LEGAL AND SOCIAL ENVIRONMENT OF BUSINESS FINAL
What was the court's ruling in the Goodrich Corp. v. Town of Middlebury case?
The district court must give "some deference" to the special master's findings but not be bound by them.
Which of the following is not covered under the Resource Conservation and Recovery Act (RCRA)?
Toxic Chemical Compounds.
What is the first assessment conducted by an environmental services consulting firm hired by a buyer in a real estate purchase that helps shield the buyer from Superfund liability?
Transaction screen
An S corporation
has the ability to distribute earnings without double taxation
Which of the following sentences best describes the term "quorum" as it relates to the election of a corporation's board of directors?
the minimum number of shareholders that must be present to hold a vote
The managers of a limited liability company (LLC) owe the fiduciary duties of care and loyalty to the LLC's other members.
true
Which of the following disputes could be filed with the World International Property Organization (WIPO)?
A patent dispute between a resident of Italy and a company in the Unites States
_____ requires the government to prove that a defendant's actions objectively satisfied the elements of a particular offense.
Actus reus
Which of the following is true of the different categories of patents?
All patents must meet the novelty standard to be protected.
The five members of the Securities and Exchange Commission (SEC) are called
COMMISSIONERS
_______ consists of a body of law which, for purposes of preventing harm to society, defines what conduct constitutes criminal behavior.
Criminal law
Which warranty may be created through advertising?
Express warranty.
A primary market is one in which investors buy and sell issued securities among themselves.
FALSE
When a borrower pledges collateral in order to obtain a loan, the lender is known as an unsecured creditor.
FALSE
Mediation and conciliation are growing in popularity as international dispute resolution procedures. Both involve an adjudicative process, always without the involvement of a neutral third party.
False both involve a consensual process., often with the involvment of a third party neutral.
Which of the following are not rules used by courts for determining whether literal patent infringement has taken place? I. Exclusion II. Exactness III. Addition IV. Attention
I. Exclusion IV. Attention
Which of the following is the last step in the Administrative Procedure Act's (APA's) rulemaking process?
Individual parties may challenge the rule in court under certain circumstances.
The judicial branch of the United Nations charged with settling legal disputes submitted by members is the:
International Court of Justice.
Which of the following is a function of the administrative agency known as the Federal Communications Commission?
Licensing television and radio stations.
Which of the following statements is the best example of puffery in advertising, assuming that the product fails to meet the claims specified?
Our desserts, made of the richest cocoa, will make you want more.
Which of the following is included as a consumer protection under Regulation Z?
Requires a uniform method for disclosing APR and the finance charge on loan documents.
The standards for internal governance rules of a corporation are set out in the __________________, a model law that has been adopted by more than half of the states.
Revised Model Business Corporation Act
Which consumer protection applies to loan documents regulated under Truth in Lending Act (TILA)?
Right to cancel the loan contract within 3 business days.
Once the EPA has determined the principally responsible parties, it begins to negotiate a settlement for the cleanup of a site. If the negotiations fail, the EPA files a _____________ to collect cleanup costs from responsible parties.
Superfund lawsuit
Which of the following statements accurately describes a feature of the U.N. Convention on Contracts for the International Sale of Goods (CISG)?
The CISG specifically provides that contracts are not subject to requirements as to format.
A limited liability company (LLC) is formed by filing _____ with the state public filing official in the secretary of state's corporation bureau.
articles of organization
In a criminal case, the government must prove its case ________________.
beyond a reasonable doubt
Modern day antitrust enforcement is primarily concerned with protecting the _______, rather than protecting individual competitor companies.
competitive process
If criminal actions were committed for some _______, courts have held that corporations and their managers can be convicted of the crime.
corporate benefit
The most common form of unsecured credit is a ______.
credit card
Oversight and management of a corporation's general course of direction is the responsibility of its ________.
directors
Which of the following is not included in the revised LLC statute (RULLCA)?
establishes a mandated structure for the LLCs management
Antitrust laws provide for government enforcement of antitrust statutes, but do not permit an aggrieved party to file a private enforcement action against an alleged antitrust violator.
false
Discovery of protected information through independent research or reverse engineering is misappropriation.
false
One of the primary weaknesses of a limited liability company (LLC) is that it fails to provide its members flexibility in terms of the rights and responsibilities of each member.
false
Under the rule of omission, infringement occurs even when the alleged infringing invention lacks an essential element of the patent holder's claims in the patent application.
false
Laws that provide patent protection to inventors are found in _____________.
federal statutes
Agreeing to provide the same level of protection to _____ copyright owners as they provide to their own citizens is a key component of signing the treaty on international protection of copyrights.
foreign
A _____ agrees to be responsible for a debt, but only if the debtor actually defaults.
guarantor
A company goes "public" through the use of a(n) _____________, when it sells its voting common shares for the first time to outside investors.
initial public offering
A court is most likely to pierce the corporate veil when the
liability claim involves some sort of tort by the corporations employees.
Those that have an ownership interest as principals in an LLC are called ___________.
members
Which of the following is true of dissociation in a limited liability company (LLC)?
the remaining members have a choice to continue or trigger dissolution.
Which of the following is one of the rights of the landlord in a landlord-tenant agreement?
A landlord may begin the process of evicting a tenant by first filing a lawsuit of eviction in a local court.
Secured creditors require ______ (property, assets, or land) to secure the debt of a borrower.
An attorney representing a medical practice sending a letter to a patient to collect a debt.
Which of the following is protected under the Copyright Act?
Choreographic works
The National Environmental Policy Act (NEPA) classification that is appropriate for actions that may have a significant environmental impact is:
Environmental Impact Statement (EIS).
Federal environmental laws are primarily administered, implemented, and enforced by the _____________.
Environmental Protection Agency
Understanding Warranties A warranty is a seller's promise to a buyer regarding the quality and/or functionality of a particular product. Warranties may be given expressly or they may be required by law (UCC implied warranties). Warranty statutes also typically allow sellers to disclaim both express and implied warranties, so long as the disclaimer is done conspicuously and plainly.
Express warranty: must be an actual promise and not puffery Implied Warranty (Merchantability): applies to all sales from merchant to buyer Disclaimer: accomplished through use of the phrase "as is" Implied Warranty (fitness): buyer relies on sellers advice and expertise
Only those who trade on insider information for their own benefit are guilty of a criminal violation involving that insider information.
FALSE
The Sarbanes-Oxley (SOX) Act is federal legislation intended to protect publicly held companies from frivolous litigation. The Act makes it more difficult to pursue litigation under the securities laws that is based solely on commentary by company executives.
FALSE
Which of the following are NOT considered equity instruments? I. Bonds. II. Common stock. III. Preferred stock. IV. Promissory notes.
I. Bonds. IV. Promissory notes.
Which of the following are considered fundamental tenant rights? I. Possession. II. Quiet enjoyment. III. Habitability. IV. Access and occupancy.
I. Possession. II. Quiet enjoyment. III. Habitability.
Which of the following are secured creditors? I. Credit card companies. II. Mortgagees. III. Mortgagors. IV. Bank with interest in a business's inventory.
II. Mortgagees. IV. Bank with interest in a business's inventory.
Which of the following statements is true of international arbitration?
International arbitration usually has no connection with the country in which the arbitration is being held.
3. Chapter 24 Fundamentals of Patent Law Fundamentals of Patent Law Patents are a form of intellectual property protection affording inventors an exclusive legal right to make, use, license, or sell their invention for a limited period of time. However, not all inventions are eligible for patent protection. The invention/process must meet certain criteria set out in federal statutes in order to obtain protection. A fundamental understanding of patent law helps business owners and managers to limit the company's risk because both the enforcement of a patent and infringement of the patent may have severe consequences for the patent holder and infringer.
Novelty: Three prong test Nonobviousness: Minimal improvements not eligible for patent Subject Matter: Laws of nature and abstract ideas
1. Chapter 22 White-Collar Crime White-Collar Crime One way that the government regulates business practices is through criminal laws. White-collar crimes are typically thought of as committed by business principals, entities, or employees in the course of their employment or occupational duties. These crimes are typically set out in state and federal statutes and include fraud, bribery, theft, insider trading, obstruction of justice, and conspiracy.
RICO: Includes forfeiture laws Conspiracy: Agreeing to commit crime Fraud: Profit through deceit Ponzi scheme: Fake investment plot Insider Trading: Manipulating stock Foreign Corrupt Practices Act: Payoff foreign govt. Obstruction of justice: Cover up of wrongdoing Bribery: Payoff local official
According to the landlord-tenant agreement, Ray's monthly rent includes his electricity and water bills. Daniel, the landlord, failed to pay the bills for almost four months and, as a result, the supply of water and electricity has been stopped in Ray's apartment. Ray reminded his landlord to pay the bills several times. In this case, which of the following is true?
Ray's right to habitability has been violated.
Which environmental law is intended to regulate active and future facilities that produce solid waste and/or hazardous materials?
Resource Conservation and Recovery Act
Which of the following laws provides a remedy against those that attempt to monopolize an industry?
Sherman Act
The partnership agreement typically establishes a limited liability partnership's (LLP) management and operational structure.
TRUE
An involuntary bankruptcy petition is filed
against a debtor by three or more creditors with aggregate unsecured claims of at least $11,625.
The centerpiece of the Foreign Corrupt Practices Act (FCPA) is its __________ provision.
antibribery
Which international legal systems use written law as their highest source of law?
civil law systems
Eminent domain is traditionally invoked using a(n) _____.
condemnation proceeding Explanation Eminent domain is traditionally invoked using a condemnation proceeding. Once a government has decided that certain real estate is necessary for public use, the government typically begins to negotiate sales agreements with the private property owners of the area(s) to be taken.
The original works of authors are protected by _______ statutes.
copyright
_____ consists of a body of law that, for the purposes of preventing harm to society, declares what conduct is unlawful and prescribes the punishment to be imposed for such conduct.
criminal law
If a copyrighted work is used for a commercial or profitable purpose, the unauthorized user cannot assert that the work was used under the fair use defense.
false
If a seller makes no specific representation about a product, the buyer may not be protected by an express or implied warranty.
false
In a civil case, the plaintiff needs to prove beyond a reasonable doubt that the defendant committed a civil wrong.
false
While acquiring rights for trademark protection, a mark holder may use the symbol TM to indicate that the
holder considers the mark distinctive enough even though it is not yet registered with the USPTO.
The U.S. Supreme Court has recognized that the president has _____ power over administrative agencies by virtue of the Appointments Clause of the Constitution.
inherent
The principals in an LLC are referred to as ___________.
members
When extending a loan to a small or mid-sized business, a(n) __________ from the principals is typically required by the creditor to help secure the loan.
personal guaranty
Eva is one of the directors of Purple-On Corp. Tim works as a reporting officer in the corporation. In which of the following situations will a court most likely find Eva to have breached her duty of care?
she suspects his intentions and still allows him to make reporting decisions
Corporations are created under the authority of __________.
state statutes
The Clean Air Act improves outdoor air quality. The law focuses on pollution from both __________ sources and __________ sources.
stationary; mobile
The most extreme form of bankruptcy is ___________, primarily because the debtor is required to liquidate all of their property in order to pay creditors.
Chapter 7
The ________ insulates directors from breach of fiduciary duty liability, so long as they acted in good faith and followed a reasoned decision-making process.
business judgement rule
Which of the following breaches a director's duty of loyalty?
conflict between personal interests and corporate interests.
Which of the following are defenses to Superfund PRP liability? I. Prospective purchaser under the Small Business Liability Relief Act. II. Secured creditor. III. Owned parcel more than 50 years ago. IV. Innocent landowner.
I. Prospective purchaser under the Small Business Liability Relief Act. II. Secured creditor. IV. Innocent landowner.
Which of the following statements is true of a limited liability company (LLC)?
In a member managed LLC, it is similar to a partnership.
Which of the following is true of a property sublease?
In a sublease, a tenant transfers her interests to a subleasee for a term that is less than the remaining term of the original lease.
When the distinctive quality of a particular mark is identified with goods that are not alike, there is a strong indication of ________________.
dilution
Members of an LLC who wish to withdraw from participation and liability of an LLC have the right of ___________.
disassociation
Sellers have the option to ______ implied and express warranties, so long as they do so in a conspicuous writing.
disclaim
_____ occurs when an individual member of a limited liability company (LLC) decides to exercise the right to withdraw from the partnership.
dissassociation
When a corporation is converted from privately held to publicly held, it is likely to have done so by
engaging in an initial public offering (ipo)
A merchant that regularly engages in extending credit terms to its customers is not considered a creditor and the transaction is not a consumer credit transaction.
false
According to the patentable subject matter standard, materials common to nature, such as penicillin, are patentable.
false
Fines and penalties are fixed under the Clean Water Act and the Oil Pollution Act if an oil spill occurs. A company is not subject to increased fines or penalties even if found reckless.
false
In a trademark infringement claim, it is not necessary to provide evidence of consumer confusion in order for the mark holder to prevent another from using the holder's mark.
false
In the case of unsecured debts, a creditor is allowed to use a judicially created procedure to seize a borrower's primary residence.
false
Personal property must be tangible but need not be movable.
false
Punishment as an underlying tenet to criminal law is based on the concept that punishment, not rehabilitation, is an effective part of the criminal justice system.
false
The Foreign Corrupt Practices Act was created to prevent foreign officials from bribing U.S. companies or officials.
false
The law tends to offer more protection to commercial tenants than to residential tenants.
false
Violators of antitrust laws are subject to civil penalties, not to criminal penalties.
false
When a jury finds a defendant guilty of a criminal offense, it is called an acquittal.
false
When real estate is used as collateral for a debt, the rules of Article 9 of the Uniform Commercial Code (UCC) govern the transaction.
false
Without a warrant, government agents use a telephoto lens to take overhead photographs of a fenced-in plant from a public bridge. They observe evidence of possible criminal activity. The evidence ________________.
fits the plain view doctrine
An important aspect of being a signatory country to the international treaty for protection of copyrights is an agreement to provide the same level of protection to _____ copyright owners as they provide to their own citizens.
foreign
A trademark is a word, symbol, or phrase used to ______ a particular seller's products and distinguish them from other products.
identify
The U.S. Supreme Court defines __________ as the willful acquisition or maintenance of power in a relevant market as opposed to growth as a consequence of superior product, business acumen, or historical accident.
monopolization
The willful acquisition or maintenance of power in a relevant market, as opposed to growth as a consequence of superior product, business acumen, or historical accident is the definition of __________.
monopolization
LLCs are not taxed at the entity level, but principals pay tax on any distribution by the LLC. This is called ___________.
pass through taxation
Some principals find that an LLC is an attractive form of entity because of its _______.
pass through taxation
A secured creditor must ______ their security interest in the collateral in order to be fully protected under UCC Article 9.
perfect
For small and mid-sized business ventures, a creditor will typically require a(n) ___________ from the principals of the business in order to help secure a business loan.
personal guaranty
Once a suspect has been charged with a criminal violation, the prosecutor may decide to prosecute the defendant on that original charge. The next step in the criminal justice process is the defendant's right to a(n) _____.
preliminary adjudication During a criminal investigation, the suspect, once charged, is referred to as the defendant and is formally read the charges by a magistrate. The prosecutor decides whether to (1) proceed with prosecuting the defendant on the original charge, (2) amend the charges as necessary, or (3) drop the charges altogether due to lack of evidence. If the prosecutor elects to proceed with the charges, the defendant is entitled to a preliminary adjudication.
Securities transactions occur in two settings. One is the original and reissuance of securities by a business to raise capital also known as the ____ market.
primary
The most common category of corporation is a __________ corporation.
privately held
After the prosecutor presents evidence during a preliminary adjudication, the decision maker determines whether ______ exists to hold the defendant over for trial.
probable cause
Which of the following bankruptcy plans is limited to individuals who have a substantial debt, and it cannot be used to cover any business debt (even as a sole proprietor)?
repayment plan
Rulemaking, an important function of an administrative agency, involves all of the following except that
rulemaking is a simple process set forth in each agency's enabling statute.
_____ of a corporation have the power to elect and remove directors at their annual meetings.
shareholders
Suppose that a landlord leases a refrigerated warehouse to Cold Storage for a period of 10 years. After two years, Cold Storage leases 50 percent of the warehouse to Polar Industries for a period of one year. The agreement between Cold Storage and Polar Industries is a(n) ________________.
sublease
Although both common stockholders and preferred stockholders share in the profits, common stockholders are _____ to preferred stockholders.
subordinate
Intellectual property (such as patents and trademarks) and ____ property (such as real estate or goods) are the two categories of the law of property.
tangible
The law of property recognizes two distinct categories: intellectual property (such as patents and trademarks), and____ property (such as real estate or goods).
tangible
The two distinct categories that are recognized as forms of legal property are: intellectual (such as patents and trademarks), and ____ (such as real estate or goods).
tangible
The business judgment rule provides corporate officers and directors protection when
they set up a committee to establish a procedure for making decisions that are in the best interests of the corporation
The legal term for ownership rights in property is _______.
title
When a hazardous substance spill occurs, the Environmental Protection Agency (EPA) and the principally responsible party (PRP) begin negotiations regarding liability and cleanup. If the negotiations result in a settlement being reached before cleanup efforts begin or are complete, the EPA and PRP will
to prevent punish and deter
The three primary sources of international law are
treaties, customs, and judicial decisions.
All federal statutes create liability for owners of contaminated property, but only if the owners have contributed in some way to the contamination.
true
Before shareholders of a corporation can file a derivative action lawsuit, they must first make a formal demand on the board of directors to take corrective action and must allow sufficient time for correction.
true
Corporations are created through a state law filing, and their formation is governed by state statutes.
true
Courts are reluctant to allow fair use as a defense if a copyright holder demonstrates that the value of a copyrighted work will be diminished by allowing its use.
true
Local zoning ordinances are generally designed to prevent nuisance by segmenting a municipality into zones—industrial, residential, and so forth.
true
Properties owned by individuals for business purposes are not eligible for relief under the Mortgage Forgiveness Debt Relief Act.
true
The parties to an international dispute are typically corporations or government entities, while domestic dispute resolution can involve relatively small claims by individuals.
true
The term "property" in a legal sense is defined broadly as a person's set of legal rights over others to use his or her property exclusively.
true
When a seller refuses to sell a certain product unless the buyer also purchases a different product from the seller, this is classified as a __________.
tying agreement
Which of the following is an example of vertical restraints?
tying restraints
A seller's promise to a buyer about the quality/functionality of a product is called a _______.
warranty
Equity payments made to common stock owners based on the profitability of the company they own stock in are called
DIVIDENDS
Which warranty arises when the buyer relied on the seller's advice and recommendation regarding a specific use of the product?
implied warranty of fitness for a particular purpose.
1. Chapter 17 Rulemaking Rulemaking One of the most important duties of administrative agencies is to generate regulations pursuant to objectives set by Congress. This is normally done through a process called rulemaking. These rules are designed to facilitate the federal government's administration of the law and programs as set down in federal statutes. Rulemaking involves following a procedure set down in the Administrative Procedures Act (APA) that is centered on a deliberate decision-making process with adequate opportunity for public comment.
1. Enabling Statute: Fruit Standards Control Act 2. Agency Study: FDA researches issue 3. Proposed rule published: Preliminary version of standard A published 4. Public Comment: Growers object to standard A 5. Rule revised (if necessary): Slight changes to standard A 6. Final Rule Published: Standard A has force of law 7. Judicial challenges: Growers file lawsuit
1. Chapter 15 Piercing the Corporate Veil Piercing the Corporate Veil Although a major advantage of the corporate form of entity is the liability protection for its principals, there are some cases where a court will disregard the corporate entity and allow a creditor or judgment holder to reach through the corporation to the personal assets of its principals. This is called piercing the corporate veil and may result in significant liability for the corporation's principals. Ultimately, the law provides a fairness standard for when the corporate veil should be pierced. Business owners and managers can limit liability and control risk by understanding the circumstances under which a court will pierce the corporate veil.
1. Inadequate capitalization: Shell Corporation with no assets 2. Nature of claims: Involuntary Creditor 3. Fraud: Lying on a loan application 4. Corporate Formalities: Failure to file required forms.
2. Chapter 22 The Criminal Justice Process The Criminal Justice Process The criminal justice system is typically thought of as two separate processes. The system begins with the investigative phase. This involves investigation by authorities that may lead to arrest, filing of formal charges against a defendant, and the setting of bail by the local magistrate. The adjudication process begins with a preliminary adjudication, such as grand jury or local magistrate, and provides a system to bring the defendant through the process either by plea or by trial.
1. Investigate possible crime 2. Interview witnesses and suspects 3. Obtain search warrants 4. Arrest (or issue citation of minor infraction) 5. Formal charges filed against defendant 6. Local judicial authority sets bail
2. Chapter 15 Corporate Formation Corporate Formation Although the corporate form of business entity provides significant liability protection for its principals, it also typically has the most formal filing and compliance requirements compared to other entities. Principals that wish to form a corporation do so under the authority of state statutes. Each state has a specific corporate formation statute, and requirements vary to some degree from state to state. Preincorporation obligations of a business venture may trigger personal liability for one or more of the principals. Therefore, a working knowledge of the stages and sequence of corporate formation helps business owners and managers limit risk and reduce liability. Step 2 - Determine which action of CVI's principals fits into which stage of corporate formation. Then drag the action to the applicable stage of formation.
1. Preformation: Johann's preliminary activities for CVI 2. Legal Formation: Principals hire counsel to file articles 3. Postformation: Wolfgang and Christian elected as directors 4. Commence Business Operations: Johann begins to make sales calls for CVI 5. Corporate Formalities: Christian files annual report with state agency
In the city of Allegram, Congress has passed a new enabling statute. In response to this statute, the Public Emergency Management Agency (PEMA) must devise procedures to ensure the safe evacuation of persons with physical disabilities in shopping centers during emergency situations. These procedures must be put in place within a year of the date of the law's passage. Which of the following citizen suits against the PEMA is most likely to be considered valid by a court?
A claim made by an activist group that the PEMA failed to provide regulations detailing such procedures within the one-year statutory period.
Two companies that operate social networking websites conspire to set advertising rates at a certain price. Under the Sherman Act, this conspiracy is _______.
A per se violation
Two manufacturers of active wear conspire to set prices on certain rainproof jackets. Under the Sherman Act, this conspiracy is __________.
A per se violation
Two retailers that sell sporting goods conspire to set prices on softballs. Under the Sherman Act, this conspiracy is __________.
A per se violation
Which of the following situations involving infringement is most likely to be protected by a fair use defense?
A professor studies an experiment in a published journal and draws analogies with it during a class lecture.
In a bankruptcy, a(n) _____ protects the debtor by prohibiting creditors' initiation or continuation of any debt collection action against the debtor or her property.
AUTOMATIC STAY
According to the National Environmental Policy Act (NEPA), actions that have little or no potential for significant environmental impact are classified into the category of _____.
According to the National Environmental Policy Act (NEPA), actions that have little or no potential for significant environmental impact are classified into the category of _____.
Which of the following statements is true of the taxation of limited liability partnerships (LLPs)?
All income or losses are reported on the partners individual tax returns
The _____ provides that its International Arbitration Rules apply only in the absence of any designated rules.
American Arbitration Association (AAA)
Which of the following statements is accurate regarding the formation of limited liability companies (LLCs) versus limited liability partnerships (LLPs)?
An LLC articles of organization are filed LLp is a statement of qualification
Which of the following actions are governed by the Fair Debt Collection Practices Act?
An attorney representing a medical practice sending a letter to a patient to collect a debt.
1. Chapter 24 Trademarks, Service Marks, and Trade Dress Trademarks, Service Marks, and Trade Dress Businesses often invest significant resources into their trademarks, service marks, and trade dress because these marks generate brand identity and make it easier for their customers to identify, locate, purchase, and recommend their products and services. Distinctive words, symbols, and phrases are protected by trademark law (including the shape or color scheme of a product's packaging, called trade dress). When marks are used to identify services, they are called service marks. These valuable assets require business owners and managers to be vigilant about preserving trademark protection and preventing their own company from infringing on other entities' trademarks.
Arbritrary or fanciful: Starbucks for coffee shops. Suggestive: Roach Motel for insect traps. Descriptive: Park 'N Fly for airport parking lots.
Alex has been charged with manslaughter and the charge is being reviewed by grand jurors. The grand jurors have determined that probable cause exists to hold Alex over for trial. Alex has been notified that he is held over for trial through an indictment. Which of the following steps will most likely occur immediately after the indictment?
Arraignment
1. Chapter 25 Understanding International Dispute Resolution Understanding International Dispute Resolution Parties to an international dispute are typically corporations or government entities rather than private individuals. Many countries, recognizing that different considerations apply to international disputes, have agreed to a separate legal regime to govern international disputes. Resolving disputes through international courts or other dispute resolution systems involves dealing with uncertainty. Understanding the various international courts, legal systems of other nations, and methods of dispute resolution helps businesses engaged in global commerce to limit risk and increase commercial reliability and fairness.
Civil Law System: Relies heavily on written legal codes Common Law System: Strongly favors use of case law for decisions Religious-based System: Doctrines directly based on tenets of faith Mixed-legal System: Also called a hybrid or composite legal system
Which of the following legal systems is typically used by former colonies or protectorates of Great Britain?
Common law
2d. What was the amount and substantiality... What was the amount and substantiality of material used under Burns' plan?
Complete use of the entire work.
2. Chapter 17 Limits on Administrative Agencies Limits on Administrative Agencies Although administrative agencies have broad powers to implement and enforce regulations, their powers are limited in various ways by the three-part system of government. The executive, legislative, and judicial branches all have a range of measures at their disposal for limiting an agency's power and, in some cases, for invalidating agency rules or actions. One of the most important limits is accomplished through judicial review. Although courts are highly deferential to administrative agency actions, any action outside the scope or the agency's authority, or actions taken that are arbitrary and capricious can be invalidated by a court.
Congressional Overruling Resolution: authority to cancel final rule Judicial Review: applies the arbitrary and capricious standard Private Citizens Suit: can't attack the substance of a rule Executive Power: Derived from the appointments clause
Which of the following statements accurately differentiates between criminal law and criminal procedure?
Criminal law defines the boundaries of behavior and sanctions for violating those boundaries; criminal procedure refers to the legal processes and safeguards afforded to individuals during criminal investigations.
Administrative agencies are often granted broad powers for policymaking and enforcement by Congress through what?
Enabling statute
Which of the following is important because it is the source of an administrative agency's authority and establishes the agency's scope and jurisdiction over certain matters?
Enabling statute
Securities laws are designed to protect the investor by providing insurance for losses, and punishment for the venture's principals if the business does not earn a profit.
FALSE
1. Chapter 23 Understanding Personal and Real Property Rights Understanding Personal and Real Property Rights Personal and real property are an integral part of the legal environment in which business operates. Personal property is defined as property that is both tangible and movable. Real property, also called real estate, is land and any structures built upon it, as well as plant life and vegetation. Ownership rights vary depending on the category of ownership interests.
Fee Simple: Highest level of general rights in real estate Leasehold Estate: Qualified right to use real estate for a limited time Life Estate: Interest that lasts for the lifetime of an individual Easement: Privilege to use real estate owned by another
1. Chapter 19 Antitrust Antitrust The Sherman Act is divided into two parts: first, the act provides prohibitions against restraint of trade; and second, it covers monopolization. To understand the distinction between the sections, consider the difference between single-firm conduct (only one business engaged in a certain transaction or behavior) and multifirm conduct (more than one business engaged in a certain transaction or behavior). There are also certain actions or transactions deemed as a per se violation of the Sherman Act. Certain per se violations are through the use of horizontal restraints and vertical restraints. The following exercise requires you match the appropriate agreement to the correct Sherman Act category.
HORIZONTAL RESTRAINTS: PRICE FIXING AMONG COMPETITORS; MARKET ALLOCATION; BOYCOTT VERTICAL RESTRAINTS: EXCLUSIVE SELLING OR TERRITORY AGREEMENTS; TYING AGREEMENTS; PRICE FIXING BETWEEN BUYER AND SELLER
Which of the following constitutes a "government official" under the Foreign Corrupt Practices Act? I. A candidate for political office in Spain. II. The secretary to the Minister of Agriculture in Costa Rica. III. The Chief Financial Officer of Venezuelan Oil, a company controlled by the government of Venezuela.
I. A candidate for political office in Spain. II. The secretary to the Minister of Agriculture in Costa Rica. III. The Chief Financial Officer of Venezuelan Oil, a company controlled by the government of Venezuela.
Which of the following is an example of a bailment relationship? I. A customer leaving her watch for repair with the local jeweler. II. A tenant living in an apartment owned by the landlord. III. A restaurant patron using a coat check service. IV. The owner of a car parked in a self-check parking lot.
I. A customer leaving her watch for repair with the local jeweler. III. A restaurant patron using a coat check service.
Which of the following are considered debt instruments? I. Bonds. II. Common stock. III. Preferred stock. IV. Promissory notes.
I. Bonds. IV. Promissory notes.
Which of the following are necessary for Congress to override a final rule by an administrative agency? I. Both houses must agree. II. An overruling resolution must be presented to the president. III. There must be a two-thirds majority to approve. IV. There must be an agreement of the executive branch.
I. Both houses must agree. II. An overruling resolution must be presented to the president.
The debtor is afforded protection from creditors via an automatic stay in which of the following options? I. Chapter 7. II. Chapter 11. III. Chapter 15. IV. Automatic Stay Act.
I. Chapter 7. II. Chapter 11.
Which of the following are controls on mobile sources required by the Clean Air Act (CAA)? I. Corporate Average Fuel Economy (CAFE) standards. II. Operating permits. III. Requirement for state-of-the-art technology for new projects. IV. Tailpipe emissions standards.
I. Corporate Average Fuel Economy (CAFE) standards. IV. Tailpipe emissions standards.
When certain competing business entities are contemplating a merger involving a certain dollar amount, they are required by the Hart-Scott-Rodino Act to give advance notice of their intention to the: I. Federal Trade Commission. II. Federal Antitrust Bureau. III. Department of Justice. IV. Secretary of Commerce.
I. Federal Trade Commission. III. Department of Justice.
Which of the following are examples of words used in criminal statutes used to express the guilty mind requirement? I. Intentionally II. Carelessly III. Wantonly IV. Negligently
I. Intentionally III. Wantonly
Which of the following are true about the LLC form of entity? I. It is formed by filing articles (or certificates) of organization. II. Its principals are referred to as shareholders. III. It is frequently governed by an operating agreement. IV. It does not limit the personal liability of its principals.
I. It is formed by filing articles (or certificates) of organization. II. Its principals are referred to as shareholders.
Which of the following are true about the LLC form of entity? I. It is formed by filing articles (or certificates) of organization. II. It does not require a formal filing. III. It is frequently governed by an operating agreement. IV. It limits the liability of its principals.
I. It is formed by filing articles (or certificates) of organization. III. It is frequently governed by an operating agreement. IV. It limits the liability of its principals.
Which of the following are not true about U.N. Convention on Contracts for the International Sale of Goods (UNCISG)? I. Its coverage is based on the citizenship of a company's majority shareholder. II. It governs only international contracts where both parties are merchants. III. It requires all transactions over $500 to be in writing to be enforceable. IV. It provides a remedy for the seller to cure even if the time for performance is past due.
I. Its coverage is based on the citizenship of a company's majority shareholder. III. It requires all transactions over $500 to be in writing to be enforceable.
Which of the following are violations of the Computer Fraud and Abuse Act? I. Launching a Trojan Horse. II. Use of a computer to distribute adult pornography. III. Unauthorized access of another party's information stored on a computer. IV. Employer monitoring of an employee's use of office computers to visit unauthorized websites.
I. Launching a Trojan Horse. III. Unauthorized access of another party's information stored on a computer.
Which of the following are among the requirements to acquire ownership of real estate via adverse possession? I. Open, notorious, and visible possession. II. Continuous possession for a statutory period of time. III. Prescription or express grant of land. IV. Exclusive and actual possession.
I. Open, notorious, and visible possession. II. Continuous possession for a statutory period of time. IV. Exclusive and actual possession.
Which of the following are required for Congress to override a final rule by an administrative agency? I. Overruling resolution must be passed within 60 days. II. An overruling resolution must be presented to the president. III. There must be a two-thirds majority to approve. IV. Both houses must agree to the overruling resolution.
I. Overruling resolution must be passed within 60 days. II. An overruling resolution must be presented to the president. IV. Both houses must agree to the overruling resolution.
Which instruments provide the investor with a return based on profitability of the company? I. Preferred stock. II. Common stock. III. Profit stock. IV. Performance stock.
I. Preferred stock. II. Common stock.
2. Chapter 24 Copyright Law and Fair Use Copyright Law and Fair Use The Copyright Act of 1976 is a federal law that protects the creators of original works. This includes literary works, musical works, dramatic works, and any other work that is original, requires creativity, and is fixed in a durable medium. However, copyright owners do not enjoy unlimited rights to their work. Through the doctrine of fair use, U.S. copyright law balances the public interest with the property rights of copyright owners. Because copyright infringement triggers substantial penalties, business owners and managers may limit risk for their company by understanding the basics of copyright law and the fair use defense. Read the following hypothetical case study and answer the follow-up questions to formulate the correct strategy. Burns, the vice president for marketing at Extreme Equipment Corporation (EEC), attends a seminar by a well-known corporate training firm called Millionaire Sales Methods. The seminar was a two-day event in which the facilitators introduced cutting-edge techniques for achieving high sales volume in the industry. As part of the seminar, Burns received an instruction manual, a DVD, and a flash drive with several slide-show presentations. Burns was so impressed with the seminar that he brought the ideas back to his own sales team at EEC. His preliminary plan is to make copies of the seminar materials and distribute them to his sales force. rev: 03_24_2018_QC_CS-121676 2a. What elements of the seminar... What elements of the seminar are covered by the Copyright Act? I. The slide shows. II. The DVD. III. The instruction manual.
I. The slide shows. II. The DVD. III. The instruction manual.
Which of the following factors are used by courts when applying the arbitrary and capricious standard? I. Whether the agency relied on factors that Congress had not intended it to consider. II. Whether the agency failed to consider an important aspect of the problem. III. Whether the final rule is a logical outgrowth of the enacting statute. IV. Whether the agency offered an explanation that ran counter to the evidence before it.
I. Whether the agency relied on factors that Congress had not intended it to consider. II. Whether the agency failed to consider an important aspect of the problem. IV. Whether the agency offered an explanation that ran counter to the evidence before it.
Which of the following is not an example of a bailment relationship? I. A customer leaving her watch for repair with the local jeweler. II. A tenant living in an apartment owned by the landlord. III. A restaurant patron using a coat check service. IV. The owner of a car parked in a self-check parking lot.
II. A tenant living in an apartment owned by the landlord. IV. The owner of a car parked in a self-check parking lot.
Which of the following are not true about the LLC form of entity? I. It is formed by filing articles (or certificates) of organization. II. Its principals are referred to as shareholders. III. It is frequently governed by an operating agreement. IV. It does not limit the personal liability of its principals.
II. Its principals are referred to as shareholders. IV. It does not limit the personal liability of its principals.
Which of the following factors are not used by courts when applying the arbitrary and capricious standard? I. If the agency relied on factors that Congress had not intended it to consider. II. The amount of time that the agency spent during the rulemaking process. III. Whether the final rule is a logical outgrowth of the enacting statute. IV. Whether the agency is independent or not.
II. The amount of time that the agency spent during the rulemaking process. III. Whether the final rule is a logical outgrowth of the enacting statute. IV. Whether the agency is independent or not.
Which of the following does not constitute a "government official" under the Foreign Corrupt Practices Act? I. A candidate for political office in Spain. II. The secretary to the Attorney General of Florida. III. The Chief Financial Officer of Venezuelan Oil, a company controlled by the government of Venezuela. IV. A candidate for Congress of the United States.
II. The secretary to the Attorney General of Florida. IV. A candidate for Congress of the United States.
The debtor is NOT afforded protection from creditors via an automatic stay in which of the following options? I. Chapter 7. II. Chapter 11. III. Accord and satisfaction. IV. Lights out.
III. Accord and satisfaction. IV. Lights out.
Which instruments do not provide the investor with a return based on profitability of the company? I. Preferred stock. II. Common stock. III. Bonds. IV. Debentures.
III. Bonds. IV. Debentures.
Which of the following are prominent international arbitration forums? I. North American Arbitration Commission. II. International Board of Arbiters. III. London Court of International Arbitration. IV. International Court of Arbitration.
III. London Court of International Arbitration. IV. International Court of Arbitration.
Which of the following are not requirements for qualification as a Subchapter S corporation? I. Unanimous consent of all shareholders. II. No more than 100 shareholders. III. No more than three classes of stock. IV. No more than $1 million in annual revenue.
III. No more than three classes of stock. IV. No more than $1 million in annual revenue.
Which of the following is/are not statutory defenses to Superfund PRP liability? I. Prospective purchases under the Small Business Liability Relief Act. II. Secured creditor. III. Short-term ownership. IV. Innocent landowner.
III. Short-term ownership.
Which of the following is not true of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010?
IT SIGNIFICANTLY LIMITS THE JURISDICTION OF THE SEC
Which of the following is true of taxation of a C corporation?
In a C Corporation, both the entity and the shareholders pay tax through a system of double taxation.
1. Chapter 16 Overview of the Securities Market Overview of the Securities Market Certain business entities have the option to raise capital for business operations through selling ownership in the venture (equity) to investors who hope to receive a return on their investment based on the profitability of the company. Businesses may also raise capital by issuing debt instruments to public investors that desire a fixed rate of return that is not pegged to profits. The issuance and trading of equities and debt instruments to public investors is highly regulated by securities law.
Investment: Maybe a cash or non cash investment Commonality: Maybe horizontal or vertical Profit Expectations: Opportunity for a return on the investment Efforts of others: Promoters must be primary sources of profits
Which of the following is true of the Fair Debt Collection Practices Act (FDCPA)?
It does not regulate a creditor collecting her own debt.
Which of the following is true of sovereign immunity?
It exempts nations from jurisdiction by other nations' courts.
Which of the following is true of the International Court of Justice?
It gives advisory opinions on legal questions submitted to it by duly authorized international organs.
Which of the following is not true about the Magnuson-Moss Act?
It imposes an implied warranty on every product sale.
1. Chapter 18 Major Environmental Laws Major Environmental Laws Environmental law impacts not only large companies that use smokestacks, but also small and midsized businesses in a variety of ways. As the public continues to become aware of environmental dangers, Congress and state legislatures have expanded coverage, increased standards, and imposed more liability. Small-business owners that use regulated chemicals or materials are subject to registration, reporting, and care requirements. Laws imposing liability for environmental cleanup is another concern for business owners who own or wish to purchase land.
NATIONAL ENVIRONMENT POLICY ACT- STUDY OF ENVIRONMENTAL IMPACT REQUIRED CLEAN AIR ACT- MOBILE AND STATIONARY SOURCES RESOURCE CONSERVATION AND RECOVERY ACT- CRADLE TO GRAVE PROCEDURE ESTABLISHED CERCLA (SUPERFUND)- HAZARDOUS SUBSTANCE CLEAN UP
2. Chapter 20 Alternatives for Insolvent Borrowers Alternatives for Insolvent Borrowers Insolvent businesses are those that cannot pay their bills as they become due in the usual course of business. In addition to filing for protection under the bankruptcy code, insolvent business owners have several other alternatives. A company's course of action is largely dependent on the type of financial crisis that caused the insolvency.
Out of existence: Nonstatutory option Accord and satisfaction: settlement Chapter 7: Liquidation Chapter 11: Reorganization
The most important multilateral agreement on international protection of patents is called the _____________ agreement.
Paris Convention
Which of the following best describes how an LLC is taxed?
Pass through taxation
Administrative agencies are frequently charged by Congress to study potential solutions to a problem and then to exercise a legislative function by creating administrative regulations. This function is best known as _____.
RULEMAKING
2. Chapter 21 Regulation of Credit Transactions Regulation of Credit Transactions Credit transactions are an integral part of the business environment and are regulated through an array of federal and state laws primarily designed to afford consumers certain protections. Credit transactions take place primarily in the context of the use of loans (e.g., home equity loan) and credit cards. Merchants also act as creditors and offering credit to consumers is subject to federal statutory requirements. A credit transaction takes place between a borrower and a creditor.
Reg Z: uniform reporting of APR and finance charges Fair and Accurate Credit transactions act: protections of victims on identity theft Credit card accountability responsibility disclosure act: restrictions on credit to 18-21 year olds. Truth in Lending Act: scope limited to non commercial credit
Which of the following laws prohibits contracts, combinations, and conspiracies in restraint of trade or monopolization?
Sherman Antitrust Act
One who has experience, business savvy, and knowledge of a market to the extent that the law imputes a certain cognizance of investment risk and the ability to protect his or her own interests is referred to as a(n)
accredited investor.
Which statute is designed to take into consideration the impact of a proposed rule on small business?
THE REGULATORY FLEXIBILITY ACT (RFA)
Which of the following statutes was driven primarily by the civil rights movement of the late 1960s and 1970s to prevent what was then a relatively common practice of considering gender or race in credit decisions?
The Equal Credit Opportunity Act.
Which of the following acts establishes a national fraud alert system so that consumers have a timely way to guard themselves once they suspect an identity fraud has occurred?
The Fair and Accurate Credit Transactions Act.
One primary difference between civil and criminal cases is that in a criminal case, the burden of proof is _______________.
beyond a reasonable doubt
Courts have given agencies broad latitude in publishing a revised final rule without an additional comment period under what condition?
The revisions were a logical-outgrowth of the original proposal.
2e. What potential market effect could the copyright... What potential market effect could the copyright holder claim to demonstrate in a copyright infringement suit?
The works are diminished in value because they were made free to nonpaying clients (EEC's sales team).
2c. What was the nature of the protected... What was the nature of the protected works at issue in this scenario?
The works were private and put out by the creators only to paying clients.
Which of the following is true of implied warranties under the Uniform Commercial Code (UCC)?
They are applicable to sales made by one merchant to another merchant.
Corporations raise capital by issuing ____ to investors wanting to earn a fixed rate of return.
bonds
For investors wanting to earn a fixed rate of return rather than a return based on profitability, companies may raise capital by issuing _____.
bonds
2b. What was the purpose and nature... What was the purpose and nature of Burns's use of the seminar materials for his own sales team?
Use for a commercial reason.
