Business Law Midterm Exam

Under a shipment contract for the sale of a certain quantity of solar panels, the seller is required to deliver conforming goods at a particular destination.

False

Under the "stakeholder view," no group ever has a greater stake in company decisions than the shareholders do.

False

Under the Madrid Protocol, the fees and procedures for trademark registration vary significantly among individual countries.

False

Under the categorical imperative, an unethical decision that would have only a small impact is acceptable as long as no one else in society acts the same way.

False

Warrants are required for searches of businesses in highly regulated industries.

False

When profit maximization is the goal, a company does not benefit from ethical behavior.

False

Outcome-based ethics deals with traditional standards of behavior.

T

The first step in making an ethical decision is to understand the problem.

True

The obligation of commercial reasonableness underlies every sales and lease contract.

True

Life Products Inc. enters into a contract to sell medical supplies to Med Clinic, which later sells some of the items to Nina, a patient and consumer. Article 2 of the UCC applies to

both transactions.

Precise Parts, Inc., and Quality Auto stores enter into a contract for a sale of auto parts that meet certain specifications. Precise Parts ships goods that do not comply. Quality Auto

can reject the entire shipment.

Pine Mills Inc. agrees to sell a certain quantity of plywood to Quality Lumber Company under a destination contract. Pine Mills must

deliver the plywood to a particular destination.

Rancho Stables orders ten saddles from Saddles, Inc. The sales contract states that if the tack is defective, Rancho will allow Saddles to repair or replace it instead of rejecting the shipment. When the gear arrives, it is defective. In this case, the perfect tender rule

does not apply.

Artificial Intelligence Inc. sells to Beta Bots Corporation a promising idea for a technological innovation that is still being developed and that looks very promising. This is

ethical and legal.

ABC Hardware Store orders one hundred power hand-drills from Best Tools Inc. When the hand-drills are delivered, they are all missing pieces. ABC rejects the shipment. To exercise a right to cure, Best Tools must

promptly notify ABC of the intent to cure.

Lucy is a business manager for Manufacturing Company. Ethical issues that Lucy is not likely to encounter include determining

protocols for company meetings.

With respect to what society will tolerate, a company's compliance with the law, and no more, is

the lowest ethical level.

"Be honest and treat people fairly." With respect to business ethics, implementing this motto is

very important.

A merchant who is in the business of selling certain goods makes an implied warranty of merchantability every time she sells any type of merchandise.

False

A state's prosecution of a crime prevents a separate federal prosecution relating to the same activity.

False

Because it may be unclear how a court will interpret and apply a law, companies can ensure decisions are viewed as ethical by documenting their own interpretation of the law.

False

Because social media is so widespread, it is legal and ethical for a company to have social media policies limiting employees from criticizing the company.

False

Certain business processes are copyrightable.

False

Congress does not pass laws based on ethics.

False

Corporate stocks and bonds meet the requirements to be among the items of property characterized as goods under the UCC.

False

Decision makers need to consider what they can and will do before they consider what they should do.

False

In a product liability suit based on a design defect, a manufacturer is liable only when the harm was not reasonably preventable.

False

In a successful tort suit, an individual is awarded compensatory damages to put him or her in a better position than the party who committed the tort.

False

The UCC states that an agreement sufficient to constitute a contract cannot exist if the moment of its making is undetermined.

False

The Uniform Commercial Code requires parties to form sales and lease contracts with the same formality used in forming other types of contracts.

False

The registration of a copyright is not evidence that the copyright is valid.

False

The term moral minimum is best defined as the highest degree of ethical behavior expected of a firm.

False

When a sales contract contemplates shipment of the goods but does not specify the arrangements, either party can make those arrangements.

False

A defective product is an unreasonably dangerous product when it is dangerous beyond the expectation of the ordinary consumer.

True

A descriptive term is protected under trademark law if it acquires a secondary meaning.

True

A license may limit the use of a software application to a specific device.

True

A person will not be liable for wrongful interference if the interference results from legitimate competitive behavior.

True

A seller who tenders nonconforming goods has reasonable grounds to believe that the buyer will accept the tender if it includes a price allowance.

True

Acceptance of an offer to lease goods can be made by any means reasonable under the circumstances, including a prompt shipment of the goods.

True

An implied warranty can arise as a result of a well-recognized trade custom that a court could infer the parties intended to apply to their contract.

True

Any time that one party's allegedly wrongful conduct causes injury to another, an action may arise under the law of torts.

True

As part of the IDDR approach as described in the text, it is important to list many possible actions and analyze them using several different ethical theories.

True

Corporate "citizenship" involves making decisions beyond just maximizing profits and dividends.

True

Express and implied warranties do not displace each other because more than one warranty can cover the same goods in the same transaction.

True

Generally, when an acceptance to a sales contract between merchants includes terms additional to those in the offer, the terms automatically become part of the deal.

True

Global businesses need to be conscious of the impact of different religious principles on ethics.

True

In a criminal case, the state must prove its case beyond a reasonable doubt.

True

In response to an order for a hundred baseballs, the shipment of a hundred basketballs is both an acceptance of the offer and a breach of the contract.

True

It can be difficult to predict with certainty how a court will apply a given law to a particular action.

True

One view of the role of business in society is the perceived duty of a company only to generate revenue for its owners.

True

Outcome-based ethics determines what is ethical by looking at the potential benefits and harms of a given action.

True

The Fourth Amendment protects only against searches that violate a person's reasonable expectation of privacy.

True

To the extent that it has not been modified by the UCC, the common law of contracts applies to sales contracts.

True

Under the perfect tender rule, a buyer or lessee has the right to insist on goods that conform to their contract in every detail.

True

The triple bottom line looks at all of the following except

how decisions impact the relationship between the U.S. and other nations.

Jake offers to sell Kyle a collection of baseball cards. To qualify as a sale under the UCC, Kyle's payment for the cards must be

in cash, or its equivalent, or in other goods or services.

Business Rents LLC and Cartage Trucking Inc. enter into a contract for a lease of ten hydraulic lifts. Under the perfect tender rule, Business Rents must ship or tender lifts to Cartage that, with regard to the contract specifications, conform

in every way.

Don interferes with the business interests of Erin in a way not permitted by law, and Erin's business is harmed as a result. To be liable to Erin for the commission of an intentional tort, Don must have

intended to commit the act.

Hal posts online secretly recorded videos of Ida, and includes her name, address, phone number, and Facebook page. Most likely, Ida could bring a successful tort action against Hal for

invasion of privacy.

Minerals Ltd. contracts to provide several manufacturers with tin. When a cartel of tin-producing countries suddenly embargoes future shipments of tin to Minerals so that it cannot fulfill its contracts, the distributor

is excused from the performance of its contracts.

Volatile Investments Inc. sends e-mail ads to any e-mail address that the sender can find on the Web or otherwise generate. Under federal law, Volatile's marketing method

is prohibited

Brewed Beans Inc. makes and sells "CoCoCafe," a chocolate-flavored coffee. Darkroast Inc. later markets a similar drink under the name "KoKoKafe." This is most likely

trademark infringement.

"Fair use" cannot be asserted as a defense to a charge of copyright infringement in a dispute concerning digital sampling.

False

A bar of soap is unmerchantable if stepping on it would cause its user to slip and fall.

False

A buyer is required to cover and a failure to do so will bar the buyer from using any other remedies available under the UCC.

False

Hilo tells the Internal Revenue Service that Jon "cheated on his taxes." This can lead to Hilo's liability for defamation if the statement is

False

If a contract for a sale of goods leaves the quantity term open, there is a basis for determining a remedy.

False

In a criminal case, typically only three-fourths of the jurors need to agree in order to convict the defendant.

False

Corporate social responsibility may increase a business's reputation or goodwill.

T

Crimes are offenses against society as a whole.

True

Digital sampling can constitute copyright infringement.

True

Downloading music into a computer's random access memory, or RAM, without authorization is copyright infringement.

True

Duty-based ethics is based in the idea that every business has certain duties to others.

True

Ed works for Family Dwellings Inc., an investment firm that buys, renovates, and rents foreclosed houses. Ed steals his employer's digital files to start his own competing business, Good Homes LLC. This is

larceny.

Ethics is important because laws may not always be easy to interpret or apply. This is because

laws represent the will of the people and that will is often changing.

Ethics has to do with how a businessperson making business decisions applies

moral principles.

Rosa, who operates a Street Tacos restaurant in her apartment, is charged with criminal violations of the local health and building codes, state license regulations, and federal environmental statutes. To obtain a conviction, the prosecution must

prove beyond a reasonable doubt that Rosa committed every essential element of an offense.

If the acceptance to a sales contract between non-merchants includes terms different from those in the offer, no contract is formed under the UCC.

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.

False

One of the purposes of criminal law is to compensate the victims.

False

Online conduct gives rise to only a narrow variety of legal actions.

False

Rationalization is the process of making a logical decision based in evidence and an analysis of the ethical dimensions of the decision.

False

Tender can occur at any hour and in any manner—such as by a phone call to the buyer, allowing "fifteen minutes to pick up the goods."

False

If a sales contract prohibits any changes unless they are in a signed writing, then only those changes agreed to in a signed writing are enforceable.

True

The parties to a sales contract can limit or exclude consequential damages for any commercial loss—such as a business's lost profits or property damage.

True

When an award of punitive damages is grossly excessive, it furthers no legitimate purpose and violates due process requirements.

True

Ethical decision makers should test and reflect on the outcome of their decisions.

True

When making decisions that are ethical under either profit maximization or corporate citizenship theories, a business should include all of the following steps except

publicize the options you rejected with your reasons.

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.

Sound Financials Corporation sends daily e-mail ads to its previous customers and those who have opted to receive the notices. The state in which the company is physically located has enacted an antispam law. Under federal law

the application of the state's law to Sound's ads is preempted.