Module 6

Lin is an employee at Manufacturing Plant Inc. Lin is called for jury duty and as a result cannot work her scheduled shift. The plant fires Lin, who subsequently successfully sues her employer for reinstatement. With respect to the employment-at-will doctrine, this is

an exception based on public policy.

Pipe Inc.'s stated purpose is to install plumbing. Pipe contracts with Quality Contracting to pour a new building's foundation despite lacking the skill and license to do such work. This is most likely

an ultra vires act.

Kay and Leo form Metro Delivery Inc. Responsibility for all policymaking decisions necessary to the management of corporate affairs rests with Metro's

board of directors.

A foreign corporation that has not obtained a certificate of authority to do business in a state can nevertheless maintain an action in the state's courts.

False

A whistleblower is an employee who publicly reveals a co-worker's unsafe or illegal activity.

False

Corporate bylaws and resolutions of the corporation's board of directors provide guidelines but cannot grant or restrict corporate powers

False

Disparate-impact discrimination occurs when a protected class is adversely affected by the practice or procedure of an employer who intended that result.

False

During an employee's leave under the Family and Medical Leave Act, an employer must continue to compensate the employee to avoid the potential negative effect of unpaid leave on interstate commerce.

False

The Americans with Disabilities Act defines disability to include a physical or mental impairment that causes "undue hardship."

False

To avoid permitting a key employee to take family or medical leave, an employer must show that the leave would cause "substantial injury" to the employer.

False

Beri owns and operates City Delivery Service as a sole proprietorship. When she dies, the business will automatically

dissolve.

Oil Industries Inc. is a private, for-profit corporation that is owned by five shareholders who are members of the same family. Po, the majority shareholder, misappropriates company funds. The shareholders whose interests are injured by Po's misconduct should

have their shares appraised and be paid the fair market value for them.

Devon takes temporary family leave from her job at Equipment Sales Company to care for a newborn baby. With respect to Devon's health-care coverage, during the leave, under the Family and Medical Leave Act, Equipment

must continue it.

Brea and Colin do business as Dig Excavators. In acting on the firm's behalf, Brea makes an honest error in underestimating the cost of a certain project. In this situation, to her firm, Brea is liable for a breach of the duty of

none of the choices.

Oversight Inc.'s board of directors votes to empower corporate officers to make decisions regarding ordinary, daily corporate affairs within well-defined guidelines. With respect to these affairs, Oversight's board

retains its responsibility.

The primary document needed to incorporate a business is the articles of incorporation because the articles serve as a primary source of authority for the firm's organization and functions.

True

To make informed decisions and supervise corporate officers and employees, the directors need an unrestricted right to inspect corporate books and records.

True

An eligible employee may take unpaid leave under the Family and Medical Leave Act for family or medical reasons, or in certain situations for military service.

True

An employer can avoid liability under Title VII by showing that the employer's standards for hiring and promoting have a substantial, demonstrable relationship to realistic qualifications for the job at issue.

True

An employer cannot discharge a worker who, in good faith, refuses to work in a high-risk area if bodily harm or death might result.

True

As in a partnership, a limited liability company may pay no taxes—profits can be passed through to the members, who pay personal taxes on the profits.

True

Because a franchisor's termination of a franchise can adversely affect a franchisee, much franchise litigation involves claims of wrongful termination.

True

Directors and officers whose failure to exercise due care results in harm to the corporation or the shareholders can be held liable for negligence unless the business judgment rule applies.

True

If the members of a limited liability company want to reinvest profits in the business, they may opt for the firm to be taxed as a corporation.

True

Individual state laws should be relied on to determine corporate law because, despite the existence and use of model corporation acts, there is considerable variation among the states.

True

Limited legal liability can be an advantage for a small business wishing to raise capital.

True

Most of the states and the federal government have enacted statutes to protect employees who report wrongdoing from employer retaliation.

True

Shareholders' assumption of personal liability, as guarantors, for the obligations of a corporation can enable the firm to obtain credit.

True

Health Food Inc. coordinates the purchase, sale, and delivery of organic products. The stated corporate purpose is to make a profit and to have a material positive impact on society and the environment. Health Food is

a benefit corporation.

Integrated Devices, Inc., is a private, for-profit corporation that is owned by seven shareholders who are members of the same family. Integrated is

a close corporation.