she not taken it on the spot, so she did. Later in the week, the manager, Molly, returned from vacation to find the beautiful, new furnishings, which the lobby desperately needed. Molly reminded Janine about the limitation on her contracting authority but was pleased with the furniture. Two months later, however, the furniture cushions were sagging and looking shabby. The hotel's owners, the partners, just saw the furniture for the first time and are not pleased. May the hotel now rescind the furniture contract?

No, because Molly ratified the contract for the hotel.

A target company's charter requires a vote of 80 percent of the board members to approve a merger. If Sam Corp. acquires 51% of the target company, can it nonetheless merge the two companies?

No, because Sam Corp. did not reach the charter's supermajority requirement.

Wayne is a home builder. He hires Steeple Inc. to do drywall in all of his homes. Unfortunately, the costs of one home ran too high for Wayne to make a profit. He asked Steeple whether it would reduce its bill for that one particular house, and its President agreed. Unfortunately, after that home sold, the buyer claimed that the work on the foundation was of inferior quality. The buyer sued Wayne. Is Steeple potentially liable, too?

No, because Steeple and Wayne do not share profits.

Midtown Motors sponsors a "back to school drive" to help raise money for under-privileged students to have school supplies. Every time someone takes a test drive in a car, Midtown motors donates $25 in school supplies to local schools. Lots of people come test drive the cars and Midtown has developed a good reputation for the campaign, but records show that it has no effect on sales. According to Harvard Professor Michael Porter's views on Corporate Social Responsibility (CSR), should Midtown Motors continue the campaign?

No, because it is not profitable to Midtown Motors.

Jessica, as promoter, signs a contract for Heather to perform services for a soon-to-be corporation, Glow Corp. After both parties believe the corporate documents for Glow Corp. were properly filed, the company and Heather entered a novation releasing Jessica from liability on the contract. Unfortunately, Glow Corp. breached the contract shortly thereafter. The next day, Glow Corp. learned that its attorney had not yet filed the corporate documents. The attorney corrects the mistake the next day. Is Jessica personally liable on the contract because of the attorney's error?

No, because of the corporation by estoppel doctrine.

Susan, the CEO of a large, publicly traded company, proposed that a large division enter a joint venture with another company. The shareholders did not vote on the transaction. In the end, the joint venture did not turn out well. Shareholders sued Susan. The court determined that the transaction was entirely fair to the corporation, but it resulted in a $15 million loss. Will Susan be liable?

No, because of the court ruling.

Five years ago, Deirdre inherited 100 shares of stock in Sears, Roebuck & Co. The company has not been doing well in recent years, with its stock dropping to $13.04 on the date Deirdre reads about the following. The company is about to offer more appliances for sale in its stores again. Deirdre wants to make sure that any steel used in the appliances is American made. Can she make a shareholder proposal?

No, because she does not own enough stock.

Tamara is on the board of a target company. She has voted in favor of implementing a poison pill to prevent a hostile takeover. Her intent in doing so is to insure that the shareholders receive maximum compensation. She also knows that she will no longer be on the board if the takeover attempt is successful. Has Tamara violated her fiduciary duties?

No, because she is acting in the best interest of the shareholders.

Billy, as promoter, signs a contract for Jill to perform services for a soon-to-be corporation, NewTown, Inc. Unfortunately, Billy misspelled the name of the corporation's registered agent in the incorporation documents filed with the secretary of state. Jill and NewTown entered a novation when they believed NewTown was properly incorporated. NewTown later breached the contract. Is Billy liable?

No, because the NewTown was a de jure corporation when the novation was entered.

The Pharmaceutical Association holds an annual convention. At the convention, Brittany, who was president of the Association, told Luke that Research Corp. had a promising new cancer vaccine. Luke was so excited that he chartered a plane to fly to Research's headquarters. On the way, the plane crashed and Luke was killed. Is the Pharmaceutical Association liable for Luke's death?

No, because the Pharmaceutical Association had no control over the plane flight.

A group of investors believes it has been defrauded as a result of a new securitized loan product it bought, and it wishes for the Securities and Exchange Commission (SEC) to outlaw this securities product. The SEC has refused to take action. The group plans to meet with the President of the United States in order to have him change the agency's policy regarding the securities product. Assuming the President supports the group's cause, will the group likely be successful?

No, because the SEC is an independent regulatory agency, which means the President has very little influence over the agency's policy priorities.

April opens a business renting storage space to customers. The business becomes popular, and she needs money to expand her business and build more storage units. She approaches numerous wealthy individuals in the community asking if anyone would like to invest money in the business. Several of the individuals say that they will personally loan money to April, so that she can use it in the business if she needs it. The loan will be at 10% annual interest rate. Does this implicate the federal securities laws?

No, because the individuals made a personal loan to April.

Noah and Martin opened a bike shop together in the form of an undocumented partnership. Noah worked fifteen hours per week while Martin worked sixty. Noah put up the $37,000 necessary to start the business. They agreed Martin would take a salary of $800 per week until the partnership was profitable. After one year, the partnership was profitable, so they stopped Martin's salary. Martin believed he was entitled to a higher portion of the profits given how long he worked so many hours for so little pay. Was Martin correct?

No, because the law presumes partners share profits equally.

Carla decides to open a business. After operating the business for some time, she realizes that there is going to be far more than she expected. She approaches Donald and asks if he would like to work for her. Donald will earn a salary and a percentage of ownership in the company as compensation. Does this involve the sale of securities?

No, because the ownership interest is compensation to Donald.

Brad decides to open a business. When planning the business, he realizes that there is going to be far more financial paperwork than he expected. He approaches Heather, a CPA, and asks if she would like to become a partner in his business. She would be responsible for all accounting and finance, while Brad works on operations. Is this the sale of a security?

No, because these are co-founders of a business.

John, Kim and Greg were partners in a computer repair business. Neither was supposed to enter contracts for more than $200 without telling the other. Nonetheless, Greg was offered a very useful used machine for $1,000, so he went ahead and bought it using cash from the partnership's bank account. When Kim and John found out it, they were leery about spending so much, but they recognized that the machine was a good buy. If Kim and John think things over for the next week or so, might they be able to get out of the contract?

No, because they ratified the contract.

George, while serving as promoter of a soon-to-be corporation, signs a contract with Susan. The contract calls for Susan to receive $10,000 for her services to the corporation (Big Box). Though Susan performs, she does not get paid from either George or Big Box. Can she successfully sue George for $10,000?

No, if Susan agreed to a novation.

Pfizer Inc. paid $2.3 billion to settle civil and criminal charges alleging that it had illegally marketed thirteen of its most important drugs. This settlement made history but not in a good way. It was both the largest criminal fine and the largest settlement of civil health care fraud charges ever paid. Shareholders filed a derivative suit against the Pfizer board and top executives. Defendants responded with a motion to dismiss on the grounds that shareholders had not made demand on the board to bring an action against itself. Is demand necessary?

No, if a majority of the directors either had a conflict of interest or was careless when making the decision.

The Daisy Corporation is in Oregon. If Daisy, 90 days after forming, offers stock to people or entities in Oregon only, must the Daisy Corporation register with the SEC?

No, if it only sells stock within the state of Oregon.

Leonard C. Blum, an attorney, was negligent in his representation of Louis Anthony, Sr. In settlement of Anthony's claim against him, Blum signed a promissory note for $10,400 on behalf of his law firm, an LLC. When the law firm did not pay, Anthony filed suit against Blum personally for payment of the note. Is a member personally liable for the debt of an LLC that was caused by his own negligence?

No, regardless of his actions, Blum cannot be personally liable for this debt.

You are walking down a country lane and notice a three-year-old playing with matches near a barn filled with hay. Are you obligated to intervene?

No, says the law, although it might be moral to intervene.

Ben owns a business that is licensed and comprehensively regulated by a state agency. One day, without warning, the state inspector surprises Ben and begins to search his business and takes quite a few samples of the products Ben is selling. Ben objects claiming a violation of his constitutional rights. Is Ben correct?

No, the agency need not give any notice before beginning an inspection.

A pharmaceutical company is opposed to a proposed rule of the U.S. Food and Drug Administration (FDA). Rather than deal with the agency, the company files a lawsuit in federal court. Will the company prevail in its lawsuit?

No, the company must first exhaust its administrative remedies before it can challenge an agency's decision in federal court.

Does the plaintiff's name always appear first in a case?

No, the plaintiff's name is not always listed first

Mrs. Meadows opened a biscuit shop called The Biscuit Bakery, LLP. The business was not incorporated. Whenever she ordered supplies, she was careful to sign the contract in the name of the business, not personally: The Biscuit Bakery, LLP, by Daisy Meadows. Unfortunately, she had no money to pay her flour bill. When the vendor threatened to sue her, Mrs. Meadows told him that he could only sue the business because all the contracts were in the business's name. Mrs. Meadows is a member of a limited liability partnership. Is Mrs. Meadows liable for the debt to the vendor?

No, unless she agreed to be liable.

Lucas saw his co-worker, Nathan, taking office supplies out to his car. In order to maintain loyalty, Lucas offered to keep watch for Nathan so that no one else saw him taking the supplies. Did Lucas act ethically?

No, while Lucas was trying to help a friend, he was participating in an unethical activity.

Carlos pushed Rebecca into the St. John's River and watched as she struggled to swim to shore. Carlos did not assist Rebecca because he was under the understanding that he did not have to help someone in peril. Is he correct?

No. Because Carlos put Rebecca in peril, he had a duty to assist her.

Andrew is at work and begins to throw a fit because the copy machine is jammed again. In his outrage, Andrew was screaming out profanity. The company fired him, stating that the employee handbook gives using profanity as a reason for immediate termination. Andrew claims that the company is violating his First Amendment right of freedom of speech. Is Andrew correct?

No. Freedom of speech does not apply here because it is not the government acting.

The Aviation Security Improvement Act (ASIA) states that the FAA can refuse to divulge information about airport security. The FAA interprets this to mean that it can withhold data in spite of the FOIA. Public Citizen and the Lockerbie family members interpret FOIA as being the controlling statute, requiring disclosure. Is the FAA interpretation binding?

No. Interpretive rules do not change the law.

A federal statute prohibits the broadcasting of lottery advertisements, except by stations that broadcast in states permitting lotteries. The purpose of the statute is to support efforts of states that outlaw lotteries. Truth Broadcasting operates a radio station in State A (a non-lottery state) but broadcasts primarily in State B (a lottery state). Truth wants to advertise State B's lottery but is barred by the statute. Does the federal statute violate Truth's constitutional rights?

No. The government can regulate commercial speech for a compelling reason as long as the rules are reasonable.

Waffle Shoppe, Inc. sells a local franchise to Dave and Sharon Sanders. After three years, Waffle Shoppe sells another franchise in the same town to Bill and Fran Copeland. Bill and Fran open their Waffle Shoppe across the street from Dave and Sharon, cutting their income in half. The franchise agreement does not address the locations of the local franchises. Dave and Sharon sue Waffle Shoppe for breach of contract. Dave and Sharon maintain that Waffle Shoppe had a duty not to sell a second franchise so close to them as to interfere with their customer base. Are Dave and Sharon correct?

No. Waffle Shoppe did not contractually agree to limit the sale of franchises in Dave and Sharon's area.

Jessica and Alberta do not have a lot of money, but they want to go into business together. Which of the below must they do to comply with the Uniform Partnership Act?

None of these. Make a formal filing with the local secretary of state. Prepare a written agreement. Register with the Internal Revenue Service.

Avery got sick and was hospitalized from being exposed to a hazardous chemical at work. Which piece of legislation would allow Avery to sue the workplace?

OSHA

Brighton Cosmetic Company wants to stand out from the crowd, as well as act in a socially responsible manner. What might the company choose to do to set itself apart from the other cosmetic companies?

Offer a "gift with a purpose," such as a donation to a charity with every purchase.

Which of the following scenarios relates to the ethical trap of following orders?

On orders to do so from the chief of security of the company he is working for, a security guard on nightshift allows strangers to enter the warehouse he is guarding and pilfer supplies.

Which of the following is a main advantage of direct public offerings?

One can avoid the costs of using an underwriter.

In Porter's view of Corporate Social Responsibility (CSR), when should a company undertake a CSR project?

Only if the project is profitable for the company.

Ray and Chris decided to open a franchise. They were debating whether to operate as a partnership or an S Corporation. Which of the following is (are) characteristic(s) of operating as an S Corporation?

Only one class of stock issued. 100 or fewer shareholders. Shareholder cannot be partnership, corporate shareholders or non-U.S. citizen/resident.

Criminal cases are different from civil cases in that:

Only the government can prosecute defendants in criminal cases.

If a member of a Professional Corporation commits malpractice, whose assets are at risk?

Only the member who committed malpractice.

Tara decides to sell stock in her company, Tara Corp., to individuals over the internet. She fails to follow any of the security disclosure laws, and many investors believe they were defrauded. What are the potential repercussions if the SEC attempts to challenge the activity?

Order Tara to cease and desist from selling securities. Levy fines against Tara. Confiscate the profits Tara derived from the sales.

A crime consists of the following elements:

Outlawed conduct and a voluntary act.

Which of the following is NOT an appropriate, ethical response to unethical behavior that is occurring in the workplace?

Participation

Gordon is hired to sell Patricia's restaurant. While Gordon is looking for a buyer, the quality of the restaurant starts going downhill. Patricia later says, very publicly, that she would not even eat at her own restaurant. After hearing this, Gordon stops putting in effort to sell the restaurant. If Patricia were to sue Gordon for breach of duty, what would Gordon's best argument be?

Patricia unreasonably interfered with Gordon's ability to accomplish the task.

If partners expel a partner but decide to continue the business, what must the partnership generally do?

Pay the ex-partner the value of her share.

Hunter got an email that appeared to be from his friend inviting him to take an on-line personality quiz. At the end of the quiz, Hunter was asked to enter his phone number in order to get the results. On his next phone bill, Hunter had been charged hundreds of dollars to several unknown services. What type of crime was committed against Hunter?

Phishing.

In U.S. legal terminology, the _____ is the party who is suing.

Plaintiff

The doctrine of ________________, which developed gradually over centuries, requires that judges decide current cases based on previous rulings. This vital principle is the heart of American common law.

Precedent

The following is/are necessary step(s) in the incorporation process once a company has decided where to incorporate?

Prepare and file the charter Prepare the bylaws of the corporation Elect the first set of directors

A police detective has provided sufficient information so that a judge feels that evidence of a crime is likely to be found in a particular place and the judge issues a search warrant. Which term is applied to this concept?

Probable cause

Jim and Joe have signed a document entitled "partnership agreement." It provides that Jim will put up the cash to start a computer repair business, which Joe will have 100% managerial control to run as he sees fit. They will split profits 50/50. If there are losses, Jim will be cover them. Is Jim a partner?

Probably, even though he is not involved in management.

Joe's, Mary's and Harvey's father passed away leaving a rather large estate. Joe wanted to divide the estate equally, Mary felt she deserved more and Harvey felt that he should get the entire estate because he was the oldest. Which court would settle this dispute?

Probate court

Dan dies leaving two children, Tom and Kate. Dan's estate is worth $5,000. Tom wants all of Dan's estate but Kate insists that she deserves at least half of Dan's estate. In what court can Kate bring this lawsuit?

Probate court.

One evening, three farmers witnessed Randy hanging around Farmer Fred's barn with an unlit torch, wearing an awfully nefarious expression. The barn burned to the ground later that evening. Randy is charged with the crime of arson. The burden of proof required for a conviction in a criminal case is:

Proof beyond a reasonable doubt

Lacey sends emails to thousands of people, offering to rent them a beautiful vacation home in Miami if they send a $2,000 deposit. Several hundred people respond, sending in the money. In reality, there is no property and Lacey is arrested and prosecuted for several criminal activities. Does Lacey have a right to a jury trial?

Prosecutor did not prove the criminal case beyond a reasonable doubt.

When a fire breaks out in Arnie's house, it destroys his house and also causes $150,000 damage to an adjacent store. The state charges Arnie with arson. Simultaneously, Vickie, the store owner, sues Arnie for the damage to her property. Both cases are tried by juries, and the two juries hear identical evidence of Arnie's actions. But the criminal jury acquits Arnie, while the civil jury awards Vickie $150,000. How did that happen?

Prosecutor did not prove the criminal case beyond a reasonable doubt.

Stan was attacked in the street by a couple of robbers. Following the attack, Stan sued the state in which he was attacked. He claimed correctly that the state's statutory law regarding carrying firearms in the open was not clear. Stan also alleged that if he had been allowed to carry a gun with him, the attack could have been deterred. The Supreme Court was asked to interpret the state's statute regarding carrying firearms. Which of the following steps in statutory interpretation would apply in this case?

Public policy

Layla is being harassed at work by her co-workers, as well as her supervisor. She reported the behavior, but no one believed her. Which of the following is the most ethical response for her?

Quit her job and take legal action against the harassers.

Congress passed the _____ primarily to prevent gangsters from taking money they earned illegally and investing it in legitimate businesses.

RICO Act.

When Rachel is walking her dog, Bozo, she watches a skydiver float to earth. He lands in an enormous tree, suspended 45 feet above ground. "Help!" the man shouts. Rachel hurries to the tree and sees the skydiver bleeding profusely. She takes out her cell phone to call 911 for help, but just then Bozo runs away. Rachel darts after the dog, afraid that he will jump in a nearby pond and emerge smelling of mud. She forgets about the skydiver and takes Bozo home. Three hours later, the skydiver expires. The victim's family sues Rachel. She defends by saying she feared that Bozo would have an allergic reaction to mud, and that in any case she could not have climbed 45 feet up a tree to save the man. The family argues that the dog is not allergic to mud, that even if he is, a pet's inconvenience pales compared to human life, and that Rachel could have phoned for emergency help without climbing an inch. Rachel is a bystander, someone who perceives another in danger. Apply the bystander rule to the facts of this case. Who wins?

Rachel wins. A bystander has no duty to assist someone in peril unless she created the danger. Rachel did not create the skydiver's predicament. She had no obligation to do anything.

Justin really wanted to go to lunch with his friends but didn't have any cash, so he took $15 from the petty cash drawer with the intention of putting it back tomorrow when he got paid. He told himself he would only take the money just this one time and it would be fine because he was going to put the money back tomorrow. What type of ethical trap has he fallen into?

Rationalization

Almost all states permit live television coverage of what?

Real trials

The colonists adopted English law, but what was one part they did not adopt?

Religious restrictions

Avery discovers that her co-worker Matt has stolen thousands of dollars from the company. Which of the following is the most ethical response for Avery?

Report Matt to her supervisor.

What is not a common characteristic of close corporations?

Requirements for a board of directors

Judge Judy presides over the Warren County Court of Appeals. After reviewing the trial court's findings, Judge Judy decides that the trial court made an error of law, which rendered the verdict unfair. Judge Judy should:

Reverse and remand the trial court's holding.

Judge Stephens presides over the Buffet County Court of Appeals. After reviewing the trial court's findings, Judge Stephens decides that the trial court made an error of law, which rendered the verdict unfair. Judge Stephens should:

Reverse and remand the trial court's holding.

When reviewing the decision of the trial court, the court of appeals can:

Reverse the trial court's decision. Remand the case back to the trial court. Affirm the trial court's decision.

Roger assaulted Jim in a tavern, causing medical expenses and lost wages. Roger is prosecuted by the state for a criminal offense and now Jim wants to sue him for money damages. Roger says that Jim cannot sue him because that would be double jeopardy. The constitution provides that a defendant can only be prosecuted once for a particular criminal offense. Which of the following is correct?

Roger can be prosecuted by the state for a criminal offense and Jim may sue him for money damages.

_________ means that a manager makes a decision benefitting either himself or another company with which he has a relationship.

Self-dealing

Which of the below is not a guideline for management using antitakeover devices?

Shark repellent should be used to make a takeover impossible if the local community would be harmed in any way.

At lunch, Peyton told her co-worker Emily that she was leaving work early to get a head start on her vacation. Their boss comes to Emily and asks if she knows where Peyton is. Using the theory of moral universalism how would Emily reply to her boss?

She left early for her vacation.

Susan and Brenda started a retail business called Eagle's Nest Hobbies. The business is operated as a partnership. Under partnership law, Susan is personally liable for any:

She would be liable for all of these.

Kate loaned Devon $300, who promised to pay her back in two weeks. Devon never paid Kate and in fact he kept putting her off. After a year of trying to get her money back Kate sued Devon. In which court would she have filed suit?

Small claims court

Which of the following organizations focuses on the triple bottom line: "people, planet, and profits"?

Social enterprises

Wanda wants to create a corporation. Which of the following is a necessary step to incorporate?

Someone must file the appropriate forms with the Secretary of State.

Which of the following is true about ethical choices?

Sometimes conditions exist making the right choice unclear.

Employees, communities and customers are considered what part of an organization?

Stakeholders.

Which of the below acts must a social enterprise do?

State in its charter that it is a benefit corporation

Which of the following is true of statutes?

Statutes are bills that have become law.

Stein, a psychologist, is counseling Alice, who has expressed intentions to violently injure her roommate Carla. According to the bystander rule, which of the following is true of such a situation?

Stein is obliged to inform or warn Carla about Alice's intentions due to the relationship between Stein and Alice.

Which of the following would be a true ethical dilemma?

Stop doing business with an unethical customer knowing that it will cost the company a lot of profits.

Suzette was a financial planner with Star Financial. Suzette decided to do some financial planning on the side in the evenings and on weekends. Star Financial is unaware of Suzette's after-hour work. Which statement is correct?

Suzette has breached a fiduciary duty to Star Financial since she is competing with Star Financial.

A group of 10 middle school students played a harmless prank at their school. Their friend Courtney saw the students and knows who played the prank. The principal questions Courtney about the incident and tells her that if he doesn't find out the truth about who did it, the whole school will be punished. If Courtney is applying Utilitarian ethics, what will she do?

Tell him the truth about who played the prank.

All the employees who work for Mr. Blanton at Blanton Accounting decided to decorate his office for his birthday as a joke with decorations making fun of his age. Instead of laughing, Mr. Blanton was furious and threatened to fire everyone who was involved. The custodian, Ben, knows that everyone participated. If he was employing deontological ethics, what would Ben do when Mr. Blanton questions him?

Tell the truth about who did it even if everyone gets fired.

What does the Statute of Frauds require?

That contracts for the sale or lease of property be in writing

In the days before cell phones, a fight broke out at Happy Jack's Saloon. A Good Samaritan ran across the street to the Circle Inn. He asked the bartender at the Circle Inn to let him use the telephone to call the police, but he refused. Back at Happy Jack's Saloon, the fight escalated, and a man shot and killed Soldano's father. Soldano sued the owner of the Circle Inn, O'Daniels, for negligence. What is he arguing in this case?

That the bartender violated a legal duty when he refused to hand over the inn's telephone and that, as the employer of the bartender, O'Daniels was partially liable for Soldano's father's death.

In 1835, when the young French aristocrat Alexis de Tocqueville traveled through the United States, one of the things that struck him most forcefully was what?

The American tendency to file suit

What document establishes the national government with its three branches, creates the Congress, with a Senate and a House of Representatives, prescribes what laws Congress can enact and establishes the office of the president and the duties that go along with it?

The Constitution of the United States

This federal agency is charged with pursuing criminal actions against individuals who violate the securities laws.

The Department of Justice.

A federal statute prohibits the broadcasting of lottery advertisements, except by stations that broadcast in states permitting lotteries. The purpose of the statute is to support efforts of states that outlaw lotteries. Truth Broadcasting operates a radio station in State A (a nonlottery state) but broadcasts primarily in State B (a lottery state). Truth wants to advertise State B's lottery but is barred by the statute. What is the relevant section of the Constitution?

The First Amendment

The Equal Protection Clause, which states that governments must treat people equally, is part of which Amendment?

The Fourteenth Amendment

Police bang down the door of Mary Beth's apartment, enter without her permission, and search the apartment. They had no warrant. When the officers discover that she is growing marijuana, they arrest her. What section of the constitution is relevant to this scenario?

The Fourth Amendment.

Burglar Bob breaks into Vince Victim's house. Bob steals a flat-screen TV and laptop and does a significant amount of damage to the property before leaving. Fortunately, Vince has a state-of-the-art security system. It captures excellent images of Bob, who is soon caught by police. Assume that two legal actions follow, one civil and one criminal. Who will be responsible for bringing the criminal case?

The Government

Criminal law differs from civil law in that in criminal law:

The Govt itself prosecutes the wrong doer

What was one of the most heavily viewed events in the history of television?

The O.J. Simpson murder trial

Which of the following is true as an example of the separation of power provided by the Constitution?

The President cannot appoint Supreme Court judges without consent from the Senate.

A large bank's employees engaged in a massive fraud. The CEO did not know when the company filed its annual report, but the CFO did. After the press broke the story, the company was forced to restate its financials. Which of the below is true?

The SEC has the right to clawback some compensation from both the CEO and the CFO.

Tammy forms a corporation, but she fails to pay her annual filing fees. What will likely happen to the corporation?

The Secretary of State may dissolve the corporation.

Administrative agencies regulate many different kinds of activity in the United States. Which of the following is not an example of a federal administrative agency?

The U.S. Court of Appeals for the Federal Circuit

Which of the following is NOT a reason why a bill is proposed in Congress?

The U.S. Supreme Court demanded that a bill be proposed

If Congress proposed a bill imposing penalties for displaying offensive material online where children could see it, which of the following reactions to the bill demonstrates the use of the governmental checks and balances instituted within the Constitution?

The U.S. Supreme Court rules a month later that the statute conflicts with the First Amendment, thereby voiding it.

_________________ were a nomadic European tribe who had detailed written laws during the fifth and sixth centuries A.D.

The Visigoths

Carter worked for an accounting firm and was prosecuted and found guilty under RICO of laundering money for a drug cartel. Under what circumstances can the accounting firm also be found guilty?

The accounting firm could be prosecuted if they knew or should have known what Carter was doing and made no effort to stop him.

Which of the below describes a partnership?

The association of two or more persons to carry on as co-owners a business for profit forms a partnership, whether or not they intend to form a partnership.

Zoe was arrested for allegedly hiring someone to murder her husband. The police seized evidence from her home and office including her computer. Before the trial begins, her attorney asks for discovery. What is the attorney asking for?

The attorney is asking the prosecution to hand over any evidence favorable to the defense.

OJ was tried for murder and was acquitted. He was later charged in a civil case and found guilty. The murder was the same in both venues. How can the criminal court find OJ not guilty and the civil court find OJ guilty?

The cases have two different burdens. In a criminal case, the prosecution's burden is to prove OJ guilty beyond a reasonable doubt and in the civil case the plaintiff's burden is a preponderance of the evidence or more likely than not.

Which of the following scenarios relates to the deontological theory of ethics?

The chief of the police force of a city orders the arrest of a mafia criminal, even though he has been threatened with repercussions to his family.

The executives at Cedar Valley furniture read a report saying that the chemicals they use in manufacturing their products can be dangerous and possibly cancer-causing. While none of their employees has gotten sick, there is a very good possibility that their employees are being exposed to dangerous levels of this chemical. Unfortunately, to use a different, safer chemical would cost the company thousands of dollars and force the customers to pay more for the product. What solution would Immanuel Kant propose?

The company should use an alternative to the chemical to reduce the danger to the employees.

Maximum Sportswear, Inc. files a lawsuit seeking to challenge Congress' authority to create and delegate power to federal administrative agencies. Which of the following statements accurately characterizes the company's likelihood to prevail in its lawsuit?

The company will likely lose its lawsuit. As long as there are limits on an agency's discretion, courts will generally uphold the agency's legality.

The essence of common law is:

The concept of stare decisis

Betsy's elderly father gave her written authority to sell the family house. Her father lived in Arizona and she lived in Minnesota. After about two months she found a buyer for the house and signed an acceptance of the offer on March 21. Later that same day she learned her father had died the day before (March 20). Other members of the family did not want the family house sold and claimed that the acceptance Betsy signed was void. The buyer of the house claims Betsy had the legal authority to sell the house and that the contract is binding. Who is right?

The contract is void and therefore Betsy does not have the right to sell the house.

Under a written contract dated May 1, Jodi hired Mandy to buy a piece of lakefront property. On May 30, Mandy finalized a deal with Matt for the purchase of the land and a contract was signed. On May 31, Mandy learned Jodi had died on May 29. Which statement is correct concerning the contract Mandy entered into with Matt?

The contract is void since the agency terminated May 29.

Higher courts are reluctant to review a lower court's factual findings. What is the role of the Court of Appeals?

The court hears both sides to decide on whether to reverse or affirm the trial court's decision.

Stacy forms a corporation for her hair styling business. The business acquires nearly $100,000 in debt and has only $20,000 in assets. Also, the business is not bringing in sufficient revenue to cover the operational expenses. What is a possible result if a creditor sues the business, alleging it is bankrupt?

The court may order involuntary dissolution, because the corporation is bankrupt.

Matrix Inc., a software company, had a very small capital base. It had only $15,000 in assets but over $250,000 in annual revenue. The founders of the company did not bother to buy insurance or keep a minute book to record their meetings. Which of the following is true in the given scenario?

The court may pierce the corporate veil in the given scenario.

Sandy and Mike form a corporation for their consulting business. They have a large number of clients and various projects under way. Sandy and Mike run into a conflict over who will control the firm's management decisions moving forward. The disagreement leads to deadlock, and Sandy and Mike sue each other to secure control of the corporation. Which of the following is the most probable result.

The court will involuntarily dissolve the corporation and order a winding up.

Lance received a summons and complaint. Believing that the case had no merit, Lance did not respond. Which statement is correct?

The court will issue a default judgment.

A high court in North Carolina has to decide whether the theory of evolution should be allowed to be taught in schools. The court decides to follow the doctrine of stare decisis in reaching a conclusion. Which of the following would the court do when following stare decisis?

The court would look at decisions made in previous cases from North Carolina courts pertaining to teaching the theory of evolution.

What is criminal law?

The criminal law concerns behavior that threatens society and is therefore outlawed. The government prosecutes the defendant.

Which of the following is the first step in the voluntary termination process of a corporation?

The directors recommending to the shareholders that the corporation be dissolved.

Alan broke into Edna's car and stole her purse in the parking lot of Spike's General Store. Days later, Alan was caught and the district attorney's office prosecuted Alan on burglary charges. Subsequently, Edna filed a lawsuit against Alan for monetary damages. To which of the following do the legal actions correspond?

The district attorney's case was a criminal case; Edna's lawsuit was a civil case.

Which of the following is NOT a duty that a principal owes to an agent?

The duty to obey instructions

Katie saw a large paper sack tied up with string in front of her neighbor's door. She took the bundle into her apartment, opened it, and discovered it was full of cocaine. She called the police and the neighbor was arrested. The neighbor's lawyer claimed the evidence had been illegally obtained since no probable cause existed to justify opening up the paper bundle and it is therefore inadmissible as evidence. Which of the following is true?

The evidence was lawfully obtained

Embezzlement refers to:

The fraudulent conversion of property already in the defendant's possession.

Barden Corporation was convicted of violating RICO. Accordingly:

The government may file criminal charges against both the company and the individuals associated with the criminal acts. The government may file a civil lawsuit against the company to obtain injunctions and other relief. Individuals may file civil lawsuits against the company for violating the RICO statute to recover losses sustained by the criminal act.

Bill is hiking in the woods. He meets a stranger, who introduces herself as Katrina. Bill sells a kilo of cocaine to Katrina, who then flashes a badge and mentions how much she enjoys her job at the Drug Enforcement Agency. The next day, Bill is in jail. What can happen to Bill?

The government will prosecute Bill for dealing in drugs. If convicted, he will go to prison.

Which of the following situations led to the creation of the first administrative agency in the United States?

The impact of the railway industry on the American economy in the mid-19th century.

Which of the following is true with regard to a public offering of common stock under the Securities Act of 1933?

The issuer would act unlawfully if it were to sell the common stock without providing the investor with a prospectus.

In December, the Environmental Protection Agency (EPA) filed an administrative complaint against Marlin Firearms Co. alleging that the company exceeded chromium emissions limits. The EPA proposed a $257,162 fine. Which statement is correct concerning administrative agency adjudication?

The losing party has a right to appeal.

Which of the following is true about ethical choices in business?

The most ethical choice is not always the most profitable choice.

George wants to sell franchises. What must he include in the Franchise Disclosure Document (FDD)?

The number of franchises in operation

Which of the following was created under Article II of the Constitution?

The office of the President

Mark is pulled over by a police officer for speeding. When the officer approaches to get Mark's license and registration, he sees a bloody knife and several full garbage bags in the back seat. Can the officer search Mark's car?

The officer can search the car without a warrant based on what he sees in the back seat.

Jayden is suspected of having stolen $5 million of artwork from a museum. The police have enough evidence to get a warrant to search his home and his basement. When they searched the house, they found no artwork but noticed a moving van in the driveway at the house next door. The officers entered the van and found the artwork. Which of the following is true?

The officers must obtain an additional warrant to search the van.

Which of the following is true of a sole proprietorship?

The owner is responsible for all the business's debts.

Which of the following would be considered a shareholder?

The owners of the company.

An agent commits a tort in the course and scope of the agency and is sued. The agent then seeks indemnification from the principal. Under which of the following circumstances might the principal avoid liability?

The principal did not authorize the agent's tortious conduct.

Which of the following is not a remedy available to a principal when the agent breaches a duty?

The principal may require specific performance from the agent.

Which of the following is true about a principal's duty to cooperate with his agent?

The principal must furnish the agent with the opportunity to work.

Yoplait has periodically run a "Save Lids to Save Lives" campaign. For every Yoplait lid mailed in, the company makes a donation to a breast cancer charity. During these campaigns, Yoplait gains market share. What would Harvard Professor Michael Porter's response to this campaign be?

The project is a good one because it helps the community and brings in profits for the company.

Who raises the capital, hires the lawyers, and calls the shots in a corporation?

The promoter

What is the court's rationale?

The reasoning behind the decision

Rapper Ice-T's song "Cop Killer" generated significant controversy when it was released. Among other things, its lyrics anticipate slitting a policeman's throat. Such lyrics have become reasonably common today, but they were much less common 20 years ago. When "Cop Killer" was recorded, Time Warner, Inc., was struggling with a $15 billion debt and a depressed stock price. Had Time Warner renounced rap albums with harsh themes, its reputation in the music business—and future profits—might have suffered. This damage might even have spilled over into the multimedia market, which was crucial to Time Warner's future. From a businessperson's point of view, what ethical concerns should Time Warner have considered when it decided to release "Cop Killer"?

The release could be costly to Time Warner because this could prove to be offensive, and the company, thus, might lose business.

In regards to corporate stock, what element is not required to be in the corporate charter?

The rights to dividends despite insolvency

Which of the following describes statutory interpretation?

The role of courts in precisely explaining the meaning of a possibly unclear law

Which of the following statements best differentiates the shareholder model of ethics from the stakeholder model of ethics?

The shareholder model proposes commitment toward only company shareholders, while the stakeholder model proposes an obligation toward broader interests such as the society.

Whose system impressed Benjamin Franklin and others and influenced the drafting of our Constitution?

The system followed by the Iroquois Native Americans

Leslie Bergh and his two brothers, Milton and Raymond, formed a partnership to help build a fancy saloon and dance hall in Evanston, Wyoming. Later, Leslie met with his friend and drinking buddy, John Mills, and tricked Mills into investing in the saloon. Leslie did not tell Mills that no one else was investing cash or that the entire enterprise was already insolvent. Mills mortgaged his home, invested $150,000 in the saloon—and lost every penny of it. Mills sued all three partners for fraud. Milton and Raymond defended on the ground that they didn't commit the fraud, only Leslie did. The defendants lost. By holding them liable, what Anglo-Saxon legal custom did the ruling resemble?

The tithing

Xena and Zach were in a partnership to sell a board game they invented as partners when Zach, sadly, died. Zach's wife, Zelda, is his sole heir. The partnership agreement did not address what would happen if either partner died. To which of the below does Zelda have a right?

The value of Zach's partnership share.

The Big Red Traveling (BRT) Carnival is in town. Tony arrives at 8:00 p.m., parks in the lot—and is robbed at gunpoint by a man who beats him and escapes with his money. There are several police officers on the carnival grounds, but no officer is in the parking lot at the time of the robbery. Tony sues, claiming that brighter lighting and more police in the lot should have prevented the robbery. There had never before been any violent crime—robbery, beating, or otherwise—at any BRT carnival. BRT claims it had no duty to protect Tony from this harm. What are the parties disputing?

They are debating whether BRT had a duty to protect Tony from an armed robbery, committed by a stranger.

Which of the following is true of gratuitous agents?

They are liable for gross negligence.

Which of the below is true about general partnerships?

They are subject to pass-through taxation.

How do courts go about interpreting statutes?

They look at legislative history and intent. They use the plain meaning rule. Look at public policy.

Noah, Kristy and Zane had a partnership at will doing people's income taxes. Zane informed his partners that he wishes to leave the partnership. Kristy and Noah do not want to continue in the business without him, and no one will buy the business. Which of the below is incorrect?

They must file a petition with a court.

Which of the below is true of independent directors in all publicly traded companies?

They must meet regularly on their own without inside directors.

Where does the losing party often appeal?

To a court of appeals

What is the main purpose of the Securities Exchange Act of 1934?

To maintain the integrity of the secondary market.

What is one reason our nation was created?

To protect the rights of its people from the government

Aaron's primary customer demanded that Aaron give him large gifts in order to keep him as a customer. Which of the following would be the most ethical decision for Aaron to make?

To refuse to give him the gifts even though you might lose his business.

Hannah discovered that if her company used a cheaper material in making its clothing it could profit more even though the clothing would not last as long. If she were using a shareholder approach, what would she recommend?

To use the cheaper material and maximize profits.

Which of the below can a partner do without permission of the other partners?

Transfer her right to receive profits.

A corporation may be found guilty of a crime.

True

A partnership by estoppel can occur when a third party relies on the statement "Ken and I are partners."

True

A primary purpose of discovery is to ensure that the results of lawsuits are based on all the facts.

True

According to the concept of categorical imperative, you should not do something unless you would be willing for everyone else to also do it.

True

An agent is not entitled to use confidential information gained from the agency relationship even after the agency relationship terminates.

True

Business should be concerned about ethics for the following reasons: society as a whole benefits from ethical behavior; people feel better when they behave ethically; unethical behavior can be very costly.

True

During a deposition, a potential witness or a party must generally answer all the questions under oath.

True

Foster, Asher, and Jefferies are the incorporators of Moreland, Inc. They will elect the first set of directors.

True

In 1998, the United States Supreme Court ruled in a case entitled, Oncale v. Sundowner Offshore Services, Inc., that same-sex sexual harassment is illegal under federal civil rights law. Amanda works for Avali, Inc. in California. In 1999, Amanda's supervisor, Jill, repeatedly grabbed her breasts and asked for sexual favors. If Amanda decides to sue for sexual harassment, the decision in Oncale v. Sundowner Offshore Services, Inc. will be precedent.

True

Kevin was the promoter for Koolsite.com, Inc. Before Koolsite.com, Inc., was formed, Kevin contracted to buy $20,000 in computer equipment in the name of Koolsite.com, Inc., from Computers Plus. On the contract, Kevin wrote "as an agent for Koolsite.com, Inc." Kevin is personally liable on the contract signed with Computers Plus.

True

Mario is incorporating a business in Texas. The corporate name selected for the business must be different from any corporation, limited liability company, or limited partnership that already exists in Texas.

True

NewWave is building a new manufacturing facility. It is in the process of deciding what safety features to incorporate into the new machinery. The interests of the various stakeholders affected by this decision may conflict.

True

State laws regulate corporations, but federal statutes determine much of their tax status.

True

The accumulation of precedent, based on case after case, and on judge's decisions on cases makes up the common law.

True

The board of directors sets executive compensation.

True

The bylaws of a corporation set out the detailed procedures for the operation of the company.

True

To nullify a lower court's decision and return the case for reconsideration or retrial is to reverse and remand.

True

Two methods of alternative dispute resolution include mediation and arbitration.

True

Under the legal positivism theory of jurisprudence, the law is what the sovereign says it is.

True

Under the old English common law, the "oath helpers" was a forerunner of our modern jury.

True

Unethical behavior often is a bar to financial success.

True

Victoria is the director of marketing for B & G Corporation. Victoria needed to negotiate an out-of-town contract on behalf of B & G. B & G has a legal duty to reimburse Victoria for the hotel expenses she incurs on the trip to negotiate the contract.

True

Investment in a legitimate business with criminal money violates RICO if ...?

Two or more racketeering acts are used to obtain the money.

Countywide Metals is a small company that incorporated in the state in which it is doing business. It plans to offer and sell $100,000 worth of stock only to residents of the county in which it is doing business. Which statement(s) is (are) correct?

Under SEC Rule 147, an issuer is not required to register securities that are offered and sold only to residents of the state in which the issuer is incorporated and does business.

Kelly Hackworth took a leave of absence from her job at Progressive Insurance to care for her ailing mother. When she offered to return, Progressive refused to give her the same job or one like it. She sued based on the Family Medical Leave Act, a federal statute that requires firms to give workers returning from family leave their original job or an equivalent one. However, the statute excludes from its coverage workers whose company employs "fewer than 50 people within 75 miles" of the worker's jobsite. Between Ms. Hackworth's job site in Norman, Oklahoma, and the company's Oklahoma City workplace (less than 75 miles away), Progressive employed 47 people. At its Lawton, Oklahoma facility, Progressive employed three more people—but Lawton was 75.6 miles (wouldn't you know it) away from Norman. Progressive argued that the job was not covered by the statute. Hackworth claimed that this distance should be considered "within 75 miles," thereby rendering her eligible for FMLA leave. Even if it were not, she urged, it would be absurd to disqualify her from important rights based on a disparity of six-tenths of a mile. How would the court interpret the statute and to what result?

Using the plain meaning rule, Ms. Hackworth will lose.

Scott, the president of Nent, Inc, decided to relocate a manufacturing facility to Asia. He based his decision on the fact that moving the facility to Asia will cause the greatest good to most people. What approach to ethical decision making did Scott use?

Utilitarianism

Which of the following is a theory of ethics that is illustrated by a wartime strategy of sacrificing a platoon to hold the enemy back to allow the rest of the army time to retreat?

Utilitarianism

Burglar Bob breaks into Vince Victim's house. Bob steals a flat-screen TV and laptop and does a significant amount of damage to the property before leaving. Fortunately, Vince has a state-of-the-art security system. It captures excellent images of Bob, who is soon caught by police. Assume that two legal actions follow, one civil and one criminal. Who will be responsible for bringing the civil case?

Vince Victim

Ethan has noticed that some of his co-workers have begun lying to customers about small things such as delivery dates and shipping costs. He is uncomfortable working in this environment so he tries to talk to the co-workers and convince them that they are not acting in the best interest of the company. What response did Ethan exercise in response to the unethical activity?

Voice

Jackson knows that the car manufacturer he works for is using cheaper parts to make its cars, which have been shown to endanger customer safety. Jackson loves his job so he chooses to respond to this unethical behavior by trying to convince the supervisors to make a safer car. What type of response did Jackson make?

Voice

Olivia felt that the CEO of her company was about to make a bad decision. The CEO is planning to alter the financial statements to make it look like the company paid more in taxes than it actually did. This could not only have detrimental effects on the company, but also land the CEO in jail. What should Olivia's response be?

Voice - try to convince her boss that he is making a bad decision.

Which of the following is a judicial power?

Voiding unconstitutional federal statutes

The process of jury selection at trial is called:

Voir Dire.

When is an agency relationship terminated?

When the principal's goal has been achieved

After being fined for violating a Federal Communication Commission (FCC) rule, a television network challenged the FCC's recently changed interpretation of its rule regarding fleeting expletives (profane words broadcast spontaneously over the air). Which of the following statements regarding the court's review of the agency's decision is correct?

Where the agency's interpretation is impermissibly vague, the court will not enforce it against the network.

Which of the below is true about the existence of an oral agreement when it comes to partnerships?

Whether people act as partners is more important than their oral agreement, if any.

The Supreme Court created a three-part test to determine whether a creative work is obscene. Which of the below guidelines is not part of the test?

Whether the work includes language, which is prohibited by the Federal Communications Commission.

In a staff meeting, Liam suggest that his company that makes lawn equipment should take a Saturday to mow the lawns of some of the elderly people who live in the town. Liam's boss shares the same attitude about corporate social responsibility as Harvard Professor Michael Porter. Which of the following questions would NOT be one asked by Liam's boss?

Will this improve our reputation?

Denise is a promoter for a proposed corporation, EVR-Young Corp. As promoter, she signed a three-year lease to rent office space in an office park. She signed her name and indicated below her signature that she is signing as "promoter for EVR-Young Corp., a company yet to be incorporated." EVR-Young is never incorporated. The lessor believes that Denise is personally liable for any damages it will sustain as a result of the three-year lease having to be breached. Is Denise personally liable?

Yes

In accordance with their written partnership agreement, Joshua and Bertha expelled Cathy from the business. Cathy immediately filed a statement of dissociation with the secretary of state. Today, Cathy received notice that the partnership did not make the last two months of payments on the lease the three partners had taken out together. Is Cathy liable?

Yes, Cathy is liable.

Wanda needs a job and is willing to work as a personal assistant to the movie star Bradley Jolie. Bradley is unsure of her abilities, and will not sign a contract until Wanda works, unpaid, for a month after which, if he likes her, Bradley will pay Wanda $20,000. Wanda agrees. After two weeks, the actor Tomkat Zoos tells Wanda that if she sends him (Tomkat) any scripts that Bradley gets, Tomkat will pay her $10,000. If Wanda sends a script to Tomkat, is she violating her duty to Bradley?

Yes, Wanda is violating her fiduciary duty.

Angelica is planning to start a home security business in McGehee, Arkansas. She plans to start modestly but hopes to expand her business within five years to neighboring towns and, perhaps, within ten years to neighboring states. Her inclination is to incorporate her business in Delaware. Is incorporating in Delaware a viable option?

Yes, and there are several advantages of incorporating in Delaware.

David Lucas paid $975,000 for two residential lots on the Isle of Palms near Charleston, South Carolina. He intended to build houses on them. Two years later the South Carolina legislature passed a statute that prohibited building seaward of a certain line, and Lucas's property fell in the prohibited zone. Lucas claimed that his land was now useless and that South Carolina owed him its value. If Lucas took this issue to court, would he win?

Yes, based on the Fifth Amendment Takings Clause

George and Jill run a bakery together. George makes all decisions when it comes to baking bread. Jill makes all decisions when it comes to baking sweets. They split costs and profits 50/50. The name of the bakery is Bread & Sweets. Is it a partnership?

Yes, because George and Jill share profits, losses and management.

Jill and Grover entered a partnership together to grow and deliver flowers. One day, while Grover was delivering flowers in his own vehicle, he caused a car accident. The partnership had no car of its own and carried no auto insurance. This was not his first accident. Is the partnership potentially liable?

Yes, because Grover was conducting partnership business.

Suppose that, while waiting in line at the grocery store, you overhear a stranger saying that the FDA is going to approve a new drug tomorrow—one that will be a huge success for Alpha Pharmaceuticals. Is it legal for you to buy stock in Alpha?

Yes, because I am not a fiduciary.

John, an investor in a Gymbo Corp., a gym equipment company, is also considering opening a company that would compete with Gymbo. To help him in his new endeavor, John attempts to exercise his right to information by demanding Gymbo's accounting records under the Model Business Corporation Act. If Gymbo's board resists John's attempt, might it succeed?

Yes, because John is not acting in good faith with a proper purpose.

Rashan, Tajik and Samantha run a small, independent movie theatre together as a partnership. There is a sign prominently displayed in the lobby that states: "All contracts over $200 require the signatures of both Rashan and Tajik." A popcorn seller came into the theatre and offered Rashan a high-quality popcorn for $250, an excellent price for the quantity, to be delivered the following week. The seller asked about Tajik, but Rashan said he was not available. Rashan paid the seller $250. Tajik and Samantha are angry when they learn about the purchase. They immediately call the seller to cancel. Can they possibly get out of the contract?

Yes, because Tajik and Samantha acted immediately.

Holiday Inn is a national franchise. The organization has very specific standards on the appearance of its hotels, including the décor of individual rooms. Holiday Inn's franchise purchase contract states that franchisees must remodel their property every seven years in accordance with Holiday Inn's policies. Holiday Inn of Pleasantville, Inc. has been a franchisee for fifteen years but has never updated its rooms. The décor at this particular Holiday Inn is shabby and out of date. The home office has counseled Holiday Inn of Pleasantville repeatedly about the room décor but to no avail. It finally threatens to revoke the franchise if Holiday Inn of Pleasantville does not remodel its rooms within thirty days. Can the franchisor terminate the franchise if Holiday Inn of Pleasantville does not remodel?

Yes, because remodeling every seven years is one of the contractual obligations of the franchise purchase contract.

April opens a business renting storage space to customers. The business becomes popular, and she needs money to expand her business and build more storage units. She approaches numerous wealthy individuals in the community asking if anyone would like to invest money in the business. Several of the individuals agree to invest money together in exchange for 20% ownership in the company. Could this implicate the federal securities laws?

Yes, because stock is included in the statutory definition of a security.

Executives were considering the possibility of moving their company to a different state. They wanted to determine whether employees would be willing to relocate. They did not want to alarm the employees, however, because a decision about a move had not yet been made. Instead of asking the employees directly, the company hired a firm to carry out a telephone survey. The "pollsters" pretended to be conducting a public opinion poll on behalf of the Chamber of Commerce. Has this company behaved in an ethical manner?

Yes, because the company was trying to receive honest information without alarming the employees.

For Hillti Corp., a U.S. publicly traded company, to win a viable governmental contract in Nigeria, it was necessary to pay a bribe. That contract turned out to be profitable for Hillti, but the manager who paid the bribe was prosecuted by the U.S. government. The U.S. Foreign Corrupt Practices Act, makes it illegal to bribe foreign officials. Since the prosecution was filed, Hillti's stock dropped precipitously. The manager pled guilty and had to give up his position to avoid jail time. If the shareholders sue the manager, could he be liable?

Yes, because the manager committed a crime.

A shark made a tender offer on Acme Corp. stock. A shareholder accepted the offer on the first day. The shareholder on the tenth day of the tender offer withdrew acceptance. Is this allowed under the Williams Act?

Yes, because the tender offer was still open.

The Sisters of Charity was an order of nuns in New Jersey. Faced with growing health care and retirement costs, they decided to sell off a piece of property. The nuns soon found, however, that the world is not always a charitable place. They agreed to sell the land to Linpro for nearly $10 million. But before the deal closed, Linpro signed a contract to resell the property to Sammis for $34 million. However, it turned out that the nuns' law firm also represented Linpro. Their lawyer at the firm, Peter Berkley, never told the sisters about the deal between Linpro and Sammis. Did Berkely owe a duty to the sisters?

Yes, because they had an agency relationship.

While drunk, the driver of a subway car plows into the back of the car ahead of him, killing a passenger. It was against the rules for the driver to be drunk. Is the subway authority liable for the negligence of its employee?

Yes, because this worker was an employee acting within the scope of employment. It does not matter that he was drunk.

Donny and Inga are in a partnership to sell used furniture. Inga wrote a check on the partnership account for $5,000 to purchase estate furniture. The check bounced. Is Donny potentially personally liable?

Yes, for the full amount.

Bob was a director of a corporation. The CEO, with consent from the board of directors, bought property for future development. The price was fair. Bob did not disclose that he was a shareholder in the entity that owned the property. Did Bob violate any fiduciary duty?

Yes, he violated the duty of loyalty.

George is upset about Soda-Maker, Inc., operations in Mexico. George thinks that there might be some collusion between corrupt Mexican police and local Soda-Maker executives. Is George entitled to a shareholder vote on his proposal to close down Soda-Maker's plant in Mexico?

Yes, if George owns enough stock.

Harry, while serving as promoter of a soon-to-be corporation, negotiated a contract with the Little Bell Company. The contract called for Little Bell to receive $30,000 for providing certain services to Harry's business, which does not yet exist. Harry did not make Little Bell Company aware that the corporation does not yet exist. Is Harry personally liable for the contract with Little Bell?

Yes, if Harry claimed to represent a corporation that did not exist.

Wanda has family in a rural village in Mexico. Recently, Soda-Cola opened a bottling plant that extracts water from the village aquifer. Wanda owns Soda-Cola stock. Can she sue the corporation directly?

Yes, if Wanda personally owned land that was negatively affected by the bottling.

Gamma Property Management Co. has a contract with Terry to manage Terry's rental property. Before showing the property to prospective tenants, Gamma hires a cleaning service to clean the property. Does Terry have to pay for the cleaners?

Yes, if hiring someone to clean the property was reasonable.

Goldman-Sachs agrees to underwrite an IPO. Does the underwriter assume any risk?

Yes, if it gives a firm commitment.

Mrs. Meadows opened a biscuit shop called The Biscuit Bakery. The business was not incorporated. Whenever she ordered supplies, she was careful to sign the contract in the name of the business, not personally: The Biscuit Bakery by Daisy Meadows. Unfortunately, she had no money to pay her flour bill. When the vendor threatened to sue her, Mrs. Meadows told him that he could only sue the business because all the contracts were in the business's name. Will Mrs. Meadows personally have to pay?

Yes, if she operates as a sole proprietorship.

Xavier purchased stock in the initial issuance of Mickey-Land. Can Xavier win a judgment against those who signed the registration statement?

Yes, if there were any material misstatements in the registration statement.

Can a person work as an agent for two different people with conflicting interests?

Yes, provided the agent discloses to both principals that she is representing both persons and the principals agree to the dual relationship.

Jill was a director of a company. Without reading a report on a new joint venture proposed by the CEO, she voted in favor of it. The board was divided, with the CEO winning out by just one vote. Unfortunately, the new joint venture turned out very badly and lost millions of dollars for the company. Did Jill breach any fiduciary duty?

Yes, she violated the duty of care.

April opens a business renting storage space to customers. The business becomes popular, and she needs money to expand her business and build more storage units. She approaches numerous wealthy individuals in the community asking if anyone would like to invest money in the business. Several investors says that they are willing to provide the money if April promises to give them 20% of any profits derived from the business. Does this implicate the federal securities laws?

Yes, this meets the common law definition of a sale of securities.

Joe is an officer of Laico, Inc., a Delaware company engaged in land development. Joe also owns a fair amount of property himself. Joe was offered a fifty-acre tract of land just perfect for a golf course housing development like he had been speaking with his brother about developing. Joe knew that Laico did not have the funds to buy the land outright. He decided to quit his position at Laico. He went into business with his brother to buy and develop the land. Has Joe violated the corporate opportunity doctrine?

Yes, unless Laico opted out of the corporate opportunity doctrine.

Billy bought a franchise. His agreement demanded that he pay the franchisor over $10,000 per month. Is Billy liable if he cannot pay the month fee?

Yes, unless the franchisor induced the contract through fraud.

George owns 10% of stock in FurnitureZ, Inc. He wants to retire. Can George sell all of his FurnitureZ stock?

Yes, unless the stock is restricted.

Darby's employer, Holden Inc., has a policy that permits any employee who works as late as 8:00 P.M. to eat dinner at company expense. She is in the habit of staying until 8:00 P.M. every night, whether her workload requires it. She orders enough food for dinner, with leftovers for lunch the next day. She has managed to cut her grocery bill to virtually nothing. Sometimes she invites her boyfriend to join her for dinner. She knows that the other employees are doing it, too. Is Darby doing anything wrong?

Yes. Darby is acting unethically by taking advantage of the company.

The Sisters of Charity was an order of nuns in New Jersey. Faced with growing health care and retirement costs, they decided to sell off a piece of property. The nuns soon found, however, that the world is not always a charitable place. They agreed to sell the land to Linpro for nearly $10 million. But before the deal closed, Linpro signed a contract to resell the property to Sammis for $34 million. However, it turned out that the nuns' law firm also represented Linpro. Their lawyer at the firm, Peter Berkley, never told the sisters about the deal between Linpro and Sammis. Did Berkely violate any duty?

Yes. He violated a duty of loyalty to the sisters.

Sarah, Joan and Liz are the members of an LLC which owns a florist shop named Artistic Florals. The members split the monthly receipts by dividing checks made payable to the florist into three groups. Each member then deposits her stack of checks into her personal bank account. After two years, the business goes bankrupt and creditors begin looking for assets to satisfy the business debts. Can creditors of Artistic Florals go after the personal assets of the members?

Yes. The members of the LLC commingled the business assets with their personal assets.

A well-known horse racing track is incorporated. The shareholders have become increasingly concerned about the many issues related to the welfare of thoroughbred racehorses, including breeding techniques, "doping" horses to hide injuries and abusive training practices. The shareholders decide that they would like to convert the corporation to a social enterprise. In addition to profits, the organization will pursue education, public awareness and prevention of these issues. Two-thirds of the shareholders approve of the plan, and the organization hires an outside party to draft measurement standards to use when assessing whether the organization has met these goals. Will the racetrack be allowed to become a social enterprise?

Yes. The organization has done everything required to become a social enterprise.

In order to obtain limited liability, Tom and Doris formed an LLC to operate their catering business. They sometimes deposited the proceeds from catering jobs into their personal checking accounts. If they needed to pay personal bills and were short of funds, they used the business account. If creditors of the business cannot get payment for their invoices, is there anything a court can do to help the creditors?

Yes. They can pierce the company veil of an LLC.

When Rachel is walking her dog, Bozo, she watches a skydiver float to earth. He lands in an enormous tree, suspended 45 feet above ground. "Help!" the man shouts. Rachel hurries to the tree and sees the skydiver bleeding profusely. She takes out her cell phone to call 911 for help, but just then Bozo runs away. Rachel darts after the dog, afraid that he will jump in a nearby pond and emerge smelling of mud. She forgets about the skydiver and takes Bozo home. Three hours later, the skydiver expires. The victim's family sues Rachel. She defends by saying she feared that Bozo would have an allergic reaction to mud, and that in any case she could not have climbed 45 feet up a tree to save the man. The family argues that the dog is not allergic to mud, that even if he is, a pet's inconvenience pales compared to human life, and that Rachel could have phoned for emergency help without climbing an inch. What rule did the US inherit from England about a bystander's obligations?

You have no duty to assist someone in peril unless you created the danger.

Which of the following will most likely be the case in your future job?

You will encounter many different ideas about what is and is not ethical.

A potential juror who has shown a prejudice toward one of the parties will probably be excluded by the use of:

a challenge for cause.

After answering a summons and complaint, Mike was questioned under oath in the presence of his lawyer and the plaintiff's lawyer. This discovery technique is called:

a deposition

John served as director and CEO of Funpark, Inc. When retiring, he convinced the board to hire his friend Eric as the new CEO. The board hired Eric, but did not use good business practice in setting his compensation. Eric did a horrible job. Faced with extensive loss in stock value, the board decided to fire Eric. When the board fired him, the corporation was forced to pay Eric a huge severance package due to their poor compensation decisions. What remedies exist for the corporation's shareholders?

a derivative lawsuit against the board

A motion is:

a formal request to the court that the court take some step or issue some order.

During the voir dire of a trial, the challenge for cause is a claim that:

a juror has demonstrated a probable bias.

Zellar is in the middle of discovery. Her opponent wants to take its 50th deposition. Zellar makes a request to the judge that this be prevented. What is Zellar requesting?

a motion for protective order

A subpoena duces tecum requires:

a person to attend a hearing and bring specified documents.

What is a tender offer?

a public offer to buy a block of stock directly from shareholders

The "dormant" aspect of the Commerce Clause means that:

a state statute that discriminates against interstate commerce is invariably unconstitutional.

The Consumer Product Safety Commission (CPSC) was investigating the safety of one of Widget Inc.'s toys. The CPSC wanted to talk to the chief designer of the toy. Despite repeated phone calls, the chief designer refused to speak to the CPSC. To talk to the chief designer, the CPSC should issue:

a subpoena.

The surest way to infuse ethics throughout an organization is for top executives to _______.

act ethically themselves both inside and outside of the organization

A(n) ______________ is a shareholder with a large block of stock whose goal is to influence management decisions and strategic direction.

activist investor

A partner has _______ or _______ authority to bind the partnership for any transaction within the ordinary course of its business unless the partner knows that the other partners would disapprove.

actual, implied

In 2005, the Federal Trade Commission passed a regulation creating the "Do Not Call" registry. This law would be:

administrative law

The Federal Trade Commission (FTC) issued a regulation requiring website operators to obtain parental consent before gathering personal information from children. This regulation is an example of: ____________.

administrative law

As _____, a partner has a duty to pass on all relevant information to the partnership.

agent

The theory of natural law posits that:

all law must have a foundation in morality.

The Framers of the Constitution wanted the Constitution to last for centuries. They understood that the document needed to be:

amended if necessary.

According to Kant's categorical imperative:

an act is only ethical if it would be acceptable for everyone to do the same thing.

ABC Corporation is served with a subpoena to turn over business records to the Environmental Protection Agency (EPA). ABC feels that it does not have to comply with the subpoena. ABC does not want to comply with the subpoena to turn over its business records. The company can argue that the requested records:

any of these are all valid reasons for ABC Corporation not to comply with the subpoena.

Blue sky laws:

are securities laws that are passed by states.

The Utilitarian approach to decision making is to:

ask the following question: which alternative causes the greatest good (or least harm) to the most people. ignore ethics.

In a(n) _____________, the target sells off the assets the shark most wants.

asset lockup

If partners have not agreed on how a partnership will end, when may a partner leave?

at any time, for any reason

In the case of _____, the company has to agree to measure its benefit to society according to a standard set by an objective third party.

social enterprises

If an individual runs a business without taking any formal steps to create an organization, she automatically has a _____.

sole proprietorship

The recognized political power that citizens obey is referred to as:

sovereign

In companies with a _________ board, replacing the entire board takes some years to accomplish.

staggered

If in 1900 the Minnesota Supreme Court ruled that a minor can void a contract at any time during minority and in 2010 the courts in Minnesota still follow this ruling, this is an example of:

stare decisis

In 2000, the Ohio Supreme Court ruled in a case entitled Philly v. Carter Mfg. Inc., that when a substance in food causes injury to a consumer of the food, it is not a bar to recovery against the seller that the substance was natural to the food. If, in a 2008 case involving a consumer's injury caused by a fish bone in a bowl of fish chowder, the court followed the decision in Philly v. Carter Mfg. Inc., the court's action in the second case is an example of:

stare decisis

When Rachel is walking her dog, Bozo, she watches a skydiver float to earth. He lands in an enormous tree, suspended 45 feet above ground. "Help!" the man shouts. Rachel hurries to the tree and sees the skydiver bleeding profusely. She takes out her cell phone to call 911 for help, but just then Bozo runs away. Rachel darts after the dog, afraid that he will jump in a nearby pond and emerge smelling of mud. She forgets about the skydiver and takes Bozo home. Three hours later, the skydiver expires. The victim's family sues Rachel. She defends by saying she feared that Bozo would have an allergic reaction to mud, and that in any case she could not have climbed 45 feet up a tree to save the man. The family argues that the dog is not allergic to mud, that even if he is, a pet's inconvenience pales compared to human life, and that Rachel could have phoned for emergency help without climbing an inch. Rachel wins the case because bystanders have no duty to assist someone in peril unless they created the danger. The bystander rule seems like a harsh rule, why do we follow this rule?

stare decisis

___________ means "let the decision stand."

stare decisis

The sale and exchange of securities are regulated by:

state and federal law.

To form an LLP, the partners must file a statement of qualification with _____.

state officials

When the enabling legislation limits the power of an agency, it is referred to as _____.

statutory control

The power of federal agencies is limited by:

statutory control in the enabling legislation and the Administrative Procedures Act. political control by Congress and the President. judicial control through the court's power of judicial review.

The definition of a security includes:

stocks, notes, and bonds. treasury stocks. participating in profit-sharing agreements.

Greenville College, a public community college, has a policy of admitting only Caucasian students. If the policy is challenged under the Fourteenth Amendment, ________________ scrutiny will be applied.

strict

Through informal rulemaking, the Federal Trade Commission (FTC) proposed rules concerning on-line privacy. Beta Company disagrees with the proposed rules. Beta should:

submit its objections to the FTC during the public comment period.

Ergometrics, Inc. wishes to challenge an agency's determination of the facts in its case in a federal court. What is the standard of review for an agency's determination of issues of fact?

substantial evidence

In which type of partnership have the partners agreed in advance how long it will last?

term partnership

Alex is a car salesman. He agrees to sell Zoe's car for her in exchange for ten percent of the sales price. While the car is on Alex's sales lot, a nearby tree is struck by lightning, and the tree crushes Zoe's car. Alex's obligation to sell the car

terminates because of the destruction of the car.

Early state regulation of securities transactions was undertaken out of the following concern(s):

that many securities had no substance

The first ten amendments to the Constitution are known as:

the Bill of Rights.

Article I of the Constitution created _______, and Article II created _______.

the Congress, the Presidency

The development of a federal securities law system came in response to:

the Great Depression.

The federal agency primarily charged with enforcing the securities laws is ________.

the Internal Revenue Service.

The Constitution gives ______________ the authority to conduct the nation's foreign affairs, coordinate international efforts, and negotiate treaties.

the President

The President is allowed to appoint federal judges and members of the Cabinet, but only with a consenting vote from:

the Senate

Jurisdiction is:

the authority of a court to decide a case

The proceeds, if any, of a derivative lawsuit go to:

the corporation

The phrase "piercing the corporate veil" refers to:

the court ignoring the corporate entity in order to do justice.

A state statute that discriminates against interstate commerce is almost always unconstitutional. This concept is referred to as:

the dormant aspect of the Commerce Clause.

The Securities Act of 1934 was passed with the purpose of regulating:

the exchange of stock in public companies.

The power to regulate interstate commerce can best be described as:

the federal government has exclusive power.

The primary difference between the federalists and the antifederalists was that:

the federalists urged a strong central government, while the antifederalists wanted the states to retain maximum authority.

The United States has seen periods when administrative agencies grew in number and in power and periods when they were reduced in number and power. Dozens of administrative agencies were created during which period of our nation's history?

the great depression

Jill is a shareholder in Dongo Corp. and has legitimate concerns that the board of directors bought property from one of the directors as an inflated price. Which of the below would she not have an automatic right to inspect under the Model Business Corporation Act?

the property itself

Proponents of deontological ethics are most likely to believe that:

the results of a decision are not as important as the reason for which it is made.

Which of the below does not accurately describe a right of a shareholder?

the right and duty to manage by proxy

Life Principles are:

the rules by which a person chooses to lead his life.

Shareholders may bring a direct lawsuit against the corporation, only if:

their own rights have been harmed.

A summary judgment is issued when:

there are no essential facts in dispute.

In an administrative adjudication:

there is no jury

The purpose of the checks and balances instituted within the Constitution toward the governmental branches is:

to bring governmental action only through a broad agreement between the branches.

Lawsuits always begin in a ________.

trial court

Alberto is the Director of Human Resources at Eastgate, Inc. Eastgate, as a government contractor, is required by law to have an affirmative action plan. Alberto disagrees with affirmative action. Nevertheless, Alberto follows Eastgate's affirmative action plan when he makes employment decisions. The legal positivism theory of jurisprudence supports Alberto's actions.

true

An appeals court may overrule any cases in which it finds the trial court's instructions to the jury were wrong.

true

Disputants Martin and Daulton have hired Thurman to arbitrate their disagreement. Although Martin and Daulton must accept whatever decision Thurman makes, the arbitration has the advantage of keeping Martin and Daulton out of court.

true

For diversity purposes, a corporation is considered a resident of its state of incorporation and the state in which it has its principal place of business.

true

For many years and in numerous cases, the Minnesota Supreme Court had refused to recognize the tort of invasion of privacy. In 1998, the Minnesota Supreme Court allowed Eli Lake and Melissa Weber to sue Wal-Mart stores for invasion of privacy. The need for flexibility in the law explains the Minnesota Court's decision.

true

Generally, a felony is any crime punishable by one year or more in jail.

true

If the principal and agent are both liable, they are jointly and severally liable.

true

In order for a person to obtain a civil conviction, it need only prove its case by a preponderance of the evidence.

true

John, the President of NewWave, is considering relocating a manufacturing facility to Asia. In making this decision, John is using the Utilitarian approach to ethical decision making. Under this approach, John will ask the following question: which alternative causes the greatest good (or least harm) to the most people.

true

Most legal disputes are settled by negotiation between the parties.

true

RICO provides for criminal and civil penalties.

true

SEC Regulation D allows for the sale of certain types of private offerings without full registration.

true

Shoplifting is a common type of larceny.

true

The Civil Rights Act of 1964, a federal statute, forbids discrimination on the basis of national origin in employment. The Equal Employment Opportunity Commission (EEOC) is the administrative agency that oversees the law. The EEOC issued "Guidelines on Discrimination Because Of National Origin." According to one of the guidelines, the EEOC will presume a violation of the law if an employer sets a work requirement that employees must speak only English in the workplace. This is an interpretive rule because it interprets the Civil Rights Act.

true

The Federal Trade Commission Act makes unfair or deceptive acts or practices in commerce illegal. The Federal Trade Commission (FTC) administers this law and issues guidelines against deceptive pricing. Under the guidelines pertaining to comparative pricing, businesses should not offer imperfect merchandise at a reduced price without disclosing that the higher comparative price refers to the price of the merchandise if perfect. This guideline is an interpretive rule because it interprets the Federal Trade Commission Act.

true

The RICO Act makes patterns of criminal behavior illegal rather than simple instances of crimes.

true

The U.S. Consumer Product Safety Commission (CPSC) promulgated a federal safety standard for multi-purpose lighters. The new standard will require multi-purpose lighters to be child-resistant. This legislative rule has the full effect of a statute.

true

The burden of proof required in a criminal case is proof beyond a reasonable doubt.

true

The process of jury selection is called "voir dire."

true

To affirm the outcome of a lower court but with changes is to modify the lower court's decision.

true

To allow a decision to stand is to affirm the decision.

true

To qualify for the intrastate sales exemption, a corporation can offer to sell its securities only to persons residing in the same state as the corporation.

true

Ethical behavior builds...

trust.

The state of Arkansas wishes to promote its farmers over out of state farmers. To that end, it passes a law, a special tax on all produce sold in the state. The proceeds are then distributed to Arkansas farmers. Such a law would probably be

unconstitutional under the "dormant" aspect of the Commerce Clause.

Directors must resign:

under majority voting if more than half the shares that vote in an uncontested election withhold their vote from them.

A statute is in conflict with the U.S. Constitution. That statute can be enforced:

under no circumstances.

If a federal law and a state law are in conflict, then:

under the Supremacy Clause, the state law is void.

Utilitarianism conflicts with deontology in that:

utilitarianism considers the end as the imperative for a deed, while deontology pays no heed to the end.

Any law that conflicts with the United States Constitution is _________.

void

For a bill to become federal law, it must be:

voted on and approved by both the House of Representatives and the Senate and signed by the President.

Constitutional Framer Patrick Henry:

was an antifederalist.

The duty of care requires a manager to act:

with the care an ordinarily prudent person would take in a similar situation.

A party that wants the U.S. Supreme Court to review a lower court ruling must file a:

writ of certiorari.