Business Law Questions

Cybersquatting is legal when the person offering for sale a domain name that is the same as another's trademark intends to profit from the sale. T or F

F

Even if the defects on a piece of property are obvious, the buyer can justifiably rely on the seller's misrepresentations concerning those defects. T or F

F

File-sharing can be used to download others' stored music files without raising copyright issues. T or F

F

Forcing a party to enter into a contract under the fear of threats constitutes undue influence. T or F

F

If a party is already bound by contract to perform a certain duty, that duty can serve as consideration for a second contract. T or F

F

In a product liability suit based on a design defect, a manufacturer is liable only when the harm was not reasonably preventable. T or F

F

Intentional deceit for personal gain may be unethical but it does not give rise to liability for fraud. T or F

F

Malware is a hacker whose purpose is to create a serious negative impact. T or F

F

Most states encourage or require parties to undertake a trial before alternative dispute resolution. T or F

F

Negotiating bearer instruments requires both indorsement and delivery because the use of bearer instruments involves more risk through loss or theft. T or F

F

Online conduct gives rise to only a narrow variety of legal actions. T or F

F

The primary purpose of the Uniform Electronic Transactions Act is to create new rules for electronic contracts. T or F

F

Those who do not make goods, but only sell or lease them, cannot be held liable for harm caused by those goods to a consumer. T or F

F

To satisfy the UCC's Statute of Frauds, a writing indicating an intent to form a sales contract must be signed by both parties T or F

F

Under the Madrid Protocol, the fees and procedures for trademark registration vary significantly among individual countries. T or F

F

Under the UCC, good faith can never be disclaimed. T or F

F

Under the United Nations Convention on Contracts for the International Sale of Goods, when an acceptance to a contract includes terms additional to those in the offer, the terms automatically become part of the deal. T or F

F

When profit maximization is the goal, a company does not benefit from ethical behavior. T or F

F

When there is a direct conflict between a federal law and a state law, both laws are rendered invalid. T or F

F

A descriptive term is protected under trademark law if it acquires a secondary meaning. T or F

T

A trade acceptance is created when, as part of a deal to buy wheat from Moyo, Naruta signs a draft ordering the buyer to pay for the wheat within ninety days. T or F

T

A trade name is used to indicate all or part of a business's name. T or F

T

A wrongful action that interferes with a person's legal right to personal property can support a tort action in trespass. T or F

T

An illegal act committed by a business using nonviolent means to obtain a business advantage is a white-collar crime. T or F

T

Arbitrary and fanciful trademarks are sometimes considered to be the most distinctive trademarks. T or F

T

By supplying procedures for enforcing private agreements, contract law provides an essential condition for the existence of a market economy. T or F

T

Corporate social responsibility links the responsibility of citizenship with the strategy and key principles of a business. T or F

T

Each member country to the TRIPS agreement must include in its domestic laws broad intellectual property rights and effective remedies for violations. T or F

T

Electronic discovery can reveal significant facts that are not discoverable by other means. T or F

T

Outcome-based ethics determines what is ethical by looking at the potential benefits and harms of a given action. T or F

T

Painting a garage can constitute "something of legally sufficient value." T or F

T

Painting a garage can constitute "something of legally sufficient value." T or F

T

Persuasion that induces a person to act according to the will of a dominant party is undue influence. T or F

T

The Statute of Frauds operates as a defense to the enforcement of an oral contract for the sale of land. T or F

T

The United States Supreme Court has held that a constitutional right to privacy is implied by several of the amendments in the Bill of Rights. T or F

T

The effect of the minimum-contacts standard is that a business firm has to comply with the laws of any jurisdiction in which it targets customers. T or F

T

The legal rules that control a business's actions reflect past and current thinking about how similar businesses should and should not act. T or F

T

The need to protect intellectual property is recognized in the U.S. Constitution. T or F

T

The obligation of commercial reasonableness underlies every sales and lease contract. T or F

T

Under a state long-arm statute, a court can exercise jurisdiction over certain nonresident defendants. T or F

T

When an award of punitive damages is grossly excessive, it furthers no legitimate purpose and violates due process requirements. T or F

T

Basso includes in his song "Chords" a few seconds of Dante's copyrighted sound recording "Etudes" without permission. Some federal courts have found that such digital sampling is a. a violation of copyright law. b. a "fair use" exception to the provisions of the act. c. not a "fair use" exception to the provisions of the act. d. all

d. all

Steel Mill Inc. makes an offer to Tom to enter into a contract to work as a mechanical engineer for a certain salary for one year subject to a five-year renewal based on his performance. Tom accepts the offer. This is a valid contract because it includes a. a price and a subject. b. a duration and a termination. c. an offer and an acceptance. d. specific quality standards.

d. an offer and an acceptance

Dean solicits investors for a nonexistent business, eApps. Dean is arrested and charged with "mail fraud." This requires intent to a. claim that an item is "in the mail" when it is not. b. defraud postal authorities. c. use the U.S. mail. d. defraud the public.

d. defraud the public.

The employees of Eco Engineering Inc. share company-related resources among multiple computers without requiring a central network server. This is a. digital sampling. b. cybersquatting. c. cloud computing. d. peer-to-peer (P2P) networking.

d. peer to peer networking

Sid offers Tina, a city inspector, money to overlook health code violations in his restaurant. Tina accepts the money and overlooks the violations. Sid is charged with the crime of bribery. The crime occurred when a. Sid violated the health code. b. Sid offered the bribe. c. Tina accepted the bribe. d. Tina overlooked the violations.

b. Sid offered the bribe

Under the principle of rights theory, a key factor in determining whether a business decision is ethical is how that decision a. compares to religious principles. b. affects the rights of others. c. causes consequences that would follow if everyone acted the same way. d. supports the right to make a profit.

b. affect the rights of others

Sam, driving under the influence, causes a car accident that results in the death of Tanya. Sam is arrested and charged with a crime punishable by imprisonment for more than a year. This crime is a. misdemeanor b. felony c. civil wrong d. a tort

b. felony

Ethics has to do with how a businessperson making business decisions applies a. legal doctrine d. moral principles c. corporate policy d. financial priorities

b. moral principles

Speedy Auto Parts orders two gross of tires from Tough Tread, Inc. Ten tires are delivered in a damaged condition. Speedy a. cannot reject the entire shipment. b. must pay for all of the tires at the contract price. c. may accept the shipment with a reduction in price. d. must reject the entire shipment.

c. may accept the shipment with a reduction in price.

A contract in which a party assumes a secondary obligation must be in writing to be enforceable. T or F

T

A court usually will enforce a covenant not to compete provided its restrictions are reasonable. T or F

T

An Internet service provider can disclose personal information about its customers only when ordered to do so by a court. T or F

T

Congress enacted the Sarbanes-Oxley Act to help reduce unethical management decisions. T or F

T

Controlling precedents are binding authorities. T or F

T

Corporate "citizenship" involves making decisions beyond just maximizing profits and dividends. T or F

T

Federal guidelines allow a company to disclose material information about itself through social media as long as investors are notified in advance. T or F

T

Foreseeability is the test for proximate cause. T or F

T

If one party to a contract has fully performed but the other has not, the contract is executory. T or F

T

Many states require the sender of an e-mail ad to tell recipients how to opt out of receiving future e-mail ads from the sender. T or F

T

Berry Good LLC registers its trademark with the U.S. Patent and Trademark Office, and uses it to market a distinctive line of ice cream products. Crabapple Inc. uses the mark without Berry's consent to sell imitation frozen desserts. Berry has a cause of action against a. crabapple b. the U.S. Patent and Trademark Office. c. consumers who buy Crabapple's desserts. d. all of the choices

a. Crabapple

Renee, a minor, enters into a contract to buy two all-season passes from Ski Mountain Resort. The contract will be made enforceable if Renee a. ratifies it b. disaffirms it c. nullifies it d. voids it

a. ratifies it

Ordinarily, one can agree to a bargain without knowing that it exists. T or F

F

State law may protect individuals from having to disclose their social media passwords to potential employers. T or F

F

The UCC provides that a sale or lease contract will fail for indefiniteness if more than one of its terms is left open. T or F

F

The Uniform Commercial Code requires parties to form sales and lease contracts with the same formality used in forming other types of contracts. T or F

F

The first element of proving fraud is to show that the innocent party is not easily fooled. T or F

F

The products involved in a trademark dilution suit must be similar. T or F

F

A precedent is any legal authority or source of law that a court may look to for guidance but need not follow when making its decision. T or F

False

Duane and Evan orally agree to a transfer of forty acres of farmland. Evan asks Finance Bank to lend him the funds to buy the land. Under the Statute of Frauds, the agreement between Duane and Evan is enforceable by a. Duane or Evan. b. Duane, Evan, or Finance Bank. c. Finance Bank. d. none

D. none

A contract clause that releases an employer from liability for any injury to an employee, no matter who is at fault, is generally enforceable. T or F

F

A contract involving property of any kind must be in writing to be enforceable. T or F

F

A contract must be in writing to be enforceable if its performance is not likely within a year of its formation, even if that performance is possible. F or T

F

A default judgment is a judgment entered by a court against neither party to a case. T or F

F

A federal statute applies only to those states that agree to apply it within their borders. T or F

F

A person can sign an instrument as an authorized agent of the drawer, but the instrument is not negotiable unless the drawer also signs it. T or F

F

A social media post is not subject to discovery in litigation. T or F

F

After a patent is issued, there is a nine-month limit before it can be challenged. T or F

F

An offer that can be accepted simply by a promise to perform does not create a binding contract. T or F

F

Reese contracts to sell her Spicy Pizza restaurant to Titian. As part of the deal, Reese agrees not to open a competing business within a hundred-mile radius for ten years. Reese later sues Titian, alleging that the agreement is illegal. To enforce the covenant not to compete, the court will most likely a. award damages for Reese's complete compliance with the terms. b. reform the contract to make the distance and time limits reasonable. c. rescind the contract and require restitution. d. order specific performance.

b. reform the contract to make the distance and time limits reasonable.

Predictive Data LLC makes and sells software that enables a business to target its advertising precisely. The company could successfully bring an action for copyright infringement against a competitor who copies a. the screen displays of the software. b. the parts of the software that can be read by humans. c. the menus of the software. d.any of the choices.

b. the parts of the software that can be read by humans

Bob devises a scheme to send fraudulent e-mailed ads—claiming that an arrest warrant has been issued for non-payment of taxes—to individual taxpayers. By these false pretenses, Bob intends to obtain money and personal data. This is a. robbery b. wire fraud c. larceny d. no crime

b. wire fraud

Erma enters into a contract to buy a tract of lakefront property from Forest Acres to build and sell a residential development. Forest Acres fails to close the sale. Erma's remedy is most likely a. the amount that Erma invested in the project to the date of the closing. b. nothing—Forest Acres still owns the land. c. the difference between the contract and market prices of the land. d. specific performance.

d. specific performance.

Cultivator Inc. designs and makes tractors, balers, and other farm equipment. In a product liability suit based on negligence, Cultivator could be liable for failing to exercise due care with respect to all of the following except a. the inspection of components purchased to use in the equipment. b. the selection of materials used to make the equipment. c. the assembly and testing of the equipment. d. the growth of the equipment's sales.

d. the growth of the equipment's sales.

Because courts of law and equity have merged, the principles of equity are no longer applied. T or F

F

Courts normally do not enforce the terms of click-on agreements. T or F

F

Martin files a suit against Nichelle in a state court over an employment contract. The case proceeds to trial, after which the court renders a verdict. The case is appealed to the state's highest court. After that court's review of Martin v. Nichelle, a party can appeal the decision to the United States Supreme Court if a. a federal question is involved. b. a state question is unresolved. c. the party is unsatisfied with the result. d. the state trial and appellate court rulings are different.

a. a federal question is involved

O-Ring Corporation allows Piston Company to incorporate O-Ring's patented fuel-injection system into Piston's product. This is a. a license. b. copyright infringement. c. trademark infringement. d. patent infringement.

a. a license

Insulate Inc. makes and sells fire-retardant building materials. In a product liability suit against Insulate, a court would use a risk-utility analysis of the company's product as designed to determine whether a. a risk of harm outweighs the products' utility to the users and the public b. the product performed as a consumer would reasonably expect. c. the product is as useful and as risky as the public expects. d. the risk of return on investment in the product supports its utility.

a. a risk of harm outweighs the products' utility to the users and the public

Employees of Bodega Inc. maintain a password-protected social media page to "vent about work." Bodega learns of the page and intimidates the network that operates it into revealing the password. After reviewing the posts, Bodega fires the participants. Most likely, this is a. a violation of the Stored Communications Act. b. within the employer's rights. c. a subject for dispute resolution by the network. d. a "business-extension exception" under the Electronic Communications Privacy Act.

a. a violation of the Stored Communications Act

Talk, Inc., offers to buy from Ultra Corporation 1,000 phones with certain features. Without notifying Talk, Ultra timely ships phones with fewer features. With respect to the offer, this shipment is an acceptance and a. breach b. accommodation c. complete performance d. a counteroffer

a. breach

Bottling Company enters into a contract with Chug's Brewery to provide certain bottling and delivery services. Before Bottling starts to work, the market price rises for the fuel for glass ovens. Bottling tells Chug's that due to the added cost it will not perform their deal. Bottling's contractual obligation to Chug's is a. breached. b. discharged c. rescinded. d. suspended

a. breached.

In a suit by Citizens Conservation Organization (CCO) against Deep Mining Inc., CCO serves a written request for the defendant to admit the truth of matters relating to the trial. Deep Mining's admission in response a. conclusively establishes the matter for trial. b. completely absolves the defendant of the issue in question. c. is the basis for a default judgment in the plaintiff's favor. d. irrelevant

a. conclusively establishes the matter for trial

Without the permission of the copyright owner, Faye copies the literary expression of Game of Thrones, changes the names of the main characters, and publishes the result as her own work. This is a. copyright infringement. b. a "fair use." c. a legitimate creative act. d. none of the choices.

a. copyright infringement

Coal Mine Company buys an excavator from Dig Equipment Inc. Coal Mine is unaware that Equity Credit Company holds a lien against the excavator. If Equity repossesses the goods, Coal Mine can recover for breach of warranty from a. dig b. none c. maker d. equity

a. dig

Martin files a suit against Nichelle in a state court over an employment contract. The case proceeds to trial, after which the court renders a verdict. The case is appealed to the state's highest court. After that court's review of Martin v. Nichelle, a party can appeal the decision to the United States Supreme Court if a. federal question is involved b. state question is involved c. the party is unsatisfied with the result d. the state trial and appellate court rulings are different

a. federal question is involved

Payback Inc. discovers that defamatory statements about its policies are being posted in an online forum. Q Web Inc., the Internet service provider whose users are posting the messages, refuses to reveal the users' identities. To obtain those identities, Payback should initially a. file a suit against the anonymous users. b. gain unauthorized access to Q Web's servers. c. file a suit against Q Web. d. ask the U.S. Department of Justice to issue a subpoena.

a. file a suit against the anonymous users

Dash convinces Esmé to enter into a contract for the purchase of a Falafel Waffle Food Cart by knowingly misrepresenting a number of material features about the facility and the business. Most likely, Esmé can rescind the contract on the basis of a. fraudulent misrepresentation. b. undue influence. c. mistake d. none of the choices.

a. fraudulent misrepresentation

Dex sells a motorcycle to Elton without disclosing that the odometer, which reads 10,000 miles, was disconnected 100,000 miles ago. Dex is most likely liable for a. fraudulent misrepresentation b. none of the choices c. undue influence d. puffery

a. fraudulent misrepresentation

Business Center Inc. and Catering LLC enter into a contract. Later, they agree to rescind it and enter into a new contract. If the first contract was subject to a preexisting duty, the new contract will most likely be a. invalid b. enforcable c. valid d. voidable

a. invalid

Riley commits an act via e-mail against State Bank, a business in Texas, where the act is a cyber crime. Riley resides in Utah where the act is not a crime. Prosecution of Riley in Texas involves questions of a. jurisdiction. b. "maximum contacts." c. the immunity of Internet service providers. d. encryption.

a. jurisdiction

Mobile Device Company (MDC) discovers that defamatory statements about its products are being posted in an online forum. NuView Inc., the Internet service provider whose users are posting the messages, can disclose their identity a. only when ordered to do so by a court. b. whenever and however the provider chooses. c.only in egregious circumstances. d. in no circumstances.

a. only when ordered to do so by a court

Serena invents a new, unique, long-life battery. A grant from the government that gives Serena the exclusive right to make and sell the battery for a certain period of time is a. a patent. b. trademark c. copyright d. a trade secret.

a. patent

Reed agrees to sell his Sports Equipment store to Taylor. As part of the sale, Reed promises not to open a similar, competing store anywhere. This promise is most likely a. invalid because it is part of a sale of an ongoing business b. invalid because of the unreasonable terms of area and time c. valid because it is part of a sale of an ongoing business d. valid if both parties are justifiably ignorant of the facts

b. invalid because of the unreasonable terms of area and time

Minerals Ltd. contracts to provide several manufacturers with tin. When a cartel of tin-producing countries suddenly embargoes future shipments of tin to Minerals so that it cannot fulfill its contracts, the distributor a. can substitute some other material for the tin. b. is excused from the performance of its contracts. c. is liable for breach of contract. d. must obtain tin in any way to meet the needs of its customers.

b. is excused from the performance of its contracts.

Volatile Investments Inc. sends e-mail ads to any e-mail address that the sender can find on the Web or otherwise generate. Under federal law, Volatile's marketing method a.may be permitted. b. is prohibited. c. must be reviewed by a federal agency. d. is preempted.

b. is prohibited

Duke signs a note "payable to the order of Equity Bank." Unless Duke has a valid defense against payment, his liability on this note is a. impaired. b. primary c. secondary. d. qualified.

b. primary

At Mattress Store, Nate signs a contract to buy bedroom furniture. The contract sets a schedule of $500 monthly payments, subject to a late fee of 15 percent. Nate finds the language of the contract difficult to understand. This is most likely a. an exculpatory contract. b. procedural unconscionability. c. substantive unconscionability. d. an enforceable contract.

b. procedural unconscionability

Ben makes an appointment for a $50 haircut, buys a bike for $250, and agrees to work for Coding Associates for one year for $5,000 per month, starting at the beginning of next month. To be enforceable, a writing is required for a. the appointment. b. the purchase. c. the employment agreement. d. none

b. purchase

Domestic Gas Company offers to sell Energy Ltd. a certain quantity of liquefied natural gas. If Energy sends an acceptance via Domestic's authorized mode of communication, it will be effective when it is a. in transit b. received c. sent d. written

b. received

United Inc., a U.S. film production company, files a suit against Video Ltd., a Mexican production firm, for infringement of intellectual property rights under Mexico's national laws. Both the U.S. and Mexico are signatories of the TRIPS agreement, under which United is entitled to a. more protection under Mexican law than Video b. the same rights and protection under Mexican law as Video. c. fewer rights under Mexican law than Video d. none

b. the same rights and protection under Mexican law as Video.

Jan tells Lee she will pay him to babysit her son Mark weekday evenings for six months. Lee agrees. Jan and Lee have formed a. bilateral contract b. a unilateral contract c. void contract d. unenforceable contract

bilateral contract

Soto contracts to buy an oven from Restaurant Appliances Inc. for $5,000, but the seller fails to deliver. Soto buys a similar oven from another dealer for $6,500. Soto's measure of damages is a. $5,000. b. $1,500. c. $1,500, plus any additional expense to obtain the oven. d. $6,500

c. $1,500, plus any additional expense to obtain the oven.

Burger Corporation allows its trademark to be used as part of a domain name for Burger NY Inc., an unaffiliated company. Burger NY does not obtain ownership rights in the mark. This is a. trademark infringement. b. fair use. c. a license. d. trademark dilution.

c. a license

Galaxy Research Inc. uses a mark associated with its name to distinguish its services from those of other tech firms. This mark is a. none b. a trade secret. c. a service mark. d. a trade name.

c. a service mark

Steel Mill Inc. makes an offer to Tom to enter into a contract to work as a mechanical engineer for a certain salary for one year subject to a five-year renewal based on his performance. Tom accepts the offer. This is a valid contract because it includes a. price and subject b. duration and termination c. an offer and an acceptance d. specific quality standards

c. an offer and an acceptance

ConnectWeb, Inc., operates a subscription-based service that extends the software and storage capabilities of its subscribers. This is a. dilution b. peer-to-peer (P2P) networking. c. cloud computing. d. a distributed network.

c. cloud computing

Home Products, Inc., warrants its goods to be free of defects. Ian issues an instrument to Home Products for the purchase of a thermos that leaks. With respect to payment on the instrument, Ian a. is liable only to a subsequent holder of the instrument. b. has a universal defense against it. c. has a personal defense against it. d. cannot avoid it.

c. has a personal defense against it.

Rosa, who operates a Street Tacos restaurant in her apartment, is charged with criminal violations of the local health and building codes, state license regulations, and federal environmental statutes. To obtain a conviction, the prosecution must a. convince the court it is more likely than not that the charges are true. b. show the evidence as reasonably permitting a guilty verdict. c. prove beyond a reasonable doubt that Rosa committed every essential element of an offense. d. persuade three-fourths of the jurors to agree on a guilty verdict.

c. prove beyond a reasonable doubt that Rosa committed every essential element of an offense

Caryn is faced with making a business decision. As she thinks about the problem, she feels that there is no easy answer. She continues to think about what is making her uncomfortable about the situation before brainstorming possible solutions. If Caryn is using the IDDR approach to decision making, she is engaged in a. the discussion step b. the decision step c. the inquiry step d. the review step

c. the inquiry step

Sound Financials Corporation sends daily e-mail ads to its previous customers and those who have opted to receive the notices. The state in which the company is physically located has enacted an antispam law. Under federal law a. the application of federal law to Sound's ads is preempted. b. Sound's ads are required to be reviewed by a federal agency. c. Sound's ads are prohibited. d. the application of the state's law to Sound's ads is preempted.

d. the application of the state's law to Sound's ads is preempted.

Omar asserts that a deal he entered into with Pat to sponsor and host a motivational conference for independent sales representatives was formed as the result of a mistake. Omar's best defense to the enforcement of this contract is a. desire to not preform b. insufficient capital c. preliminary indications of unsatisfactory results d. the lack of a party's voluntary consent

d. the lack of a party's voluntary consent

Big Dig LLC makes an offer to perform an excavation and related tasks for Commercial Development Corporation, but due to a substantial mathematical mistake, significantly underprices the work. Commercial accepts the offer. Data Big's best defense against enforcement of the contract is that Commercial knew a. a bilateral mistake supports the cancellation of a contract. b. a mistake of value supports the cancellation of a contract. c. a unilateral mistake supports the cancellation of a contract. d. the price was below the prices of comparable services.

d. the price was below the prices of comparable services.

Gusher Irrigation Inc. and Heartland Farm enter into a contract for a sale of irrigation equipment for $50,000. To be enforceable, the contract should be in writing and identify a. the source of payment. b. the price. c. the terms of payment. d. the quantity.

d. the quantity

Federal regulations concerning medical devices directly conflict with a certain state law. Under the U.S. Constitution, which law takes precedence is determined by a. the equal protection clause. b. the commerce clause. c. the due process clause. d. the supremacy clause.

d. the supremacy clause.

Nina is induced by her guardian Ollie to sign a contract to invest funds in Penny Stocks Inc. through Ollie's investment firm. Unknown to Nina, Ollie realizes a commission from the investment. Most likely, Nina may rescind the contract on the basis of a. duress b. fraud c. none of the choices d. undue influence

d. undue influence

A lease between Mia and Niles for residential property contains an exculpatory clause. This clause is most likely a. enforceable as a matter of public policy b. enforceable if either party is in a business important to the public c. enforceable if an event occurs to which the clause applies d. unenforceable

d. unenforceable

Fresh Agro Inc. offers to deliver produce to Growers' Market for a certain price. Fresh's intent to extend an offer is determined by reference to Fresh's a. market assumptions b. all of the choices c. subjective, unexpressed intentions d. words and actions

d. words and actions