Legal Environment of Business Final Exam

Which of the following is generally defined as a relationship between a principal and an agent?

Agency

In which of the following types of cases does a plaintiff attempt to prove that while an employer's policy or practice appears to apply to everyone equally, its actual effect is that it disproportionately limits employment opportunities for a protected class?

Disparate-impact

Death of a corporation occurs through which of the following phases?

Dissolution and liquidation

Which of the following references the right of a corporation or its shareholder to purchase any shares of stock offered for resale by a shareholder within a specified period of time?

The right of first refusal

Real property ownership includes airspace above the land, water rights flowing across or beneath the land, and ___________________.

mineral rights under the land

An agent's duty of _____ to the principal includes the agent's obligation to perform the duties as specified in the agency agreement.

performance

Administrative law consists of both substantive and _____ rules.

procedural

Land and everything permanently attached to it are known as _____ property.

real

Which of the following are debt securities?

Bonds

A limited partnership is an agreement between at least _____ general partner(s) and ______ limited partner(s).

1;1

Chocolate Chips. Molly makes great chocolate chip cookies and sells them. She calls them "Molly's Famous Chocolate Chips." Some of her friends are interested in selling her cookies. They want to use her name and identify the cookies as "Molly's Famous Chocolate Chips." Molly says, however, that she does not have enough time to bake any more cookies. She agrees, for a price, to allow her friends to use her recipe and her name. Suzette, one of Molly's friends who was selling the cookies, was not being sufficiently careful and negligently put a harmful ingredient into the cookie dough resulting in a customer, Fred, becoming ill. Fred threatens to sue both Suzette and Molly. Molly is so exasperated that she cancels all the franchise contracts on the basis of aggravation although the franchise agreements provided that so long as requirements were met, the franchise agreements were good for a period of two years, Molly took the position that the cookies involved a personal service and that she could not be held liable for discontinuation. What type of arrangement did Molly make with her friends?

A franchise that was a manufacturing arrangement

Tutoring Concerns. Wally and Sally want to go into business together and plan on offering a tutoring service to high school and college students. Wally proposes that they share control of the business and split profits equally and not bother with a written agreement. Sally, however, is concerned about being able to pay their debts because they will have to rent tutoring space and purchase computers and supplies. She is also concerned about parents and students who may sue if the students' test scores do not improve. She tells Wally that she just bought a new boat and car, and that she does not want her assets to be in jeopardy. She tells Wally that they should form a corporation to shield their personal assets. Wally, however, says their personal assets are not in danger with his proposal because they are a business and that, furthermore, forming a corporation would likely result in double taxation. What type of arrangement did Wally propose with his suggestion that they share control of the business and split profits equally?

A partnership

Which of the following is true regarding a secured party's interest in proceeds?

A secured party automatically has an interest in proceeds for a limited amount of time.

Which of the following is false regarding the employer-employee relationship?

All employees are agents, and all agents are employees.

Which chapter of the Bankruptcy Code is used to reorganize the debtor's financial affairs under the supervision of the bankruptcy court?

Chapter 11

________ is the practice of advertising with claims that mislead or could mislead a reasonable consumer.

Deceptive advertising

Which of the following are estates that do not include the right to possess the property?

Easements, profits, and licenses

Which of the following is true regarding the tort liability of employers for the actions of their employees and independent contractors?

Employers are generally liable in tort for the actions of their employees, while they are generally not liable for the actions of independent contractors.

Which of the following types of securities represent ownership in a corporation?

Equity

Assuming it was initially registered with the United States Patent and Trademark Office after 1990, how often must a trademark be renewed after its initial renewal?

Every ten years

In a limited partnership, who assumes unlimited personal liability for the debts of the partnership?

General partners

Which of the following are examples of collateral?

Goods, indispensable paper, intangibles, and proceeds

Persons who are not employees but who are hired by employers to perform certain tasks are known as:

Independent contractors

When a company employee or executive uses material inside information to make a profit, he or she is engaging in:

Insider trading

Bank accounts, stocks, and insurance policies are examples of which of the following types of property?

Intangible

_____ property consists of the fruits of one's mind.

Intellectual

Which of the following is a false statement regarding the Federal Unemployment Tax Act?

It provides a federal system to provide unemployment compensation to qualified employees who lose their jobs.

Which of the following are rules of an agency that are policy expressions having the effect of law?

Legislative

What types of powers do administrative agencies have?

Legislative, judicial, and executive

Securities which do not have to go through the registration process include:

Limited offers, intrastate issues, and resales of securities

In a limited partnership, who assumes no liability for the partnership beyond the capital they have invested?

Limited partners

The _____ interprets and enforces the National Labor Relations Act.

National Labor Relations Board

Tutoring Concerns. Wally and Sally want to go into business together and plan on offering a tutoring service to high school and college students. Wally proposes that they share control of the business and split profits equally and not bother with a written agreement. Sally, however, is concerned about being able to pay their debts since they will have to rent tutoring space and purchase computers and supplies. She is also concerned about parents and students who may sue if the students' test scores do not improve. She tells Wally that she just bought a new boat and car, and that she does not want her assets to be in jeopardy. She tells Wally that they should form a corporation to shield their personal assets. Wally, however, says their personal assets are not in danger with his proposal because they are a business and that, furthermore, forming a corporation would likely result in double taxation. Is Wally correct that with his proposal that because they share control of the business and split profits equally, they will not have any personal liability for debts?

No, he is incorrect because partners have personal liability for debt.

________ is/are responsible for running the day-to-day business of a corporation.

Officers

________ is the use of generalities and clear exaggerations.

Puffing

Under Title VII of the Civil Rights Act of 1964, a successful plaintiff may be awarded which of the following type(s) of remedies?

Punitive damages, remedial seniority, and/or compensatory damages

The bona fide occupational qualification (BFOQ) defense does not apply to which of the following types of discrimination?

Race and color

In which of the following situations would a court likely to pierce the corporate veil?

Shareholders attempt to commit fraud through a corporation.

_____ sets minimum standards for most voluntarily established pension and health plans in private industry to provide protection for individuals in those plans.

The Employee Retirement Income Security Act

Which law requires that an agency business meeting be open to the public if a collegiate body heads the agency?

The Government in Sunshine Act

________ is the agency responsible for enforcing the Federal Food, Drug, and Cosmetic Act.

The United States Food and Drug Administration

Which of the following laws govern(s) labor-management relations in the United States?

The Wagner Act, the Taft-Hartley Act, and the Landrum-Griffin Act

Which of the following is the first step in a three-step process of proving disparate-treatment discrimination in employment under Title VII of the Civil Rights Act of 1964?

The employee-plaintiff must demonstrate a prima facie case of discrimination.

Which of the following is an accurate statement regarding the applicability of various laws to the employer-employee and employer-independent contractor relationships?

The employer-employee relationship is subject to the workers' compensation, workplace safety, employment discrimination, and unemployment statutes, whereas the employer-independent contractor relationship is not.

_____ protects employees against discrimination and harassment based upon race, color, religion, national origin, and sex.

Title VII of the Civil Rights Act of 1964

What is a distinctive mark, word, design, picture, or arrangement that is used by a producer in conjunction with a product and tends to cause consumers to identify the product with the producer?

Trademark

Tutoring Concerns. Wally and Sally want to go into business together and plan on offering a tutoring service to high school and college students. Wally proposes that they share control of the business and split profits equally and not bother with a written agreement. Sally, however, is concerned about being able to pay their debts because they will have to rent tutoring space and purchase computers and supplies. She is also concerned about parents and students who may sue if the students' test scores do not improve. She tells Wally that she just bought a new boat and car, and that she does not want her assets to be in jeopardy. She tells Wally that they should form a corporation to shield their personal assets. Wally, however, says their personal assets are not in danger with his proposal because they are a business and that, furthermore, forming a corporation would likely result in double taxation. Is Wally correct that forming a corporation would likely result in double taxation?

Yes, because the corporation would be required to pay tax on its profits, and the shareholders would also be required to pay taxes on dividends.

An agent may demand _____ if the agent believes that he or she is not being properly compensated.

an accounting

When the creditor becomes a secured party with an interest in the collateral, _____ occurs.

attachment

Owners of _____________ stock own a portion of a corporation but do not enjoy any preferences.

common

The owner of a ______ possesses the same interest as the owner of a fee simple absolute, except that this interest is subject to a condition that may result in termination of the interest.

conditional estate

A(n) ______ trust is an equitable trust imposed on one who wrongfully obtains or holds legal right to property he or she should not possess.

constructive

A ________ is a franchise in which the franchisor manufactures a product and licenses a dealer to sell the product in an exclusive territory.

distributorship

A corporation is a ________ corporation in the state in which it is incorporated.

domestic

Which of the following refers to a defense that requires the defendant to demonstrate that he or she investigated the registration statement and had reasonable grounds to believe that the statement was accurate?

due diligence

The duration of one's ownership interest and the power one has over using the land depends on the type of ______ one is said to hold.

estate

In a ________ partnership, all the partners' liability for professional malpractice is limited to the partnership.

limited liability

Which of the following is a doctrine used in the context of the principal/employer-agent/employee relationship?

respondeat superior

A(n) _____ is an order to appear and bring specified documents.

subpoena duces tecum

If a corporation acts beyond its express and implied powers, the act is called a(n) _____ act.

ultra vires

Investment banking firms that purchase securities from the issuing corporation with the intent to sell them to brokerage houses are known as ________.

underwriters

The principal-employer holds _____ liability for any harm caused by the agent-employee during the time that the agent-employee is working for the principal.

vicarious

Stocks that are issued to individuals below their fair market value are called ________ stocks.

watered