Legal Environment of Business Final Review

Baez is employed by Credit Agency Inc. On the termination of Baez's position, Credit Agency pays Baez $10,000 to agree not to disclose the employer's confidential information. Later, Baez sells the information to Debt Records LLC for $100,000. In a suit for breach, Credit Agency is most likely to recover $10,000 from Baez. $110,000 from Baez. $100,000 from Debt Records. all future profits from Debt Records.

$10,000 from Baez

Kyla replaces Lomax in his job at Motor Corporation. Lomax believes that he has been discriminated against on the basis of his age. For the Age Discrimination in Employment Act to apply Kyla must be forty years of age or younger. Motor must have been in business for at least forty years. Lomax must be forty years of age or older. Lomax must have been Motor's employee for at least forty years.

Lomax must be forty years of age or older

A contract is an implied contract if the conduct of the parties creates and defines some of the terms. True False

True

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 fundamental change. a cumulative vote. a proxy. a quorum requirement.

a proxy

Primary sources of law include legal encyclopedias. official comments to statutes. case law. legal treatises.

case law

Lucy is married to Marco. Lucy buys food for their children's lunches and charges the cost to Marco's account. This is an agency by agreement. estoppel. operation of law. none of the choices.

operation of law

The state of Ohio can regulate building contractors and building codes in the state under its police powers. system of checks and balances. entitlement to full faith and credit. commerce power.

police powers

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 the amount that Erma invested in the project to the date of the closing. nothing—Forest Acres still owns the land. the difference between the contract and market prices of the land. specific performance.

specific performance

Laws enacted by legislative bodies at any level of government make up the body of law generally referred to as statutory law. the basis of all law in the United States. the supreme law of the land. uniform law.

statutory law

Rena establishes and operates Sweet Homes, a construction-contracting outfit, as a sole proprietorship. In the course of doing business, the outfit fails to pay some of its debts. To satisfy the obligations, the firm's creditors can go after the owner's personal assets only. the firm's assets only. none of the choices—the creditors must bear the losses. the firm's assets and the owner's personal assets.

the firm's assets and the owner's personal assets

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

unenforceable

Car Lot's salesperson Dick offers to sell Ernie, who is twenty years old, a car. Dick intentionally misrepresents the vehicle's use and repairs. In reliance, Ernie buys the car. To prove fraud, Ernie does not have to show that Dick intentionally deceived Ernie. Dick misrepresented material facts. Ernie is under twenty-one. Ernie justifiably relied on Dick's misrepresentations.

Ernie is under twenty-one

A person who wrongfully hurts another's good name or reputation orally may be liable for libel. True False

False

A social media post is not subject to discovery in litigation. True False

False

A worker who has voluntarily left his or her job qualifies for unemployment compensation to partially make up for the worker's loss of income. True False

False

An employer must reasonably accommodate its employees' religious practices, but only if they are based on the doctrines of a traditionally recognized religion. True False

False

An undisclosed principal is one whose identity is totally unknown by an agent and a third party at the time a contract is made. True False

False

Expenses incurred because of a breach of contract to obtain performance from another source are not recoverable in a suit for breach. True False

False

In a limited partnership, every partner has full responsibility for the management of the partnership. True False

False

Like a sole proprietorship or a partnership, the members of a limited liability company have unlimited liability for the firm's debts. True False

False

Making ethical decisions is most often best done by analyzing objective standards (such as profit or number of people fired) instead of subjective impacts on stakeholders. True False

False

One element necessary for an effective offer is the offeror's subjective belief in its reasonableness. True False

False

To receive benefits under a state workers' compensation law, an employee injured on the job must promptly sue the employer. True False

False

Grain Farms, Inc., files a suit against Harvest Services. Before the court can exercise jurisdiction over Harvest, the court must have proof that Grain Farms is prepared to notify Harvest of the suit. Grain Farms did not act to precipitate a dispute with Harvest. Harvest committed the act of which Grain Farms complains. Harvest was notified of the suit.

Harvest was notified of the suit

Motor Corporation (MC) makes cars and trucks. National Sales Company sells all MC vehicles. Open Road Inc. leases only the cars. Under product liability laws, liability for injuries or damage caused by an MC vehicle may be imposed on MC only. none of the parties. MC or National Sales only. MC, National Sales, or Open Road.

MC, National Sales, or Open Road

Miklos employs Nathalie to handle a list of financial transactions on Miklos's behalf. This power will terminate on any transaction causing a loss to Miklos. Miklos's death or incapacity. Miklos's sixty-fifth birthday. Nathalie's handling of one of each stipulated transaction.

Miklos's death or incapacity

A business necessity is a defense against employment discrimination based on the genuine requirements of a business. True False

True

A corporation is an artificial being—intangible, invisible, and existing only in the contemplation of the law. True False

True

A motion for summary judgment asserts that the plaintiff failed to state a claim for which the court can grant relief. True False

True

A seller who introduces into commerce a harmful or defective product may be subject to a tort action for strict liability. True False

True

Any contract can be discharged by agreement of the parties. True False

True

Every act of a partner concerning partnership business binds the firm. True False

True

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

True

Limited legal liability can be an advantage for a small business wishing to raise capital. True False

True

The common law is a body of law developed from judicial decisions. True False

True

The national government has the implied power to undertake actions necessary to carry out its expressly designated powers. True False

True

When directors and officers do not act in the best interests of their corporations, the shareholders may sue them on the company's behalf. True False

True

With respect to consideration, a bargained-for exchange distinguishes a contract from a gift. True False

True

Howe downloads Instagram's app by clicking on the site's "I agree" link to its terms of service. Later, Howe reverse engineers the software to create a competing app. This is most likely a breach of Howe's agreement to the terms of service. part of the bargain between a social media site and its users. acceptable as long as the code is not shared with third parties. within the promisee's right to expect or demand something of the future.

a breach of Howe's agreement to the terms of service

A precedent is the chief executive officer of the United States. a court decision that furnishes an example for deciding subsequent cases involving similar or identical facts or principles. a lawsuit in which a number of persons join together. the fundamental procedure by which the government exercises its authority.

a court decision that furnishes an example for deciding subsequent cases involving similar or identical facts or principles

Stare decisis is best defined as a doctrine under which judges follow established precedents. the authority to decide a specific dispute. a judicial proceeding to redress a wrong. a situation giving a person a right to initiate a judicial proceeding.

a doctrine under which judges follow established precedents

In a suit against Guillermo, Hailey obtains an award of damages. This is an order to do or to refrain from doing a certain act. the right to harm another. a payment of money or property. the cancellation of a contract.

a payment of money or property

Ruiz owns Solar Corporation. Ruiz commingles his personal interests with the corporation's interest to the extent that the firm has no separate identity. This most likely warrants an adoption of new corporate bylaws. a recognition of de facto corporate status. a pierce of the corporate veil. a fundamental change to the articles of incorporation.

a pierce of the corporate veil

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 risk of harm outweighs the products' utility to the users and the public. the product performed as a consumer would reasonably expect. the product is as useful and as risky as the public expects. the risk of return on investment in the product supports its utility.

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

Rene contracts with Scot to pay him $5,000 for repairs to Rene's lake cabin. After Scot performs, Rene tells him that she cannot pay him in full immediately. They sign an agreement in which Rene promises to pay $2,500 now instead of $5,000 later. This is a mutual agreement to rescind. an accord and satisfaction. a novation. specific performance.

an accord and satisfaction

Pastries Inc. sends Rollo its catalogue showcasing a variety of baked goods for certain prices. This is an offer. an invitation to negotiate, not an offer. an advertisement, not an offer. a request, not an offer.

an advertisement, not an offer

Motor Parts Sales Inc. hires Nolly to work on its shipping dock, accepting deliveries, and dispatching trucks, and dealing with customers and drivers. With respect to Motor Parts, Nolly is most likely an agent. an agent and a principal. a principal. none of the choices.

an agent

Health Clinic Inc. has no written employment manual or oral discharge policy, avoids abusive treatment of its staff, and acts to prevent illegal and unsafe activities. The clinic freely hires and fires its employees, who are similarly free to quit at any time. With respect to the employment-at-will doctrine, this is an example of the doctrine. an exception based on contract theory. an exception based on public policy. an exception based on a statute.

an example of the doctrine

Rosario is a chef and caterer who hires out on a per-project basis to companies with on-location work sites, as well as to the hosts of banquets and other events. In this capacity, Rosario is an agent. an employee. an independent contractor. a principal.

an independent contractor

VidGames Inc. markets a variety of shooting, fighting, and hunting video games. A state statue is enacted to require all game makers to label any games with an option to kill something as "excessively violent." A court would likely hold this regulation to be an unconstitutional restriction of speech. constitutional under the First Amendment. justified by the need to protect individual rights. necessary to protect national interests.

an unconstitutional restriction of speech

If a contract between two parties is avoided both parties are released from it. both parties must fully perform their obligations under it. the parties' contractual obligations are postponed. the parties are bound to negotiate another contract on the same subject.

both parties are released from it

Darla serves in a representative capacity for Ellen's Botanicals. To accomplish the objectives of this relationship, Darla's authority can be implied by by contradiction. by custom. by any subjective measure. none of the choices.

by custom

A court may use the identity of the party who receives a benefit from an ordinary bailment to determine, with respect to the bailed property, the standard of negligence to be applied to the deal. proof required to show loss or damage. care required of the bailee. quality expected by the bailee.

care required of the bailee

East Bay Café orders seafood from Fresh Catch Company. Fresh places the goods at East's disposal. Fresh's performance under the contract is conditional. complete. material. substantial.

complete

After shopping at a Cut-Price store, Dyan finds a fitness watch in her bag of purchases that she knows she did not pay for. Dyan fails to return the watch to the store or to pay for it. This is acquisition of property by possession. conversion. gift. production.

conversion

Neville files a suit against Olina. To obtain information to prepare for trial, the parties engage in discovery. This includes gaining access to each other's witnesses and other types of evidence by chicanery, subterfuge, and similar methods. undue harassment, improper requests, and related tactics. voir dire, the rule of four, and a writ of certiorari. depositions, interrogatories, and other procedural devices.

depositions, interrogatories, and other procedural devices

Metro Holdings Inc. contracts to sell a commercial parking garage to New Property LLC. The contract provides that if Metro does not close the deal by a certain date, it must pay the buyer one-half of the value of the property. This provision is not enforceable if it is meant to pay for additional work in the event of damage. a reasonable estimate of the loss on the breach. designed to penalize Metro. intended to quickly provide cash to New Property.

designed to penalize Metro

Bill and Charlene enter into a contract for the clearing, plowing, and preparing of Charlene's 100-acre tract for which she agrees to pay $1,000. Bill transfers his duty under this contract to Dewey. With respect to the duties under the original contract, this transfer does not relieve Bill of the potential obligation to perform. extinguishes Bill's obligation to perform. is an invalid transfer of a non-transferable obligation. requires a special form to constitute a valid transfer.

does not relieve Bill of the potential obligation to perform

Home Furnishing Store's contract for a sale of its appliances provides that the only remedy for breach is replacement, repair, or refund of the purchase price. With respect to this provision, on a customer's suit for breach, a court is most likely to enforce it. reform it. refuse to enforce it. reallocate the risk expressed in it.

enforce it

To reduce traffic, Market Town enacts an ordinance that allows only a few specific street vendors to operate in certain areas. A court would likely review this ordinance under the principles of equal protection. free exercise. interstate commerce. free speech.

equal protection

Airsoft, Inc. makes toys. Airsoft intentionally mislabels its packaged products to conceal a defect. Trusting and relying on the mislabeling, Bing buys an Airsoft product and suffers an injury. Airsoft is most likely liable for product misuse. fraud. privity of contract. comparative negligence.

fraud

Ben manages a warehouse and its inventory for Coffee Roaster Inc. To operate this part of the business, Ben's authority can be inferred from the position Ben occupies. by a reasonable party with whom Coffee Roaster does business. to contradict Ben's express authority. under no circumstances.

from the position Ben occupies

DIY, a retail hardware store, must use reasonable care on its premises to warn its invitees of all possible dangers. hidden dangers. dangers about which the business does not, or should not, know. no dangers.

hidden dangers

To obtain the title to land without delivery of a deed, one person must possess the property of another in an open, visible, and notorious manner. in secret. with or without interruption. with the other's permission.

in an open, visible, and notorious manner

Ira serves in a representative capacity for Jett. Key is injured through Ira's negligence. Jett may be liable to Key if Ira's conduct occurred due to a propensity Jett was not and could not have been aware of. during normal working hours. in the course and scope of Ira's employment. outside the parties' employment relationship.

in the course and scope of Ira's employment

Mel agrees to work as a freight broker for National Shipping Inc. In determining whether a contract has been formed, an element of prime importance is the parties' intent. character. subjective beliefs. motives.

intent

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

invalid because of the unreasonable terms of area and time

Secondary sources of law include state constitutions. legal scholars' research. laws passed by local governing bodies. regulations created by administrative agencies.

legal scholars' research

In an online blog, Oren states that Publicity Corporation invaded the privacy of individuals to collect marketing data for its clients. If the firm can prove all of the elements of defamation and Oren cannot assert a sufficient defense, Oren is most likely liable for contempt. malice. libel. slander.

libel

Aircraft Corporation employs mechanics, programmers, outside salespersons, and professionals, including pilots. Employees exempt from the Fair Labor Standards Act's overtime provisions include all of the following except mechanics. programmers. outside salespersons. professionals.

mechanics

Baby Things Inc. makes and sells a crib to Cara. Baby Things fails to exercise "due care" to make the crib safe, and Cara's child Dua is injured as a result. Baby Things is most likely liable for fraud. misrepresentation. negligence. strict liability.

negligence

Under the First Amendment, in comparison with commercial speech, the protection given obscene speech is equally extensive. not as extensive. more extensive. non-existent.

non-existent

Beverly creates a website to post threatening messages about celebrities. Under the First Amendment, these messages are most likely protected all of the time. none of the time. only if there are no accompanying ads. only if the threats can be verified.

none of the time

In a civil case, the object is to resolve a dispute to the satisfaction of all concerned parties. take coercive action against a violating party. punish a wrongdoer to deter others from similar actions. obtain a remedy to compensate the injured party.

obtain a remedy to compensate the injured party

Holly files an employment discrimination suit against Industrial Inc. under Title VII of the Civil Rights Act on a disparate-impact theory. To succeed, Holly must show in part that she was adversely affected by the employer's practice. any of the choices. business necessity. bona fide occupational qualification.

practice

George burns a U.S. flag in his backyard. He films the activity and posts the video on YouTube.com. George's conduct is most likely expressly prohibited by the Constitution. protected by the First Amendment. subject to reasonable restrictions under the due process clause. given strict scrutiny under the equal protection clause.

protected by the First Amendment

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 award damages for Reese's complete compliance with the terms. reform the contract to make the distance and time limits reasonable. rescind the contract and require restitution. order specific performance.

reform the contract to make the distance and time limits reasonable

Steel Mill Inc. agrees to deliver a certain quantity of steel to T-Bar Framing Corporation. The agreement states that delivery is to be within "9" days, although the parties intend "90" days. The seller cannot convince the buyer to amend the contract. The most appropriate remedy is damages. reformation. rescission. specific performance.

reformation

Good faith in collective bargaining between a union and an employer does not include rejecting a proposal without offering a counterproposal. being willing to compromise. negotiating with the belief that an agreement is possible. bargaining with the authority to enter into an agreement.

rejecting a proposal without offering a counterproposal

Spices & Seasonings Inc. is a private, for-profit corporation that is owned by eight shareholders who are not members of the same family but are personally known to one another. To avoid management problems caused by sharing control with someone the shareholders do not know or like, the firm could restrict the transferability of its shares to outside persons. depart from all formalities required by traditional corporate law. reorganize into a sole proprietorship or partnership. hold special shareholders' or directors' meetings on an annual basis.

restrict the transferability of its shares to outside persons

Quarry Mining Inc. and Riverside Vineyards agree to resolve a dispute in arbitration. The arbitrator meets with Quarry's representative to discuss the matter without Riverside's representative being present. If this substantially prejudices Riverside's rights, a court will most likely dismiss the dispute. review the record of the case. file a complaint against the arbitrator. set aside any award.

set aside any award

Mary creates a t-shirt design that expresses support for Nash, a presidential candidate, and distributes t-shirts to all of her friends. The t-shirts are an example of unprotected speech. commercial speech. symbolic speech. illegal speech.

symbolic speech

A business organizational form that limits its owners' liability allows the firm to lawfully act recklessly. engage in misconduct. take risks. all of the choices.

take risks

Owen and other managers employed by Pastry Bakeries are most likely to find that unethical behavior in the workplace can be deterred by taking immediate action in response to unethical conduct. imposing sanctions disproportionate to misconduct. distributing rewards without regard to ethics. ignoring small breaches of company rules.

taking immediate action in response to unethical conduct

The employees of Beverage Bottling Company designate Cola Cappers Union as their bargaining representative. Beverage refuses to bargain with the union. This most likely violates the National Labor Relations Act. the Fair Labor Standards Act. the Labor-Management Relations Act. no federal law.

the National Labor Relations Act

Buto buys a bus ticket at a window in the City Bus Depot before checking his backpack and boarding a bus. In this situation, the subject of a bailment is Buto. the backpack. a seat on the bus. none of the choices.

the backpack

Roz, a director of Soy Inc., is specially trained in petroleum trading. Soy's board approves several deals in which the company pays too much for soybeans. Roz approves all the deals without first reviewing them. Roz is most likely liable for breach of the duty of care. the business judgment rule. the duty of loyalty. none of the choices.

the duty of care

Georgia enacts a law requiring all businesses in the state to donate 10 percent of their profits to Protestant churches that provide certain services to persons whose income is below the poverty level. Price-Lo Stores files a suit to block the law's enforcement. The court would likely hold that this law violates no clause in the U.S. Constitution. the establishment clause. the free exercise clause. the supremacy clause.

the establishment clause

Retail Company is located in Seattle, Washington, where the city and the state have minimum wage laws. Retail pays its starting employees the legal minimum rate, which, among the governing laws, is the highest minimum wage. the federal minimum wage. the state minimum wage. the city minimum wage.

the highest minimum wage

Restore Inc. contracts to resurface the pools at Swim Park by June 1. Restore knows that if performance is not timely, Swim Park will have to delay its seasonal opening. Restore finishes the job June 15. In a suit for breach, Swim Park can recover the cost of new pools. the difference between the contract and market prices for the work. the loss of profit from the delayed opening. nothing—the work is done.

the loss of profit from the delayed opening

The term checks and balances refers to the system under which a state must refrain from imposing unreasonable burdens on citizens of another state. the powers of government are divided among its branches, each of which exercises a check on the actions of the others. any judicial decision with respect to property rights in one state will be honored and enforced in all states. the national government regulates interstate commerce.

the powers of government are divided among its branches, each of which exercises a check on the actions of the others

Marv files a suit against the state of New Hampshire, alleging employment discrimination under the Age Discrimination in Employment Act. The state asks the court to dismiss the suit. The court is most likely to rule that the state is immune from the suit. the suit can proceed. the plaintiff is immune from any defense. the court is immune from the request.

the state is immune from the suit

On a challenge to a provision in a state constitution that conflicts with a provision in the U.S. Constitution neither provision will be enforced. both provisions will be enforced. the state provision will be enforced only within that state's borders. the state provision will not be enforced.

the state provision will not be enforced

A federal form of government is one in which the national government shares sovereign power with no one. the states. the national government. the people.

the states

Under the U.S. Constitution, the federal government has the power to regulate commercial activities among the states. This grant implies that the regulation of such activities is not within the authority of Congress. the states. the President. the courts.

the states

Colleen owns a house. In the house, on a tile floor is a throw rug and a heavy decorative urn. Most likely to meet the definition of a fixture is the urn. the throw rug. the tile floor. all of the choices.

the tile floor

Analytic Data, Inc., wants to hire Benazir, a noncitizen. A work visa is most likely to be set aside for a noncitizen if the noncitizen is of "ethnic similarity to the employer's workforce." there is a shortage of qualified U.S. workers capable of doing the work. hiring the worker will adversely affect the labor force. the noncitizen is a "person with an extraordinary work ethic."

there is a shortage of qualified U.S. workers capable of doing the work

Under a contract with Valley View Villas, a residential development, Weng begins grading a terraced hillside. Halfway through the project, Weng asks for $5,000 over the contract price, claiming an increase in the "cost of doing business." Valley View agrees. This agreement to pay more is unenforceable because Weng's performance was a preexisting duty. unenforceable because Valley View's promise was illusory. enforceable. unenforceable because Weng's request modified the contract.

unenforceable because Weng's performance was a preexisting duty

Salsa Inc. employs three hundred workers at four locations in two states. Under federal law, Salsa must provide each employee, during any twelve-month period, family or medical leave of up to twelve days. up to twelve weeks. up to twelve pay periods. no limited duration.

up to twelve weeks

Odell is an employee of Packing Corporation. She uses social media in a way that violates her employer's stated social media policies. Packing disciplines Odell and then, after a second transgression, fires her. This is a violation of the Stored Communications Act. within the employer's rights. a subject for dispute resolution by social media. a "business-extension exception" under the Electronic Communications Privacy Act.

within the employer's rights