Business Law Final Ivy Tech

A businessperson who enters into a contract with an investor on behalf of a future corporation is not personally liable on the deal, even though the firm is not yet formed, because the nature of investment is risk.

False

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

False

If any financial institution, such as a brokerage house, handles a check for payment or collection, the check is covered by UCC Article 4.

False

A check may fall under Uniform Commercial Code Article 3 as a negotiable instrument and be subject to UCC Article 4 in the course of collection.

True

A holder will be deemed to have notice of a defect in an instrument if he or she has reason to know that it exists, given all the facts and circumstances known at the time.

True

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.

True

Advertising will be deemed deceptive if it includes a claim that omits a material fact about a product.

True

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

True

Employees might sue an employer whose failure to use pollution controls contaminated the air and caused the employees to suffer respiratory illnesses.

True

Without a permit, Timberline Plywood Company discharges its untreated wastewater into Urban City's storm drainage pipes, which empty into Valley Creek. Under the Clean Water Act, this discharge is most likely

a violation.

Bhat and Cho do business as Day Glow Paints, a partnership. In most states, for the purposes of collecting judgments and having accounting performed, this firm would be treated as

an independent entity.

Under Chapter 7, creditors are paid in a certain order of priority. The highest-priority class comprises claims for

domestic support.

Title VII of the Civil Rights Act applies to employers and labor unions with at least

fifteen employees or members.

The Americans with Disabilities Act applies to workplaces with at least

fifteen workers.

eSports Inc. offers entrepreneurs the opportunity to operate a franchise under the eSports trade name as the owner of a game-playing venue. To possible franchisees, eSports makes earnings claims. For those claims, the franchisor

must have a reasonable basis.

Under Chapter 7, once the proceeds have been distributed, the obligations of the debtor most likely to be discharged are

none of the choices.

If a voluntary petition in bankruptcy is found to be proper, the court's entry of an order for relief

puts into place an automatic stay.

Ben is a director of Creation Corporation, an architectural firm. Without informing Creation, Ben goes into business with Design, Inc., a Creation competitor. Ben is liable for breach of

the duty of loyalty.

Berry Farm Inc. employs hundreds of seasonal and permanent workers, both skilled and unskilled, in three states. Under federal immigration law, Berry Farm can hire illegal immigrants

under no circumstances.

The Franchise Rule requires a franchisor to provide potential earnings figures to its prospective franchisees.

False

The quality and safety of food may be important to consumers, but food labels that provide standard nutrition facts are a seller's option, not a requirement.

False

To most securely minimize the risk of loss on a loan evidenced by a note, a creditor needs only the debtor's promise that the note will be paid.

False

To qualify for a Chapter 7 bankruptcy, a debtor must complete a means test to determine whether the debtor has been living within his or her means.

False

Teri writes a check for $1,000 drawn on United Bank payable to Vida. Vida presents the check for payment to United Bank, which dishonors it. The party most likely liable to Vida is

Teri in a civil suit.

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

True

The rights of the owner to the subsurface of a piece of land would have little value if the owner could not use the surface to exercise those rights

True

When a bank draws a check on itself, the check is a negotiable instrument at the moment it is issued.

True

Choosing a business organizational form that limits its owners' liability may lead to greater profits for the firm.

True

In a sole proprietorship, the proprietor bears the burden of any liabilities incurred by the business enterprise.

True

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

True

Shareholders exercise ownership control through the power of their votes.

True

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

True

The Telemarketing Sales Rule applies to any offer—domestic or foreign—made to consumers in the United States.

True

The holder of a note who needs the funds owed on it can transfer it for cash to a third party, whom the maker must pay when the note comes due.

True

The law protects a person's rights and interests in anything with an ascertainable value that is subject to ownership.

True

The member of a limited liability company has the power to dissociate from the firm at any time, but may not have the right.

True

Rico works for Street Tacos Inc. The basis for Rico's contribution under the Federal Insurance Contribution Act to help pay for benefits that will partially make up for his loss of income on retirement is

his annual wage base.

On the receipt of consumer complaints about a company's ads, the most likely first step of the Federal Trade Commission would be to

investigate.

Rita is the chief executive officer for Sales Inc., a market research firm. The company obtains insurance on Rita's life from Tempo Insurance Company. This policy is

key-person insurance.

Any person—including individuals, but not partnerships or corporations—may be a debtor under Chapter 7.

False

Because an insurance agent is an agent of an applicant for insurance, not the insurance company, the agent owes fiduciary duties to the applicant.

False

Both stored-value cards and smart cards contain microchips with security programming that can authenticate the validity of a financial transaction.

False

Consideration is one of the necessary elements for an effective gift.

False

Constructive discharge occurs when an employer, to avoid conflict among workers, discharges an employee engaging in an unconventional act, such as wearing a hijab.

False

Credit can be denied solely on the basis of national origin.

False

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

False

Half-truths—information that is true but incomplete—are not deceptive because such statements are at least half true.

False

In most states, in a dispute on a partnership matter, a third party cannot sue an individual partner but must file an action against the entire firm.

False

The covenant of quiet enjoyment guarantees that the buyer will not disturb the land or any of its neighbors.

False

The last security interest to be perfected is the first in priority over any other perfected security interests.

False

When one tenant in common dies, that party's interest in the property automatically passes to the surviving owners.

False

Despite consumers' reports of inaccurate information in its files, Credit Reports Company does not delete unverifiable or erroneous information. Under the Fair Credit Reporting Act, this firm may be subject to

a cease-and-desist order.

A finder of mislaid property obtains title to the goods.

False

A customer's negligence cannot shift the loss when payment is made on a check with an altered amount.

False

Ned and Olga are shareholders of Pizza Pies Inc. Ned's written authorization to Olga to vote Ned's shares at a shareholders' meeting is

a proxy.

Ridge Bank creates a paper reproduction of customer Sophie's check with the statement "This is a legal copy of your check. You can use it in the same way you would use the original check." This is

a substitute check.

Edna and Flavia buy a cottage in Gulfport, Mississippi. On the death of either owner, that owner's interest in the dwelling passes to her heirs. This is

a tenancy in common.

Without a permit from the U.S. Army Corps of Engineers, Condos Corporation fills a wetlands area that it owns in preparation for the construction of a housing complex. Under the Clean Water Act, this is most likely

a violation.

Sara owns a ring. She asks Tomas, a jeweler, to add a diamond to it. Adding the diamond will increase the value of the ring. This is

accession.

In a bailment, in some circumstances, the dollar amount of liability for any loss or damage to bailed goods can be limited by

all of the choices.

eGames Inc. employs four hundred workers at three locations in three states. Workers who lose their jobs with eGames have a right to continued health-care coverage under the company's group plan unless they

are fired for gross misconduct.

Beck and Carli are married. Carli purchases a condominium near Downhill Ski Resort. Beck and Carli each technically own an undivided one-half interest in the condo. This is

community property.

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

has a personal defense against it.

Roy is a director of Sales Service Inc. Sales enters into a contract with TeleCenter Corporation in which Roy has a personal interest. Roy must

make a full disclosure of the conflict of interest.

Vera gives Will a $500 check as payment for a debt. Will crudely increases the amount of the check to $5,000 and deposits the check in his First Bank account. Vera is liable for the payment of $5,000 to

no one.

Deb and Elle are partners in Foundations, a counseling clinic. Deb manages the business. For this service, unless the partnership agreement states otherwise, she is entitled to pay in proportion to her

none of the choices.

On behalf of Bubbly Drinks Company, Calvin signs an instrument in which he promises to deliver 100 cases of soda as payment to Dispatch & Delivery, Inc., on April 1. This instrument is

nonnegotiable, because soda is not a medium of exchange authorized or adopted by a government as currency.

Earl buys a fishing license and goes fishing. He catches a trout, cleans it, cooks it, and eats it. Earl's acquisition of the trout is by

possession.

Consumer Finance Corporation (CFC) extends credit to consumers. CFC is subject to the Equal Credit Opportunity Act, which prohibits credit discrimination based on a consumer's

race.

Bev borrows funds from Credit Union to repair her home and to buy a car. She buys a laptop from Discount Store in a transaction financed by the seller. If these parties are subject to the Truth-in-Lending Act, Regulation Z applies to

the car loan, the home repairs loan, and the retail installment sale.

Under Chapter 13, a repayment plan must provide for

the same treatment of each claim within a particular class of claim.