BUS 3300

The federal agency that has the most to do with regulation of the securities markets is the:

Securities and Exchange Commission

Which of the following laws regulates the buying and selling of traded securities.

The 1934 Securities and Exchange Act

If Coca-Cola were to want to merge with Pepsi, and this was held to "substantially lessen competition" or "tend to create a monopoly," that would be a violation of:

The Clayton Act

The first federal law that specifically addressed equal employment issues was the:

The Equal Pay Act of 1963

Generally, the offeree must accept the exact offer that was made to them. This rule is called:

The Mirror Image Rule

The elements of a contract are:

The agreement (offer & acceptance), consideration, contractual capacity, legality, genuine consent

If a person agrees to a contract as a result of fraud, misrepresentation, duress or undue influence, what can they do?

They can disaffirm the contract

The most important antidiscrimination employment law is:

Title VII of the Civil Rights Act of 1964

A crime may be a negative or a positive act

True

After a buyer breaches a contract for the sale of goods, the seller can resell the goods (or the remaining balance of the goods) to another buyer.

True

Although all parties to a sale under the UCC must meet the UCC's good faith standard, merchants must meet even higher standards of honesty and good faith

True

Choosing to promote a younger person rather than an older person because the older person is likely to retire in several years, may violate the Age Discrimination in Employment Act.

True

Courts developed strict liability in tort when strict liability under contract law proved too restrictive

True

Criminal acts may be based on negligence.

True

Employers have the right to monitor employee e-mails in the workplace and may do so, in part, to prevent sexual harassment.

True

If a principal behaves as if he intended to ratify an unauthorized agreement between his agent and a third party, a court will find that implied ratification has occurred.

True

If an employer denies a female worker a promotion because she is pregnant, the employer has violated the Pregnancy Discrimination Act.

True

If someone volunteers to act as a gratuitous agent, and performs a task, such as selling a car, for the principal, the legal consequences are the same as if the agent were paid.

True

In a few situations, such as modeling clothing, an employer may discriminate on the basis of sex as a bona fide occupational qualification.

True

In the K-Mart Corporation case, the bankruptcy court allowed K-Mart to continue paying its critical vendors" in favor of its other vendors under the doctrine of necessity.

True

The antitrust laws may be enforced by:

the FTC, the Department of Justice and private parties

The term privity of contract refers to:

the contractual relationship that exists between the parties to a contract

The courts use the rule of reason to decide some antitrust cases because:

the courts consider the facts surrounding a case to decide if a practice hurts or helps competition

In a suretyship:

the credit of a third party secures a debt

One element of fraud or intentional misrepresentation is scienter. That means:

the defendant knew there was false information being passed on

After a plaintiff establishes a prima facie case of employer discrimination under Title VII, what happens?

the defendant must offer non-discriminatory reasons for the actions involved

Article 2 of the UCC covers the sale of:

Goods

A major purpose of tort law is to:

Provide compensation for injured parties by wrongdoers

A tort is:

a civil wrong not a breach of contract

A serious class of crimes that may be punished by death or imprisonment for more than a year is called a(n):

felony

Which of the following is not a category of agents covered in the text:

foreign agent

In Greenman v. Yuba Power Products, Greenman was injured when a tool his wife bought him malfunctioned. The Supreme Court of California imposed liability based on:

strict liability in tort

The 1933 Securities Act primarily concerns issuing of new securities, not the regulation of existing securities.

true

To prove intent for an intentional tort, the plaintiff must show willful misconduct by the defendant

true

Key element(s) of the tort of intentional interference with contractual relations is (are):

-a contract between the injured party and the defendant -a contract between the injured party and the defendant d and c (no d so assume b)

Assumption of the risk may bar recovery under strict liability for which product(s)?

-alcoholic beverages -prescription drugs -cigarettes all of the above

Caveat emptor:

-is the rule that a manufacturer is liable to a consumer with privity of contract for damages due to defects -means "let the buyer beware" a and b

Liability based on negligence:

-means the manufacturer is required to exercise reasonable care in the production of products. -includes reasonable care in presenting the product to the public to avoid misrepresentation -means that there must be a causal connection between the defendant's lack of care and the plaintiff's harm a, b and c

Defenses in strict liability include(s):

-product abuse -assumption of the risk -comparative negligence a, b and c

When a company wants to take over another, it may issue:

A tender offer

Which of the following would not be likely to be considered a violent crime:

All of the above are considered to be violent crimes. assault robbery murder kidnapping

The 1966 U.S. Supreme Court opinion relating to the Miranda rights holds that:

All of the above statements are included in Miranda rights -persons accused of a crime must be informed of their right to remain silent -persons accused of a crime must be informed of their right to be represented by counsel. -persons accused of a crime must be informed that statements they make can be used as evidence against them

Which of the following is NOT true about the Securities and Exchange Commission

All of the choices are true of the SEC the agency is charged with the responsibility for the enforcement and administration of the federal securities laws the agency is bi-partisan the agency is independent the agency has five members appointed by the President for five year term

The standard of conviction in a criminal case is:

Beyond a reasonable doubt

__________________ are foreseeable damages that result from a seller's breach

Consequential damages

Something of value or something bargained for in exchange for a promise; that is, both parties to a contract get something and give up something. In contract law, this is called:

Consideration

A promise or set of promises, the breach of which the law gives a remedy is a:

Contract

The most common remedy for breach of a contract is:

Damages

________________________ is the raising of funds through the sale of company stock.

Equity financing

A person appointed by an agent to help the agent for certain specific transaction is a special agent.

False

After secured creditors are paid, all other creditors share the proceeds of the debtor's estate equally.

False

An agent may not legally bind a principal to contracts without the principal agreeing to each contract.

False

Businesses, because they are not legal persons, may not cause a tort.

False

Criminal actions may be brought either by the state or the wronged party.

False

Gratuitous agents are appointed by other agents to undertake some work for the principal.

False

In an agency relationship, the agent is a neutral party regarding contracts between the principal and third parties

False

Misdemeanors are not crimes; they are civil offenses, unlike felonies.

False

Negligence in product liability suits means the defendant is found to have intended to produce a substandard, unsafe product.

False

The Equal Pay Act of 1963 prohibits discrimination in hiring based on sex.

False

The Sherman Act was passed in response to the general unpopularity of government agencies.

False

The creditor is responsible for liquidating all of the debtor's exempt property in bankruptcy proceedings.

False

Title VII of the 1964 Civil Rights Act does not protect against discrimination in employment based on religion.

False

Under the UCC's statute of frauds provision, Article 2-201, all service contracts must be in writing.

False

Warranties may only be express.

False

The rule of privity of contract was changed by which landmark case? This rule is still good law today.

MacPherson v. Buick Motor Company, 111 N.E. 1050 (1916), Court of Appeals of New York

In the case of Crest Ridge Construction v. Newcourt, where an order for construction materials that Crest Ridge needed was rejected for failure to meet credit terms, and Crest Ridge had to find a higher-cost replacement and sued Newcourt for damages, the appeals court held that:

Newcourt was liable for breach of contract because there was sufficient evidence that the two companies had formed a contract under the definition found in the UCC

Criminal law is:

None of the above are correct -Primarily made up of laws adapted from civil law -Primarily from ancient Greek law -Primarily from British law -Primarily made up of statutes derived from International law

As with everything in the law, sometimes promises can be enforced without consideration. Under certain circumstances, courts do not require consideration for a promise to be enforceable. This doctrine is called:

Promissory estoppel or detrimental reliance

In the case of Fordyce Bank v. Bean Timberland, where the bank had a security interest in the proceeds from the sale of timber by Bean, the court held that timber buyers had no knowledge of the bank's interest so were not responsible for its loss on the loan to Bean.

True

The UCC does not apply to the sale of investment securities

True

The agency relationship is a key part to most business operations

True

The debts owed to secured creditors have the greatest protection in bankruptcy proceedings.

True

The difference between the contract price and the price a buyer must pay for replacement goods when a seller is in breach is called cover.

True

The five C's of credit are: Capacity, Capital, Character, Collateral and Conditions

True

The rules of evidence in criminal cases are more stringent than in civil cases.

True

The three major types of bankruptcy are: Chapter 11, Chapter 7 and Chapter 13

True

There are statutes that limit product liability for certain products and services.

True

Under the common law, a contract is not formed unless there is no question that an offer has been accepted. Article 2 provides that a contract can be formed in any manner, including "conduct" that shows an agreement between the parties.

True

When a consumer misuses a product to the extent that such misuse is the primary cause of the injury, the producer may not be responsible for injury, or liability may be lessened.

True

When a principal's conduct appears consistent with the existence of an agency relationship, an agency by estoppel may be created.

True

When an agent pays for the right to exercise authority for a business, there is an agency coupled with an interest

True

Intentional torts are based on:

Willful misconduct

Bankruptcy law:

a and b -is federal statutory law -is controlled by the Bankruptcy Code

A securities registration statement consists of:

a and b information about risks involved in this business venture a prospectus

securities are the major form of investment for pension funds

a and b money borrowed by a corporation a stock traded on the New York Stock Exchange

Bonds issued by a company to raise money:

a and b are correct mean that the company has incurred debt that is to be repaid to the holders of the bonds can be traded on the securities market

Intentional torts:

a and c -Are based on actions that defendats meant to engage in -concern the interference with personal or property rights

Defenses to a negligence act include:

a and c -assumption of the risk -assumption of the risk

The principal is usually liable for the torts of an agent if the agent's tort was:

a and c -authorized by the principal -an unauthorized intentional tort within the scope of the agent's employment

A business can become involved in a tort action:

a b and c. -If an individual is harmed or injured by the actions of the business or its employees -If an individual is injured by a product produced by the business -If a business harms another business

Joyce Water, C.P.A., is sued for negligent preparation of an income tax return. To determine if she was negligent, the court applies a standard of reasonableness which measures Joyce's conduct against that of:

a competent C.P.A.

Contracts under Article 2 of the UCC could include:

a load of wheat

A crime may be classified as:

a misdemeanor

As discussed in Chapter 5, which would be the best definition of crime:

a positive or negative act that violates a penal law, that is, it is an offense against a state or federal government.

You hire an agent to sell your house for you. Typically, such an agent receives a fee only if they actually sell the house. This person is most likely:

a real estate agent

What is the parol evidence rule?

a rule that restricts the use of oral statements in a lawsuit over a contract that is contrary to the terms of a contract

a Warranty may be defined as:

a statement by the seller that its goods conform to certain quality, safety, performance or title standards

Factors that a court may consider in determining whether an act was within the course and scope of employment under vicarious liability is, was the:

a, b and c -act of the same general nature of those authorized by the principal -agent authorized to be in the location at the time the act occurred -agent serving or attempting to serve the principal's interests at the time of the tort

The key element of a security as the Supreme Court ruled in the SEC v. Howey case is:

a, b and c an investment of money an investment in a common enterprise the expectation that profits from an investment will be generated by the efforts of others

What defenses(s) is (are) available to sureties?

a, b and c impossibility duress fraud

In reviewing the competitive effects of mergers, which of the following may be considered.

a, b and c product market geographic market market share

A seller or buyer is considered a merchant by the UCC when he:

a, b, or c -regularly deals in goods of the kind involved in the transaction -by occupation presents himself as having knowledge or skill specialized to the transaction -employs an agent or broker who holds himself out as having requisite knowledge or skill

The "guilty act" that comprises the physical component of a crime

actus rea

An employment of an agent for the purpose of representation in establishing relations between a principal and third parties is known as a(n):

agency relationship

Sometimes a person lacks the Capacity to contract. Which of the following are circumstances where a person lacks capacity, and therefore cannot enter into a contract.

all of the above

When a person suffers an injury due to deliberate deception, there may be a tort of:

all of the above

Which of the following debt items are NOT extinguished by a Chapter 7 bankruptcy?

all of the above -alimony and child support payments -back taxes -debts incurred by fraud against creditors -fines owed to the government

A creditor is a person or business who:

all of the above -lends money to someone else -allows goods to be purchased by someone else on credit -allows services to be purchased by someone else on credit

Which of the following is an important impact of the Sarbanes-Oxley Act:

all of the above are correct it made private equity markets more attractive compared to public markets it raised the cost of listing a stock in the U.S. relative to other stock exchanges it had a chilling effect on managers' willingness to take risks it threatens U.S, listed comapnies with more lawsuits and brings criminal liability into civil disputes

Which group is not generally protected by Title VII against discrimination in employment:

all of the above are covered by the law pregnant women Native Americans women religious groups

Which of the following is not likely to be a step in a criminal proceeding:

all of the above are normal steps in a criminal proceeding investigation prosecutor decision arraignment indictment

The possible remedies that an injured party may sue for under Title VII include:

all of the above are possible remedies back pay punitive damages reinstatement

Which of the following can be a consequence of committing a crime:

all of the above choices are correct. -being removed from public office -being disqualified from holding office -being disqualified from owning a firearm -being disqualified from voting in public elections

Which of the following is an example of a white-collar crime:

all of the above could be considered a white collar crime embezzlement bribery fraud violation of securities law

Sexual harassment does not appear to include:

all of the above may be considered sexual harassment -commenting on physical attributes -deliberate, unsolicited touching of a sexual nature -using crude or offensive language directed at a woman -discussing sexual activities

Which of the following is not considered a security under the 1933 Securities Act:

all of the choices are considered securities under the 1933 Act. a treasure stock a bond a collateral-trust certificate a certificate of deposit for a security

Negotiable instruments do not include:

all of the choices are negotiable instruments notes certificates of deposit checks promissory notes

The definition of a good, under the UCC is:

all things (including specifically manufactured things) which are movable at the time of identification to the contract for sale.

Producers of quality brand name products, such as Sony, often favor resale price maintenance because it:

allows retailers to earn higher profits encourages retailers to advertise more encourages retailers to give customers better service promotes retail competition based on service all of the above

White Collar crime does not include which of the following:

armed robbery

Article 2 provides minimum requirements that goods must satisfy to be merchantable, including that the goods must be:

b and c -reasonably fit for the purposes for which they are being sold -of fair, average, and merchantable quality

Vertical price fixing

b and c b)involves an agreement among manufacturers wholesalers, an retailers c)attempts to control the price at which a product is sold to consumers

The Clayton Act holds illegal:

b and c certain forms of price discrimination tie-in sales that create a monopoly

The two broad categories of torts are:

b and e Negligence intentional

When a party to a contract does not perform the contract as required, this is called a:

breach of contract

Price discrimination is said to occur when different:

buyers pay different prices to a seller for the same product

Under the securities law, liability for misstatements:

can be imposed for overly optimistic statements made by executives that are not soundly grounded.

Tie-in arrangements are considered to be a violation of the antitrust laws when the:

company insisting on the tie-in has monoply power

Violations of the Sherman Act can result in:

criminal convictions and prison time treble damages plus attorney fees paid by the loser an injunction ordering a defenat to stop some activities all of the above

The drive for civil rights in employment and other aspects of life became a national movement in the:

early 1960s

If money damages are inadequate to compensate for the injury caused by a breach of contract, or if they do not resolve the problem properly, other remedies can be available. These other remedies are called:

equitable remedies

A transfer of contract duties to a third party is an assignment

false

A transfer of contracts rights to a third party is a delegation.

false

If Tiger Woods' photo appears on boxes of Wheaties cereal without his permission, he does not have a suit for invasion of privacy because he is a public person.

false

If a grocery store has a sale that offers a can of peaches at half-price if you buy a can of soup at full price. That is an illegal tie-in sale.

false

If a plaintiff is comparatively negligent, the plaintiff will recover no money from the defendant.

false

In determining negligence, the law applies a reasonable-person standard which requires a person to use extraordinary care in their actions.

false

Minors never have contractual capacity.

false

The only defense in a case of negligence is that of assumption of the risk.

false

You are the goalie of a college ice hockey team. If your jaw is broken by an opponent who accidently hits your face with his stick, you may sue the opponent for assault.

false

The Clayton Act, the Sherman Act and the Federal Trade Commission Act are all examples of:

federal antitrust legislation

Someone designated to do all acts that can be legally granted to an agent is called a(n):

general agent

Which of the following is least likely to be an intentional tort:

getting smashed in the face by a baseball at a baseball game

The law of product liability is primarily concerned with:

harms suffered by buyers and other persons who use defective products

In Keith v. County of Oakland, where the County refused to hire Keith as a swimming lifeguard because he is deaf, and he sued for disability discrimination, the appeals court held that:

he was disabled and the County did not properly consider his ability to perform

Which of the following is an advantage to having the ability to use agents:

help principals expand their business activities

Article 2 of the UCC defines good faith dealings as:

honesty in fact in the conduct or transaction incurred

In Harris v. Forklift Systems, a woman sued her employer based on the conduct of her male boss. The Supreme Court held:

if a work environment becomes hostile or abusive due to sexual harassment, an employer may be liable

Insider trading is:

illegal when insiders trade based on information they have a fiduciary duty not to trade on

Under the exclusionary rule:

improperly gathered evidence may not be used at trial

in cases involving businesses, where the public enters the business as a part of doing business (like at the mall), the law presumes the property:

is safe for public admission

The SEC has the power to:

issue a stop order to prohibit the sale of securities

Which class of securities is (are) exempt from the federal securities laws?

issues by governments

There are four major types of negotiable instruments. Which of the following is not a major type?

liens

Suppose the parties to a contract that falls under the UCC fail to specify certain terms, the UCC:

may fill the gaps in those terms

A crime that is punishable by less than a year in jail and possibly fines is called a:

misdemeanor

Alicia, talking on her cell phone, foolishly runs off the road and over Eduardo's foot. The tort that Eduardo will most likely initiate is:

negligence

Which of the following torts protects individuals from harm from the unintentional but legally careless conduct of others:

negligence

In the case of Squish La Fish v. Thomco Specialty Products, involving an adhesive that did not work as hoped in product packaging, the company that bought the adhesive sued the seller for:

negligent misrepresentation

Although commercial paper may be either negotiable or nonnegitable, only _______________fall under the UCC.

negotiable instruments

Suppose two parties to a contract that is under the UCC decide to make a significant change in the contract, obligating the seller to provide more goods. This change requires:

no consideration

A felony is generally defined as a crime that:

none of the above choices are very good. -violates the "integrity of the law" -may be punished by the possibility of time in prison, not just a fine -violates a federal statute punishable by up to life in prison -is classified as a class A offense of a state or federal statute

To be a valid contract, the writing of a contract under the UCC:

none of the above necessarily applies

In the case of Palsgraf v. Long Island Railroad Co., where Palsgraf was injured when a railroad passenger dropped a package that exploded and caused equipment to fall on her, she sued the railroad for her injuries. The New York high court held the railroad:

not liable due to lack of proximate cause

Horizontal price fixing:

occurs when competitors agree to act together to set prices for their products

Fill in the blanks: The party making an Offer is called the ______________________, and the party to which the offer is made is called the ________________________.

offeror and offeree

When a buyer has agreed to purchase the total output of a seller, there is a(an):

output contract

The Age Discrimination in Employment Act holds it illegal to discriminate in employment against:

persons aged 40 and over

Title VII allows what major defenses to employment discrimination charges?

professionally developed ability tests, seniority or merit systems and BFOQ

A(n) _______________ is a note promising to repay borrowed money, probably with interest.

promissory note

When a merger between two competitor firms is challenged, a strong defense would be that the merger will:

protect a firm from bankruptcy

In an agency relationship, the principal: (choose the best answer)

provides the agent with authority

Title VII of the Civil Rights Act protects all of the following classes from employment discrimination except:

race color national origin women who are pregnant all of the above are protected

According to the UCC's statute of frauds all:

sales of goods worth more than $500 must be in writing

In the case of bankruptcy, which of the following classes of creditors have highest priority?

secured creditors

The financial future of most people is tied to securities because:

securities are the major form of investment for pension funds

Some contracts have to be in writing in order to be enforceable. This legal doctrine is called:

statute of frauds

The rule requiring producers to pay compensation to consumers injured by defective products, even though reasonable care has been exercised, is called:

strict liability

The one who receives payment from a negotiable instrument is called:

the payee

If a repossessed product is sold for more than what is owed by the debtor:

the seller is obligated to return the difference

A guarantor is basically the same as:

the surety

Which is not a necessary element of negligence?

the wrongdoer's actions were motivated by malice

An agency relationship normally involves the use of an agent to represent a principal in dealing with which of the following:

third parties

The duty of an agent not to mix personal funds with the funds of the principal is the duty:

to account

Wrongful discharge is a(n):

tort

A rule of reason analysis means that courts look at the facts surrounding an antitrust claim before determining whether competition has been helped or hindered.

true

A security is a written instrument that provides evidence of a debt or equity ownership.

true

Among the groups usually favoring resale price maintenance agreements are small retailers and producers of well-known products

true

An exculpatory agreement is usually not enforceable.

true

Debt and equity both provide sources of funds for a company

true

If a party to a contract breaches the contract, the party who suffers the breach must act in good faith to minimize the damages suffered because of the breach.

true

If both parties to a contract misunderstand a key factor in the contract, then there is no contract because of mutual mistake.

true

In the case of Todd v. Exxon, the United States Court of Appeals remanded Todd's lawsuit back to the trial court to determine if Exxon and other large oil companies could be guilty of price fixing by sharing employee salary information since that information was not made public.

true

In the case of United States v. Apple, Inc., the United States Supreme Court found that Apple violated the Sherman Act by finding that Apple's agreement to raise e-book prices was a per se unlawful price fixing conspiracy.

true

In the case of United States v. Salman, the United States Supreme Court held that Salman was guilty of violating SEC insider trading rules.

true

Promissory estoppel is a rule used by the courts to avoid an injustice from being done when one relies on promises that do not form a contract but induced action in reliance.

true

A key motive behind the Sherman Act was:

unpopularity of large business organizations

The elements of the tort of interference with prospective advantage (relationship) include:

unreasonable and improper interference with another's business and predatory behavior a and c

When liability is imposed on the principal for the unauthorized torts of an agent, it is called:

vicarious liability

When an employee reports an employer's illegal act, it is referred to as:

whistle blowing