BUSINESS BMAL 590 week1 Legal Enviroment of Business

A blank_____ is created when two or more persons agree to place their money, labor, or skills in a business and to share the profits and losses.

A            

sole proprietorship

B            

general partnership

C            

limited partnership

D            

C corporation

A blank_____ corporation is owned by a limited number of shareholders.

A            

public

B            

private

C            

close

D            

none of the responses are correct

A member of the board who also serves as an officer is a(n) blank_____ director.

A            

inside

B            

interested

C            

outside

D            

employed

The rules that govern the internal operation of a corporation are called the blank_______.

A            

corporate charter

B            

bylaws

C            

articles of incorporation

D            

corporate articles

Small corporations can avoid double taxation by electing to be treated as a(n) blank_______.

A            

C corporation

B            

close corporation

C            

LLC

D            

S corporation

A blank_____ is a public offer to all shareholders of a corporation to buy their shares at a stated price, usually higher than the market price.

A            

tender offer

B            

leveraged buyout

C            

target bid

D            

merger

In a blank_____ merger, the shares in the disappearing corporation are automatically converted into shares in the surviving corporation.

A            

cash out

B            

non-cash

C            

freeze out

D            

liquidation

In a blank_____, a stock purchase is financed by debt.

A            

cash out merger

B            

freeze out acquisition

C            

leveraged buyout

D            

none of the responses are correct

A partnership is not automatically dissolved upon a partner’s blank______, and the partners holding a majority of the partnership interests may elect to continue the general partnership.

A            

death

B            

bankruptcy

C            

withdrawal

D            

all of the responses are correct

The blank_____ doctrine prevents a third party who acts as if it were doing business with a corporation from later claiming that the corporation is not really a corporation.

A            

de jure corporation

B            

de facto corporation

C            

corporation by estoppel

D            

alter ego

Which of the following statements is NOT true regarding the advantages and disadvantages of a sole proprietorship?

A            

A sole proprietorship can be created without formal agreements or state filings.

B            

The proprietor reports income from the business on a personal tax return.

C            

The proprietor alone bears liability for the losses.

D            

It is usually easy for sole proprietorships to raise capital.

Which of the following statements is NOT true regarding limited partnerships?

A            

General partners of a limited partnership remain jointly and severally liable for partnership obligations.

B            

Limited partners assume no liability for partnership debts beyond the amount they have contributed.

C            

Limited partners are responsible for the management of the partnership.

D            

Limited partnerships are often used to raise capital.

Which of the following requirements is NOT required by a corporation to qualify for S corporation status?

A            

The corporation must have only one class of stock.

B            

The corporation must file a timely election to be treated as an S corporation.

C            

The corporation must have no more than twenty-five shareholders.

D            

The corporation generally may not own more than 80 percent of another corporation.

A blank_____ combines the tax advantages of a pass-through entity with the limited liability advantages of a corporation.

A            

limited liability company

B            

de jure corporation

C            

joint venture

D            

general partnership

The blank_____ set forth the steps that must be taken to establish a corporation in that state.

A            

Uniform Federal Rules

B            

corporate statutes of each state

C            

corporate bylaws

D            

none of the responses are correct

If incorporators cannot show substantial compliance with statutes regarding incorporation but can show that they were unaware of any defect and acted in good faith, a court may treat the entity as a(n) blank_____.

A            

de jure corporation

B            

real corporation

C            

de facto corporation

D            

equitable corporation

A blank_____ is created when two or more persons agree to place their money, labor, or skills in a business and to share the profits and losses.

A            

sole proprietorship

B            

general partnership

C            

limited partnership

D            

C corporation

A blank_____ corporation is owned by a limited number of shareholders.

A            

public

B            

private

C            

close

D            

none of the responses are correct

A member of the board who also serves as an officer is a(n) blank_____ director.

A            

inside

B            

interested

C            

outside

D            

employed

he rules that govern the internal operation of a corporation are called the blank_______.

A            

corporate charter

B            

bylaws

C            

articles of incorporation

D            

corporate articles

Small corporations can avoid double taxation by electing to be treated as a(n) blank_______.

A            

C corporation

B            

close corporation

C            

LLC

D            

S corporation

A blank_____ is a public offer to all shareholders of a corporation to buy their shares at a stated price, usually higher than the market price.

A            

tender offer

B            

leveraged buyout

C            

target bid

D            

merger

In a blank_____ merger, the shares in the disappearing corporation are automatically converted into shares in the surviving corporation.

A            

cash out

B            

non-cash

C            

freeze out

D            

liquidation

In a blank_____, a stock purchase is financed by debt.

A            

cash out merger

B            

freeze out acquisition

C            

leveraged buyout

D            

none of the responses are correct

A partnership is not automatically dissolved upon a partner’s blank______, and the partners holding a majority of the partnership interests may elect to continue the general partnership.

A            

death

B            

bankruptcy

C            

withdrawal

D            

all of the responses are correct

The blank_____ doctrine prevents a third party who acts as if it were doing business with a corporation from later claiming that the corporation is not really a corporation.

A            

de jure corporation

B            

de facto corporation

C            

corporation by estoppel

D            

alter ego

Which of the following statements is NOT true regarding the advantages and disadvantages of a sole proprietorship?

A            

A sole proprietorship can be created without formal agreements or state filings.

B            

The proprietor reports income from the business on a personal tax return.

C            

The proprietor alone bears liability for the losses.

D            

It is usually easy for sole proprietorships to raise capital.

Which of the following statements is NOT true regarding limited partnerships?

A            

General partners of a limited partnership remain jointly and severally liable for partnership obligations.

B            

Limited partners assume no liability for partnership debts beyond the amount they have contributed.

C            

Limited partners are responsible for the management of the partnership.

D            

Limited partnerships are often used to raise capital.

Which of the following requirements is NOT required by a corporation to qualify for S corporation status?

A            

The corporation must have only one class of stock.

B            

The corporation must file a timely election to be treated as an S corporation.

C            

The corporation must have no more than twenty-five shareholders.

D            

The corporation generally may not own more than 80 percent of another corporation.

A blank_____ combines the tax advantages of a pass-through entity with the limited liability advantages of a corporation.

A            

limited liability company

B            

de jure corporation

C            

joint venture

D            

general partnership

he blank_____ set forth the steps that must be taken to establish a corporation in that state.

A            

Uniform Federal Rules

B            

corporate statutes of each state

C            

corporate bylaws

D            

none of the responses are correct

If incorporators cannot show substantial compliance with statutes regarding incorporation but can show that they were unaware of any defect and acted in good faith, a court may treat the entity as a(n) blank_____.

A            

de jure corporation

B            

real corporation

C            

de facto corporation

D            

equitable corporation

____ law legal systems primarily rely on case law and precedents.

A            

Common

B            

Civil

C            

Statutory

D            

Codified

The Seventh Amendment to the U.S. Constitution guarantees the right to a jury trial blank______.

A            

“in all legal suits”

B            

“in all civil and criminal suits”

C            

“in suits at common law”

D            

“in all civil and criminal suits” and “in suits at common law”

_____ avoids renegotiation of treaties by allowing the president to negotiate trade agreements and then submit them for an up or down vote by Congress with no amendments permitted.

A            

Treaty approval authority

B            

Executive privilege

C            

Foreign affairs priority

D            

Fast-track negotiating authority

hrough the process of blank_____, a nation that was NOT an original party to a treaty can elect to participate in a treaty at a later time.

A            

ratification

B            

accession

C            

signing

D            

approval

____ is the process by which a country asserts a right to regulate activities that occur beyond its borders.

A            

Internationalization

B            

Nationalization

C            

Extraterritoriality

D            

None of the above.

_____ tariffs require the importer to pay a percentage of the value of the imported merchandise.

A            

Ad valorem

B            

Ad hoc

C            

Harmonized

D            

Customs valuation

Exports are controlled by means of export blank_____.

A            

duties

B            

licenses

C            

subsidies

D            

customs valuation

A product is blank_____ when it is sold abroad below the current selling price in the exporter’s home market or below the exporter’s cost of production.

A            

subsidized

B            

dumped

C            

underpriced

D            

undervalued

_____ is the principal U.S. statute addressing unfair foreign practices affecting U.S. exports of goods or services.

A            

Section 301 of the Trade Act of 1974

B            

Section 502 of the Trade Act of 1990

C            

The Unfair Export Limits Act

D            

The International Control Act

The North American Free Trade Agreement provides for elimination of barriers to trade between what countries?

A            

The United States and Mexico only.

B            

The United States, Canada, Mexico, and Brazil.

C            

The United States and all South American countries.

D            

The United States, Canada, and Mexico.

A blank_____ is created when a group of states reduce or eliminate tariffs between themselves but maintain their own individual tariffs as to other states.

A            

customs union

B            

Caribbean Basin Initiative

C            

free trade area

D            

most favored nation

Courts apply the principles of blank_____ to determine which country’s laws should be used to interpret an international contract.

A            

the United Nations CISG

B            

conflict of law

C            

international law

D            

domestic law

A contract dispute which is heard by a court without reference to a prior arbitration is known as a(n) blank______ review.

A            

appellate

B            

ad hoc

C            

arbitration

D            

de novo

Under the principle of blank_____, a court will enforce another country’s judgments under certain conditions.

A            

comity

B            

harmony

C            

act-of-state

D            

conciliation

_____ is a process used mainly in the area of public international law whereby a third party, often a disinterested government, brings the parties together by establishing communication and providing a site where the parties can meet, often in secret.

A            

Public involvement

B            

Good offices

C            

International involvement

D            

Best transactions

________ damages compensate a party for losses that occur as a foreseeable result of the breach.

A            

Incidental

B            

Reliance

C            

Restitution

D            

Consequential

Contract law comes from which of the following?

A            

Case law

B            

Statutes

C            

Tradition

D            

All the responses are correct

Which of the following is not one of the basic elements for formation of a valid contract?

A            

Consideration

B            

Promissory estoppel

C            

An offer and acceptance

D            

A legal purpose

Which of the following is true regarding acceptance?

A            

In the absence of a provision in an offer regarding how acceptance is to be made, acceptance is effective upon dispatch into a mailbox.

B            

Acceptance is never effective until it is received.

C            

An offeror may not by law specify that an offer can be accepted only by facsimile to a stated fax number and that the acceptance is not effective until actually received.

D            

An offeror may revoke an offer so long as the revocation is made before an acceptance is received.

A blank_________ contract is a promise given in exchange for another promise.

A            

unilateral

B            

bilateral

C            

mutual

D            

collateral

A third-party beneficiary is someone who is not

A            

a legal and recognized type of beneficiary.

B            

intended to benefit from the contract.

C            

a party to the original contract.

D            

intended to enforce the contract.

Liquidated damages are damages that

A            

punish the breaching party.

B            

fluctuate with the market conditions.

C            

are an estimate of the damages likely to be sustained from the breach.

D            

none of the above

An agreement between two parties that provides that the seller will sell all of a product that he produces to the buyer is called a(n)

A            

illusory promise

B            

requirements contract

C            

output contract

D            

fulfillment contract

Under traditional common law, the acceptance must be the blank________ of the offer.

A            

essential terms

B            

consideration

C            

understanding

D            

mirror image

Under the doctrine of blank________, a court may invalidate an agreement if one party had sufficient influence and power over the other as to make genuine assent impossible.

A            

fraud

B            

mistake

C            

undue influence

D            

detrimental reliance

Which of the following does not generally make a contract voidable?

A            

Fraud

B            

Duress

C            

Unilateral mistake of fact

D            

Misrepresentation

A(n) blank________ is any agreement to accept performance that is different from what is called for in the contract

A            

accord and satisfaction

B            

anticipatory repudiation

C            

frustration of purpose

D            

mutual rescission

Which of the following is true regarding a mistake of judgment?

A            

It is a valid defense to enforcement of a contract.

B            

It is not a valid defense to enforcement of a contract.

C            

Whether it is a valid defense to enforcement of a contract depends upon the substantiality of the mistake.

D            

Whether it is a defense to enforcement of a contract depends upon: (1) the substantiality of the mistake, (2) whether the risks were allocated, and (3) timing.

Which of the following is a doctrine that may excuse the government from performance on a contract due to legislative or executive acts?

A            

The sovereign acts doctrine.

B            

The legislative and executive acts doctrine.

C            

The separation-of-powers doctrine.

D            

The governmental privilege doctrine.

Under the doctrine of blank________, a court may order restitution if one party has received a benefit for which it has not paid when there was no contract between the parties.

A            

mutuality of obligation

B            

laesio enormis

C            

quantum meruit

D            

pre-contractual liability

To which of the following does article 2 of the UCC apply?

A            

The sale of goods.

B            

The rendering of services.

C            

The sale of land.

D            

Both the sale of goods and the rendering of services.

What are items of personal property that are attached to real property and cannot be removed without substantial damage called?

A            

Connectors

B            

Relaters

C            

Entanglements

D            

Fixtures

Under the UCC, which statement is not true regarding a buyer’s right to reject nonconforming goods?

A            

The buyer may reject any or all of the goods.

B            

The right to reject the goods can be waived inadvertently.

C            

The buyer may treat the goods as if it owned them.

D            

A buyer who has taken possession of goods must hold the goods for a time sufficient to permit the seller to remove them.

Under the UCC, a failure to perform is excused under the doctrine of

A            

impossibility

B            

commercial impossibility

C            

commercial impracticability

D            

consumer impracticability

Under the Convention on Contracts for the International Sale of Goods (CISG), an offer becomes effective when

A            

the offeror sends it

B            

it reaches the offeree

C            

the offeree reads it

D            

the offeree replies

Under the UCC statute of frauds, which of the following terms must be in a writing order to satisfy the statute?

A            

The price

B            

The quantity

C            

The identity of the parties

D            

The time and place for delivery

Which of the following statements best describes an offer under the UCC?

A            

An offer is not defined by the UCC.

B            

An offer is an invitation to buy or sell between merchants.

C            

An offer is any writing sufficient to describe the goods.

D            

An offer is contained in the standard business forms.

Which of the following is governed by Article 2 of the UCC?

A            

A contract for sale of a commercial building.

B            

A contract for sale of office supplies.

C            

An employment contract.

D            

A life insurance contract.

UCC Section 2-319 expressly authorizes the buyer and seller to allocate the risk of blank________ between them as they see fit.

A            

damages

B            

specific performance

C            

modification

D            

loss

When the seller provides the buyer with a document enabling it to pick up goods held at an independent warehouse, the risk of loss passes to the buyer

A            

when the goods are picked up by the buyer.

B            

when the contract of sale is signed.

C            

when the buyer receives the document entitling it to pick up the goods.

D            

when the buyer pays for the goods

A contract is blank________ if its terms are unduly harsh or oppressive or unreasonably favorable to one side.

A            

substantively unconscionable

B            

procedurally unconscionable

C            

procedurally impracticable

D            

substantively impracticable

Which of the following is an example of a statement made by a salesperson that would be considered “puffing”?

A            

This car will get 35 miles per gallon.

B            

This is a genuine diamond ring.

C            

This is an original work of art.

D            

This copier is the best in the business.

If all parties are merchants, additional provisions in an acceptance automatically become part of the contract unless

A            

the offer expressly limits acceptance to the terms of the offer.

B            

the new terms materially alter the original offer.

C            

the party making the original offer notifies the other party within a reasonable time that it objects to the new terms.

D            

all the responses are correct.

Which of the following will not allow a consumer to recover under a breach of warranty?

A            

The buyer made inappropriate use of the goods.

B            

The goods were defective at the time of the sale.

C            

The loss or injury was caused by the defect.

D            

The seller has no affirmative defenses.

If a buyer wrongfully cancels a contract under the UCC, the seller may not recover

A            

the difference between the market price and the unpaid contract price.

B            

damages that are adequate to put the seller in as good a position as performance would have.

C            

damages and expenses saved because of the buyer’s breach.

D            

the profit that it would have made from full performance.

________ do not relieve a contracting party from their responsibilities under the UCC doctrine of commercial impracticability.

A            

Wars

B            

Market fluctuations

C            

Embargoes

D            

Natural disasters

A(n) blank________ contract occurs when one party is induced to enter a contract on a “take it or leave it” basis.

A            

adhesion

B            

merchants

C            

output

D            

requirement

Which of the following is not true under Magnuson-Moss Warranty Act?

A            

The Act requires a supplier of consumer products to give a written warranty.

B            

The Act applies only when a seller chooses to give a written warranty.

C            

The seller must state whether the warranty is a full or a limited warranty.

D            

The Act is federal law.

Which of the following is not a rationale of strict product liability?

A            

Manufacturers should not escape liability simply because they typically do not sign a formal contract with the end-user.

B            

The law should protect consumers against unsafe products.

C            

Manufacturers should not escape liability simply because they are negligent.

D            

Manufacturers and sellers of products are in the best position to bear the costs of injuries caused by their products.

Which of the following is true regarding the Restatement (Third) of Torts?

A            

It imposes strict liability for manufacturing defects.

B            

It imposes a standard predicated on negligence for design defects and defects based on inadequate instructions or warnings.

C            

It imposes strict liability for manufacturing defects, and it also imposes a standard predicated on negligence for design defects and defects based on inadequate instructions or warnings.

D            

There is no Restatement (Third) of Torts.

A product that was sold without a component part properly fastened to the product is an example of a blank________ defect.

A            

design

B            

manufacturing

C            

defective warning

D            

none of the above

If a product is unavoidably unsafe, the blank________ determines whether the dangerous produ