Business Law Exam 1
Which of the following is not an appropriate category/classification of law?
"Quasi-criminal" law
The __________ holds an accountant liable to any third party that was or should have been foreseen as a possible user of the accountant's work product, and that, in fact, did use and rely on that work product for a proper business purpose
"Reasonably foreseeable users test"
If a debtor has fewer than twelve (12) creditors, a single creditor with a claim of __________ can file the petition for involuntary bankruptcy
$14,425 or more
If Occupational Safety and Health Act (OSHA) inspectors find violations in the workplace, they may issue citations. Penalties for violations may range from $0 to __________ per violation, depending on the likelihood that the violation would lead to serious injury to an employee.
$70,000
Commonly-used theories of recovery in product liability cases include all of the following except:
Criminal liability
Which of the following is a true statement regarding discrimination based on sexual orientation?
Currently, there is no federal legislation that prohibits discrimination based on sexual orientation
__________ advertising consists of advertising claims that mislead or could mislead a reasonable consumer
Deceptive
Proving disparate-treatment discrimination involves all but which of the following steps?
Defendant-employer must demonstrate the existence and use of a legitimate affirmative action plan
The U.S. Constitution establishes a system of government based on the principle of __________, according to which the authority to govern is divided between federal and state governments
Federalism
Disparate treatment is sometimes referred to as __________ discrimination
Intentional
Which of the following considerations is not included in the "WPH Framework" for business ethics?
Managerial decisions are made in an attempt to circumvent the law
A(n) __________ defense tries to prove the defendant made an honest and reasonable mistake that negates the guilty-mind element of a crime
Mistake-of-fact
A summary jury trial is an abbreviated trial that leads to a __________
Nonbinding jury verdict
Administrative agencies may enact three (3) types of rules: __________
Procedural, interpretive, and legislative
All of the following include relevant areas of business law with respect to corporate management except
Property law
Which of the following is not an advantage of a sole proprietorship?
Proprietor is personally liable for all losses
Environmental law consists primarily of regulations passed by a federal agency known as the Environmental __________ Agency
Protection
Which of the following is not a state-created exception to the employment-at-will doctrine allowing an employee to sue for wrongful discharge?
Quasi-contract
The Federal Reserve Board of Governors has the power to govern credit provisions related to sales contracts through its __________
Regulation Z
One form of price fixing is bid __________, an agreement among firms not to bid against one another or to submit a certain level of bid
Rigging
If the Equal Employment Opportunity Commission decides not to sue, it notifies the plaintiff-employee of his/her right to file an action, and issues the plaintiff-employee a __________
Right-to-sue letter
The Corporate and Criminal Fraud Accountability Act is also known as the __________ Act
Sarbanes-Oxley
__________ National Ambient Air Quality Standards (NAAQS) are pollution levels necessary to protect public welfare
Secondary
Reasons cited for congressional enactment of The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 include all but which of the following?
The fact that a significant number of individuals are forced to file bankruptcy as a result of unanticipated medical expenses, separation and divorce, or unemployment
An environmental impact statement (EIS) must contain a detailed statement of all but which of the following?
The potential political implications of the proposed activity should it be implemented
When engaging in "rule-of-reason" analysis to evaluate the reasonableness of a restraint on trade, courts consider all but which of the following factors?
The subjective intent of the restraint on trade
The value of efficiency includes which of the following meanings?
To maximize the amount of wealth in society
Which of the following is not a purpose of tort law?
To punish the defendant for committing a wrong against society
A __________ is a business arrangement in which stock owners appoint beneficiaries and place their securities with trustees, who manage the company and pay a share of their earnings to their stockholders
Trust
All but which of the following categories of employees are excluded from coverage under the Fair Labor Standards Act?
Wage employees
Under the __________, an accountant is liable to known third-party users of the accountant's work product and also to those in the limited class whose reliance on the work the accountant specifically foresaw
"Restatement rule"
An alternative name for "case law" is
Common law
When two (2) or more competitors agree to set prices for a product or service, they are engaging in price __________
Fixing
The National Environmental Policy Act (NEPA) requires the preparation of an environmental __________ statement
Impact
A __________ is a partnership agreement in which company members hold transferable shares while all the goods of the company are held in the names of the partners
Joint stock company
Commonly-recognized defenses to claims under Title VII of the Civil Rights Act of 1964 include all but which of the following?
Judicial fiat
Which of the following are two (2) primary pretrial motions?
Motion for judgment on the pleadings; motion for summary judgment
According to the Federal Arbitration Act, under all but which of the following circumstances can an arbitrator's award be set aside?
The arbitrator was not a duly-appointed judge or licensed attorney of the jurisdiction in which the dispute arose
Under The Employee Retirement Income Security Act (ERISA), employers must provide pension and health plan participants with all but which of the following?
The option of selecting an employer-administered "defined benefit" plan
Product liability is primarily based on __________ law
Tort
Which amendment to the U.S. Constitution protects freedom of religion, press, speech, and peaceable assembly?
The First Amendment
Which amendment to the U.S. Constitution protects citizens from "unreasonable searches and seizures?"
The Fourth Amendment
Which provision of the U.S. Constitution prohibits states from discriminating against citizens of other states when those non-residents engage in "ordinary and essential" activities?
The Privileges and Immunities Clause
Liquidation occurs when a debtor turns over all assets to a __________, an individual who takes over administration of the debtor's estate
Trustee
___________ are the various documents used and developed during an audit, including notes, calculations, copies, memorandums, and other papers constituting the accountant's work product
Working papers
The "universalization" test
Asks us to consider what the world would be like if our decisions were "copied" by everyone else
__________ occurs when one person places another in fear or apprehension of an immediate, offensive bodily contact
Assault
To use the __________ doctrine successfully, a defendant must prove that the plaintiff voluntarily and unreasonably encountered the risk of the actual harm
Assumption of the risk
Which of the following is not a type of bankruptcy petition?
Chapter 5
__________ bankruptcy is also known as liquidation bankruptcy, or "straight" bankruptcy
Chapter 7
__________ school theorists argue that the central, and perhaps only, purpose of antitrust law is to encourage economic efficiency, that is, getting the most output from the least inpu
Chicago
___________ damages are damages awarded to compensate the victim for all harm caused by the defendant tortfeasor
Compensatory damages
Because consumers are particularly vulnerable during a door-to-door sale, the government provides the "__________," where consumers have __________ days to cancel a purchase made during a door-to-door sale
Cooling-Off Rule; three (3)
The Federal Trade Commission (FTC) may require that a company engage in __________ advertising, or __________, running advertisements in which the company explicitly states that formerly-advertised claims were untrue
Corrective; counter-advertising
In typical negligence cases, courts rarely award punitive damages, or __________ damages, which are imposed to punish the offender and deter others from committing similar offenses
Exemplary
In __________ rule making, the Administrative Procedures Act (APA) allows an agency to decide whether public participation will be allowed in rule-making proceedings with regard to "military or foreign affairs" and "agency management or personnel"
Exempted
__________ assumption of the risk occurs when the plaintiff expressly agrees (usually in a written contract) to assume the risk posed by the defendant's behavio
Express
An __________ is an affirmative representation about a product that becomes part of the "basis of the bargain"
Express warranty
__________, otherwise known as blackmail, is the making of threats for the purpose of obtaining money or property
Extortion
Congress passed the __________ to ensure accurate credit reporting
Fair Credit Reporting Act of 1970
__________, a privacy tort, is closely related to defamation and occurs when publicity about a person creates an impression about an individual that is not valid. It could involve attributing characteristics or beliefs to a person that he or she does not possess, or creating the impression that an individual has taken certain actions he or she has not taken
False light
An __________ assumes that the buyer is relying on the seller's skill and judgment to select certain goods
Implied warranty of fitness for a particular purpose
An __________ means that the goods are fit for the ordinary purpose for which they are sold and used
Implied warranty of merchantability
Which of the following is not an appropriate tip for creating a binding arbitration clause?
Impose contractual limitations on the remedies available to the parties, such as limitations on punitive damages or attorney fees
Accountants may be liable to individuals in all but which of the following groups?
Incidental users
A(n) __________ partnership is an agreement between at least one general partner and at least one limited partner
Limited
Most states have enacted __________ statutes, which enable the court to serve defendants outside the state as long as the defendant has sufficient minimum contacts within the state and it seems fair to assert jurisdiction over him or her
Long-arm
Pursuant to the Resource Conservation and Recovery Act's (RCRA's) __________ program, generators of hazardous waste must maintain records that list the amount and type of all hazardous waste produced, how it is to be transported, and how it will ultimately be disposed
Manifest
When courts rely on precedent, they are obeying the principle of __________
Stare decisis
________________________ is the deadline for filing a lawsuit. Most lawsuits MUST be filed within a certain amount of time. In general, once this period "runs out," the legal claim is not valid any longer.
Statutes of limitations
Under a __________ system, the government gives firms tax credits, low-interest loans, and/or grants if they install pollution-control devices or change their production methods to reduce harmful emissions
Subsidy
Which amendment to the U.S. Constitution provides that in light of the need for a well-regulated militia for security, the government cannot infringe on citizens' right to bear arms?
The Second Amendment
Which of the following is an example of a major federal administrative agency (executive agency)?
The Veteran's Administration
Which of the following does not determine what market participants may or may not legally do?
Corporations
Which of the following is not an essential element of negligence?
Intent to cause harm
Chapter __________ provides for adjustment of debts for family farmers or family fishermen
12
By statute, Chapter 13 repayment plans last between __________ and __________ months
36; 60
The Age Discrimination In Employment Act of 1967 (ADEA) was enacted to prohibit employers from refusing to hire, discharging, or discriminating in terms and conditions of employment against employees or applicants age __________ or older
40
Within __________ days of the creditor's meeting, all creditors (except secured creditors) must file a proof of claim with the bankruptcy court clerk to receive a portion of the debtor's estate
90
The value of "security" includes all of the following alternative meanings except
A citizen's willingness to compromise basic constitutional freedoms in return for government-provided security
In a binding arbitration clause
A contractual provision mandates that all disputes arising under the contract must be settled by arbitration
The United States Supreme Court is most likely to issue a writ of certiorari in all but which of the following instances?
A state court of last resort has ruled that a state law is invalid
___________ is also known as "cause in fact," while __________ is sometimes referred to as "legal cause"
Actual cause; proximate cause
The elements of a crime include
Actus Reus and Mens Rea
__________ agencies are bodies of the city, county, state, or federal government that carry out specific regulatory duties
Administrative
In __________ negotiation, each party seeks to maximize its own gain, while in __________ negotiation, the parties seek joint gain
Adversarial; problem-solving
Which of the following is not a proper method of service of process?
All of these are proper methods of service of process -Service by certified mail, Personal service, Residential service
The term __________ dispute resolution refers to the resolution of legal disputes through methods other than litigation, such as negotiation, mediation, arbitration, summary jury trials, mini-trials, neutral case evaluations, and private trials
Alternative
Courts of __________ jurisdiction have the power to review previous judicial decisions to determine whether trial courts erred in their decisions
Appellate
All of the following are advantages of arbitration except
Arbitration is more efficient, although more expensive, than litigation
The 1998 Alternative Dispute Resolution Act
Attempts to impress upon parties and courts the advantages of alternative dispute resolution, Gives each district court the choice whether to require alternative dispute resolution, Requires that in all district courts, civil litigants must consider the use of an alternative dispute resolution process at an appropriate stage in the litigation
The Sarbanes-Oxley Act of 2002 encourages auditor independence by prohibiting registered public accounting firms from engaging in all but which of the following non-auditing acts?
Attending professional sporting events with clients
When sellers advertise a low price for an item generally unavailable to the consumer and then push the consumer to buy a more expensive item, they are engaging in __________ advertising
Bait-and-switch
__________ is the offering, giving, soliciting, or receiving of money or any object of value for the purpose of influencing the judgment or conduct of a person in a position of trust
Bribery
Business ethics involves the application of ethics to the special problems and opportunities experienced by
Businesspeople
In a __________-style business operation, the franchise operates under the franchisor's business name and is required to follow the franchisor's standards and methods of business operation
Chain
An ethical __________ is a problem about what a firm should do for which no clear, right decision is available
Dilemma
Through the __________ method of franchising, the franchisor manufactures a product and licenses a dealer to sell it in an exclusive territory
Distributorship
When courts attempt to determine whether a reasonable person would have owed a duty to others, they consider all but which of the following questions?
Does the defendant in the subject litigation have a prior criminal record, and if so, what is the nature of the prior criminal record (both in terms of the number and types of prior criminal offenses)?
Which of the following is not a basic limit on administrative agency power?
Electoral
Under the Federal Unemployment Tax Act (FUTA,) __________ pay taxes to the __________, which deposit the money into the __________ government's Unemployment Insurance Fund
Employers, states, federal
__________ legislation is a statute that specifies the name, functions, and specific powers of a particular administrative agency
Enabling
The Fair Labor Standards Act mandates that employees who work more than __________ hours in a week be paid no less than __________ times their regular wage for all hours they work beyond __________ during a given week
Forty (40); 1 ½; forty (40)
The __________ Amendment to the United States Constitution contains the equal protection clause, which prevents states from denying the "equal protection of the laws" to any citizen
Fourteenth
The role of administrative agencies has led some to refer to them as the unofficial __________ branch of government
Fourth
The value of __________ includes the following alternative meanings: the ability to act without restriction from rules imposed by others; the right to possess the capacity or resources to act as one wishes; and the choice to escape the cares and demands of this world entirely
Freedom
In a(n) __________ partnership, partners divide the profits (usually equally) and management responsibilities and share unlimited personal liability for the firm's debts
General
Through which of the following methods does the government impose taxes on activities that are environmentally harmful?
Green taxes
To recover workers' compensation benefits, the injured party must demonstrate:
He/she is an employee and the injury occurred on the job
A merger between two or more companies producing the same or similar products is a(n) __________ merger
Horizontal
The first major piece of federal legislation adopted explicitly to encourage the formation of labor unions and provide for collective bargaining between employers and unions as a means of obtaining the peaceful settlement of labor disputes was the __________ Act. (You don't need to know this for the exam - just to test your reading comprehension)
None of these - Taft-Hartley, Landrum-Griffin, Hoffa
A __________ arises when a person uses his or her property in a manner that unreasonably interferes with another's use and enjoyment of his or her land
Nuisance
An S corporation cannot have more than __________ shareholders
One hundred (100)
Courts of __________ jurisdiction have the power to hear and decide cases when they first enter the legal system
Original
Certain business practices always hurt consumers. To establish such a violation, a plaintiff would simply have to prove that the prohibited conduct occurred. The defendant can offer no justification for the behavior; he or she can argue only that the behavior did not occur. Such business practices are called __________ violations
Per se
The negligence __________ (literally, "negligence in or of itself") doctrine applies to cases in which the defendant has violated a statute enacted to prevent a certain type of harm from befalling a specific group to which the plaintiff belongs
Per se
Which of the following is not a prohibited type of discrimination in violation of The Civil Rights Act of 1964?
Personal appearance
Only certain crimes, typically violations of regulatory statutes, allow punishment without proof of guilty mind. This liability without fault, or __________ liability, applies to actions that, regardless of the care taken, are specifically prohibited, such as selling cigarettes or alcohol to a minor
Strict
__________ liability is liability without fault
Strict
__________ jurisdiction is a court's power to hear certain kinds of cases
Subject matter
If a contract does not contain a binding arbitration clause, parties may secure arbitration by entering into a __________ agreement, a contract providing that a specific dispute will be resolved through arbitration
Submission
Administrative agency investigative powers typically include the power to issue a __________, an order to appear at a particular time and place and provide testimony, and a __________, an order to appear and bring specified documents
Subpoena; subpoena duces tecum
An investment group that comes together for the explicit purpose of financing a specific large project is a(n) __________
Syndicate
Which provision of the U.S. Constitution is the primary source of authority for federal regulation of business?
The Commerce Clause
Which of the following is not a measure of damages recoverable in a tort case?
Supplemental damages
The Fifth Amendment to the U.S. Constitution provides that when government takes private property for public use, it must pay the owner just compensation, or fair market value, for his property. This provision is called the __________ clause
Takings
According to the __________ Amendment to the U.S. Constitution, all powers that the Constitution neither gives exclusively to the federal government nor takes from the states are reserved for the states
Tenth
Which of the following collection behaviors is not expressly prohibited by the Fair Debt Collection Practices Act?
Contacting the debtor between 8 a.m. and 9 p.m.
Unlike negligence and strict liability theories, breach of warranty stems from __________ theory rather than __________ theory
Contract; tort
If the defendant successfully proves __________, no matter how slight the plaintiff's negligence, the plaintiff will be denied any recovery of damages
Contributory negligence
__________ occurs when a person permanently removes personal property from the owner's possession and control
Conversion
Types of jurisdiction include all of the following except
Deferred
The __________ defense applies if the idea for a crime originated with a police officer or some other government official who suggested it to the defendant, who would not otherwise have committed the crime
Entrapment
__________ work environment is a recognized form of sexual harassment
Hostile
__________ jurisdiction is a court's power to render a decision affecting the rights of specific persons before the court
In personam
What is not an advantage of the partnership?
Individual partner liability for all partnership losses
__________ may file under Chapter 13
Individuals, but not partnerships or corporations,
The Freedom of Information Act, Government in Sunshine Act, and Privacy Act of 1974 specify agencies' responsibilities regarding public access to information. These statutes constitute __________ limits on administrative agency power
Informational
When a law establishes labeling, design, or content requirements for products, the manufacturer has a duty to meet these requirements. Failure by the manufacturer to meet those standards resulting in harm to a plaintiff constitutes __________
Negligence per se
False imprisonment may occur by
Physical restraint
Under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), ultimate liability for cleanup of land contaminated by waste is placed on potentially responsible parties (PRPs). PRPs include __________
Present owners or operators of a facility where hazardous materials are stored, Owners or operators at the time the waste was deposited at the site, Those who transported hazardous waste to the site
___________ National Ambient Air Quality Standards (NAAQS) are pollution levels necessary to protect public health
Primary
A __________ occurs when a person uses her property in an unreasonable manner that harms a neighbor's use or enjoyment of his property
Private nuisance
The __________ Antitrust Act attempts to stop __________ from unfairly restricting market competition
Sherman; trusts
Which of the following occurrences is not covered by the Family and Medical Leave Act?
The care of a seriously ill friend
An accountant may not disclose working papers unless
The client consents or the court orders the documents
Which of the following is not an essential element of accountant fraud liability?
The client unjustifiably relied on the misrepresentation
Which of the following is not an advantage of mediation?
The decision of the mediator is binding, provided that at least one (1) of the disputing parties contractually stipulates to binding mediation prior to engaging in the dispute resolution process
The __________ laws include sales laws and other regulations affecting commerce, such as bank deposits and collections, title documents, and warranties
Uniform Commercial Code (UCC)
Disparate impact is often referred to as __________ discrimination
Unintentional
The term "computer crime" refers to any wrongful act that
Uses computers to commit a crime, Involves computers, Is directed against computers
When two (2) parties at different levels in the manufacturing and distribution process make an agreement that restrains trade, they have made a __________ restraint against trade
Vertical
Once the potential jurors have reported for jury duty, the __________, or jury selection, process begins
Voir dire
"Stakeholders" of a firm are ordinarily thought to include all of the following except
Legislators
Which of the following practices is not prohibited by the Credit Card Fraud Act of 1984?
Applying for a credit card with a credit limit of five thousand dollars ($5,000) or more if the applicant's total annual income from all sources is not greater than one hundred and fifty (150) percent of the poverty level established in the applicant's state of residence
Which of the following is a purpose of law?
Encourage social justice, Guarantee personal freedoms, Provide order
The value of justice includes all but which of the following alternative meanings?
Escaping the cares and demands of this world entirely
Once the petition is filed, all of the debtor's pre-petition assets form the bankruptcy __________
Estate
The __________ rule holds that all evidence obtained in violation of the constitutional rights spelled out in the Fourth, Fifth, and Sixth Amendments to the U.S. Constitution is normally not admissible at trial. Such evidence is considered "fruit of the poisonous tree" because it is the result of an illegal procedure
Exclusionary
The tort of __________ occurs when someone engages in outrageous, intentional conduct likely to cause extreme emotional distress to the party toward whom the conduct is directed
Intentional infliction of emotional distress
The first federal administrative agency created by Congress was the __________ Commission
Interstate Commerce
Civil law
Involves rights in relationships between persons, Involves responsibilities in relationships between persons, Involves remedies available when someone's rights are violated
The __________ doctrine allows the plaintiff to recover damages, despite proof of contributory negligence, as long as the defendant has a final clear opportunity to avoid the action that injured the plaintiff
Last-clear-chance
The concept of __________ sees our proper role as obedience to duly authorized law
Legal positivism
A(n) __________ order is a form of cease-and-desist order issued by the Federal Trade Commission applying not only to the product that was the subject of the action, but also to other products produced by the same firm
Multiple-product
An accountant is liable for __________ if he or she fails to exercise the care of a competent, reasonable professional and that failure causes loss or injury to the client
Negligence
To bring a successful case based on __________, the plaintiff must demonstrate that the defendant knew or should have known that without a warning, the product would be dangerous in its ordinary use (or in any reasonably foreseeable use,) yet the defendant still failed to provide a warning
Negligent failure to warn
__________ statements are general statements about directions in which any administrative agency intends to proceed with respect to rule-making or enforcement activities. Such statements have no binding impact on anyone, nor do they directly affect anyone's legal rights or responsibilities
Policy
The __________ placed new statutory obligations on accountants by requiring them to use adequate procedures when performing an audit, so they can detect any illegal acts committed by the audited company. It also lists a specific set of actions and guidelines an accountant must follow after identifying a potentially illegal activity
Private Securities Litigation Reform Act of 1995
Under the "Ultramares rule," an accountant will be held liable for negligence only to those with whom he or she had __________, meaning the client and anyone for whose __________ benefit the accounting statements were prepared
Privity of contract; primary
If you decide to go into business on your own, you are creating a sole __________, an unincorporated business organization in which you, as the sole owner, are in complete control of the management and profits of the business
Proprietorship
Although Section 5 of the Federal Trade Commission Act prohibits deceptive and unfair acts in commercial settings, __________, the use of generalities and clear exaggerations, is permissible
Puffing
__________ sexual harassment cases occur when a supervisor makes a sexual demand on someone of the opposite sex and this demand is reasonably perceived as a "term or condition" of employment
Quid pro quo
A(n) __________ taking, entitling a property owner to just compensation, occurs when a regulation deprives the property owner of all economically beneficial uses of the land
Regulatory
Embezzlement
Requires entrustment
__________ consists of oral statements so inherently harmful that general damages are presumed
Slander per se
What are the two common elements necessary for recovery in any product liability case?
The product is defective, and the defect existed when the product left the defendant's control
Under the Family and Medical Leave Act (FMLA), an "eligible employee" is one who has worked at least __________ hours per week for each of the __________ prior to the leave
Twenty-five (25); twelve (12) months
When a seller agrees to sell a product to a buyer on the condition that the buyer will also purchase another product, the seller has created a __________ arrangement
Tying
The Counterfeit Access Device and Computer Fraud and Abuse Act of 1984 prohibits which of the following categories of computer crimes?
Unauthorized use of a computer to collect financial or credit information protected under federal privacy law