Business Law Final Exam
Consumers benefit when producers work to develop better products that can be sold at lower prices to beat the competition True/False
True
Labels on fresh and frozen fruits and vegetables must indicate where the food originated so that consumers can know if the food was imported. True/False
True
Providing investors with more information helps them make buying and selling decisions about securities. True/False
True
The destruction of an original check after the creation of a substitute check prevents the check from being paid twice True/False
True
Under the principles of agency law, any sale of goods by a salesperson in a store to a customer can be binding on the owner of the store True/False
True
If the legitimate benefits outweigh the anticompetitive effects of a resale price maintenance agreement, the agreement may be held lawful. True/False
True
The Sarbanes-Oxley Act of 2002 attempts to increase corporate accountability by imposing strict disclosure requirements and harsh penalties for securities laws True/False
True
The Telemarketing Sales Rule applies to any offer-domestic or foreign- made to consumers in the United States True/False
True
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. True/False
False
Business as we know it could not exist without secured transactions because otherwise sellers and lenders would be less likely to sell and lend on credit True/False
True
A debt-collection agency can always contact a debtor at his or her place of employment True/False
False
A gratuitous agent can be liable to a principal for breach of contract, even in the absence of a contract, but not liable for the negligent performance of the deal. True/False
False
Agency relationships come about by voluntary consent and agreement of the parties-consideration is required, and the agreement must be in writing True/False
False
Federal securities laws take priority over state securities laws. True/False
False
If a bank pays a stale check in good faith but without consulting the customer, the bank has no right to charge the customer;s account for the amount True/False
False
It is in society's interest to condemn ever acquisition of monopoly power as an antitrust violation even though a dominant market share may be the result of business acumen True/False
False
Most private, small-business, noninvestment company offers of securities are exempt from the registration requirements. True/False
False
Once a bankruptcy petition is properly filed, creditors can commence or continue most legal actions against the debtor to recover claims True/False
False
Requiring users of a social media site to agree to certain terms and conditions to use the site is most likely an antitrust violation True/False
False
Securities can be sold before the effective date of the registration statement without restrictions True/False
False
Securities must be registered under the Securities Act of 1933 for the Securities Exchange Act of 1934 to apply True/False
False
To avoid sanctions under Section 10(b) of the Securities and Exchange Act of 1934 and SEC Rule 10b-5, scienter must exist True/False
False
To deem an agreement a per se violation of antitrust law, a court must determine whether the agreement actually constitutes a restraint on trade True/False
False
With a joint checking account, the bank can hold any joint-account owner liable for payment of an overdraft even if that owner did not sign the check or benefit from its proceeds. True/False
False
A false statement or unjustified claim about a competitor's products can result in liability for deceptive advertising True/False
True
Any person can be an agent, regardless of whether he or she has the capacity to contract True/False
True
Anyone who has access to or receives inside information of a nonpublic nature and trades on it for personal gain can be liable under SEC Rules 10b-5 True/False
True
Because checks serve as a substitute for cash, they can facilitate financial record keeping True/False
True
Because the speed of check-processing time is increasing, to avoid overdrafts, an account-holder needs to verify that funds are available to cover a check when it is written True/False
True
If an agent has represented himself or herself as possessing special skills, the agent is expected to use them True/False
True
Improper filing of a financial statement can render a security interest unperfected True/False
True
In a Chapter 13 proceeding, the debtor retains possession of her assets True/False
True
In an agency, one party called the principal agrees to represent or act for another called the agent True/False
True
Insider trading is prohibited because trading on the basis of inside information can give the trader an unfair advantage over the investing public True/False
True
The definition of security on the Securities Act of 1933 includes interests that involve the right to buy a security on a national security exchange True/False
True
The power to control the market price of a product is market power True/False
True
To avoid liability for negligence, a customer must examine monthly bank statements and canceled checks promptly and with reasonable care, and report any forged signatures to the bank Ture/False
True
When an agent, acting within the scope of his or her authority, contracts with a third party, a disclosed principal is liable to the third party True/False
True
With respect to tainted foods, the focus of federal regulators has shifted from responding to incidents of contamination to preventing them True/False
True
A deceptive ad for a product involving wrongful charges to consumers may result in an award of damages of a defendant's unjust gains and consumers' losses. True/False
Truw
Elmore pays Fidelity Bank $1000 plus a service fee to draw a check on itself made payable to Go Delivery Service. This is -a stale check -on overdraft -a cashier's check -a stop-payment order
a cashier's check
Business Sale's Inc.'s debt to Cartage Company is past due. Cartage brings legal action against Business Sales to collect. To ensure that a judgement in the creditor's favor will be collectible. Cartage asks the court to order the seizure of the debtor's property. This is a request for -an artisan's lien -a writ of execution -a mechanic's lien -a writ of attachment
a writ of attachment
Brewery Company's debt to Credit Service is past due. Credit obtains a judgement against Brewery, but the firm refuses to pay. Credit asks the court to order the seizure of Brewery's property. This is a request for -a mechanic's lien -a writ of attachment -an artisan's lien -a writ of execution
a writ of execution
Motor Part Sale's Inc hires Nolly to work on its shipping dock, accepting deliveries, dispatching trucks, and dealing with customers and drivers. With respect to Motor Parts, Nolly is most likely -none of the choices -an agent and a principal -a principal -an agent
an agent
Nora works at Oil & Gas Inc/ She is a sales representative who works with Oil & Gas customers. The company closely supervises its sales reps and dictates their schedules. With respect to third parties, Nora is -an independent contractor -an employee only -a principal -an employee and agent
an employee and agent
Ron borrows funds from Suburban Bank secured by Ron's house. Ron defaults on the debt. The bank's options include -disposing of the collateral in any commercially reasonable manner -destroying the collateral and collecting the unpaid debt from Ron -repossessing the collateral and disavowing the security interest -retaining the security interest and pursuing a judicial remedy
disposing of the collateral in any commercially reasonable manner
Salsa Inc. complains to the Federal Trade Commission (FTC) about an ad broadcast by Taco Sauce Company, Salsa's competitor. The FTC investigates and concludes that the ad is deceptive. The FTC's next step is to -draft a formal complaint -conduct negotiations between the competitors -order Salsa to broadcast similarly deceptive counteradvertising -issue a cease-and-desist order
draft a formal complaint
Brew House Coffee Company sells coffee and related beverages. The company's ad contends that ambitious businesspersons "Drink Us & Rise Up in the Corporate World!' " The Federal Trade Commission would consider this ad -impermissibly vague and general -a deceptive half-truth -false and misleading -none of the choices
none of the choices
A bank may contractually shift to its customer the risk of forged checks created electronically or otherwise by the use of non-manual signatures True/False
True
A business that cannot provide scientific evidence to support its marketing claims may be held liable for deceptive advertising True/False
True
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/False
True
Agency relationships cannot exist outside an employment, so agency law has a narrower reach than employment law True/False
False
An independent contractor is, by definition, an employee True/False
False
Any person-including individuals, but not partnerships of corporations-may be a debtor under Chapter 7 True/False
False
Creditors that use information from credit-reporting agencies cannot be held liable for violations of the Fair Credit Reporting Act. True/False
False
Crowdfunding can be exempt from the registration requirements of the Securities Act of 1933 if shares are offered directly to investors True/False
False
Federal law on menu labeling supplements but does not supersede previous state and local law on the same subject. True/False
False
The duties that an agent owes a principal must be set forth in the agency agreement because they do not arise by operation of law True/False
False
The principal is bound by the agent's unauthorized act, unless the principal negates it True/False
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 True/False
False
Igmar asks Jess to contract with Kay's Lawn Service to maintain Igmar's lawn. Jess orally agrees to do so. This is an agency by -operation of law -estoppel -agreement -none of the above
agreement
Ray is a delivery driver for Sicilian Pasta Company. Ray does exactly what the company tells him. Ray is -an employer -an independent contractor -an employee -a principal
an employee
Building Company adds a shipping dock to the property of Corporate Complex, but the owner does not pay. Building files a lien on Corporate's property. The property -can be held to guarantee payment of the debt -none of the choices -must be sold to provide payment of the debt -must be returned to the debtor within a certain period of time
can be held to guarantee payment
Fabrication Corporation is a public company whose shares are traded in the public securities markets. Under the Securities Act of 1933, Fabrication is required to -contribute to the operations of nation security exchanges -engage in market surveillance to deter undesirable practices -meet investors' reasonable expectations to make profit -disclose all essential information about the issuance of its securities
disclose all essential information about the issuance of its securities
Ewan, the chief executive officer of Furniture Inc., intentionally understates the amount of the firm's debts in information provided to investors as part of an issue of stock. Gary buys the stock and suffers a loss. Ewan may be subject to -only government prosecution -negative publicity but no criminal prosecution or civil suit -government prosecution and a private investor's suit -only a private investor's suit
government prosecution and a private investor's suit
Direct Sales Corporation sells products to consumers over the phone, through the mail, and online. Under the Federal Trade Commission's Mail or Telephone Order Merchandise Rule, the firm may be liable for failing to -all of the choices -ship orders within the time promised in its ads -notify consumers when orders are shipped -provide a cooling-off period of three days before shipping
ship orders within the time promised in its ads
Breadboard, Inc., makes and sells grain products. Breadboard's product packages must include -the restaurants and store in which the product is sold -the company owner's identity -the type of consumer most likely interested in the product -the contents' net quantity
the contents' net quantity
Bread Company hires Craig to sell the company's products in a certain area. Bread agrees to pay Craig a salary, plus commission, for a trial period. They also agree that he can sell using any methods and during any hours that seem appropriate. The key factor in whether Craig is Bread's employee is -the length of the trial period -the size of the sale's area -the degree of the employer's control over the details of the work -the amount of the salary
the degree of the employer's control over the details of the work
Jazz Inc. makes and markets music. The company wants to make an initial public offering of securities via the Internet. Most likely, this offering -is an attempt to deceive and manipulate investors -will result in higher expenses and extended oversight -is a way for investors to fairly break the rules -can avoid high costs and complicated procedures
Can avoid high costs and complicated procedures
A business, but not an individual person, can be deemed liable for monopolizing or attempting to monopolize trade or commerce in violation of the antitrust laws True/False
False
A court cannot dismiss a debtor's petition under Chapter 13 even if the circumstances indicate bad faith True/False
False
Any agreement among competitors to artificially fix prices or restrict output is a per se violation of Section 1 of the Sherman Act. True/False
True
United Contractors Inc. holds a lien on Vista Estate's real property. This property can be sold to satisfy the debt if, before the sale, notice is given to -Vista Estate's other creditors -Vista Estate -the general public -the state in which the property is located
Vista Estate
Market Data Corporation is required to file a registration statement with the Securities and Exchange Commission. This statement must contain -a statement that securities being offered for sale are worth the price -a record of pre-registration sales in securities -a description of securities being offered for sale -a copy of prospectuses to be provided to investors
a description of securities being offered for sale
Bio Med Corporation makes and sells Curative, the most prescribed name-brand pain-relief medication. Drugs Inc. has the potential to make a generic version of the same drug. Bio Med agrees to pay Drugs not to make or sell the generic. This agreement is most likely -not within the scope of the Sherman Act -subject to analysis under the rule of reason -a per se violation of the Sherman Act -a deal that neither restrains trade or harms competition
a per se violation of the Sherman Act
