Liberty
University BUSI 301 quiz 3 solutions answers right
How
many versions: 8 different versions
Courts apply a subjective
standard when examining the existence of offer and acceptance by the parties
when they created an agency relationship.
The centerpiece of a fiduciary
relationship is the agent's duty to act with due care when performing the
responsibilities of the agency.
If an agent acts in a disloyal
manner and realizes a personal profit from his or her acts, the court may order
a return of the funds, which is called:
The Social Security Act is funded
through mandatory employment taxes paid by both the employer and the employee.
Leah is a first-year elementary
school teacher at a private religious school. The parents and kids love her,
and she gets along with everyone. One month after starting, she's called into
the headmaster's office and handed an envelope containing spring-break college
photos of her topless, guzzling beer and alcohol, while sitting in various
men's laps. The headmaster informs her that she is terminated immediately and
that she must clean out her desk and remove all personal belongings by the end
of the day. She demands to know where the headmaster got these photos, and he
tells her that the school monitors social networking sites. These pictures had
been posted to a site she no longer uses and had forgotten about. She will be
successful if she sues for wrongful termination based on invasion of privacy.
The Fair Labor Standards Act
imposes restrictions on hiring workers under:
Which of the following is also
called the Taft-Hartley Act?
Under the Age Discrimination in
Employment Act, substantially
younger is not defined, but
many courts follow the general rule that the age difference must be 10 years in
order to qualify as substantially younger.
An employee must file charges of
illegal discrimination with the EEOC generally within ________ days of the
adverse job action.
Under the Age Discrimination in
Employment Act, to maintain a valid claim, the replacement employee must be
substantially younger than the terminated employee and must be a member of a
recognized protected class.
In cases where a partner has
engaged in some misconduct or tortious conduct, a limited liability partnership
(LLP) acts to shield:
A limited liability company (LLC)
is formed by filing _____ with the state public filing official in the secretary
of state's corporation bureau.
Limited liability companies
(LLCs) are frequently governed by agreement of the parties in the form of a
statement of qualification.
Which of the following statements
accurately differentiates between the management of a limited liability company
(LLC) and a limited
liability partnership (LLP)?
liability partnership (LLP)?
The Revised Uniform Limited
Partnership Act (RULPA) formally requires a partnership agreement to govern a
limited partnership.
Which of the following statements
accurately differentiates between a general partnership and a limited
partnership?
In choosing a business entity,
principals of the business should consider the extent to which they are
personally liable for debt and other contract or tort liabilities of the
business entity itself.
Which of the following is true of
taxation in a C corporation?
The Revised Model Business
Corporation Act (RMBCA) provides that anyone purporting to act on behalf of a
corporation, knowing incorporation has not yet occurred, is jointly and
severally liable for all liabilities created by the acts.
Matthew Granger is a member of
the board of directors at Produxicore Inc. Over a period of one year, Matthew
failed to attend most of the board meetings claiming that he was unaware of
their occurrence. During the meetings that he did attend, he was not up-to-date
with the company's developments. He did not read the reports he was presented
and was unfamiliar with the company's financial records. In this scenario,
Matthew Granger breached his duty of care primarily through _____.
One who has experience, business
savvy, and knowledge of a market to the extent that the law imputes a certain
cognizance of investment risk and the ability to protect his or her own
interests is referred to as a(n):
A primary market is one in which
investors buy and sell issued securities among themselves.
The Private Securities Litigation
Reform Act (PSLRA) of 1995 provides safe harbors from lawsuits that shield a
company and its officers and directors so long as the principals acted in good
faith and disclosed all relevant facts.
Disparagement has to do with
industries, companies, and corporations but not individuals.
Jessica was caught shoplifting at
a department store both by employees who witnessed the act and by cameras in
the store. The store's management may hold her as long as it takes to get her
to confess.
A commercial airliner crashed in
the middle of the Atlantic. The cause of the crash has been proved to be a
wrongly installed part in one of the engines during routine maintenance. If a
negligence lawsuit is brought against the airline, it will be based on:
Courts enforce fraudulent
misrepresentation for intentional lies but will not enforce fraudulent
misrepresentation for negligent ones.
A person cannot be guilty of negligence
if he or she has no duty owed to the plaintiff.
The nonagent employee
relationship is sometimes referred to as the:
Which of the following is an
example of terminating the agency relationship by express act?
With regard to negligent hiring,
the courts would require the least amount of scrutiny regarding:
The doctrine of negligent hiring
applies to independent contractors only when the contractor is hired to do a
hazardous or inherently dangerous job.
If a principal wants to keep her
identity secret, she would use:
The Worker Adjustment and
Retraining Notification Act applies to situations in which entire plants are to
be shut down or a layoff is to occur. WARN applies to:
The Health Care and Education
Reconciliation Act requires that employers provide health care coverage to
employees by 2014.
Disability benefits are provided
to eligible workers pursuant to the:
Morris is a nonexempt employee
with a salary of $400 a week based on a 40-hour week. If he works 50 hours in a
particular week, his paycheck should be for:
If a union chooses not to bring a
grievance to arbitration, the individual union member always has the right to
pursue the matter through a lawsuit to enforce union provisions.
The Uniform Guidelines on Employee
Selection Criteria says that discrimination
is likely if the pass rate of any protected class is less than ________ of the
pass rate of the most successful race, sex, or other protected class tested.
Title VII applies to private
sector employers with:
The Equal Pay Act was written to prohibit
racial discrimination in pay.
The Americans with Disabilities
Act applies to employers with ________ employees.
The Equal Employment Opportunity
Commission was created by:
Mike is a
limited partner in Big Blue, LP. The partnership agreement permits him to have
a say in the removal of general partners and the blocking of new partners. This
agreement will jeopardize his limited partner status.
A limited partnership requires:
One disadvantage of a sole
proprietorship business entity is that it is restricted to a single location
and cannot expand.
A general partnership may be
formed by:
To date, every state in the union
has adopted the Revised Uniform Partnership Act except the state of Louisiana.
With regard to taxation, LLPs are
treated as:
Voting rights of LLC principals
are governed by:
Some states recognize LLCs but do
not permit partnership taxation at the state level.
The IRS has classified the LLC as
a type of corporation for tax purposes.
All states require that LLPs have
a written partnership agreement.
Each of the following is a factor
used by courts to determine whether to pierce the corporate veil except:
A new start-up corporation has
gone to a bank for a commercial loan. Recognizing the start-up status of the
business and the limited assets the corporation currently possesses, the bank,
to protect its interests, may require that either collateral be pledged or a
personal guarantee be signed by shareholders but may not require both.
The corporation with the most
shareholders is the:
A start-up business planning to
incorporate must file for incorporation in the state in which it originally
plans to do business.
The Revised Model Business
Corporation Act mandates that all corporations other than single-member
corporations maintain a board of directors with at least three members who are
independent of the officers and shareholders.
The "safe-harbor"
exemption from SEC regulations involves:
The most commonly used debt
instrument is:
Blue-sky laws are federal
security laws that preempt state security laws.
Rule 10(b)(5) of the 34 Act is
aggressively used by the SEC in terms of insider-trading enforcement.
Fred is a corporate insider and
has made some very large profits through the buying and selling of his
corporation's stock during the previous six months. These profits would be
called:
The Restatement (Third) of Agency has been
adopted in about half of the states.
Courts apply a subjective standard when
examining the existence of offer and acceptance by the parties when they
created an agency relationship.
A principal has a duty to reimburse or
indemnify the agent for payments made or expenses incurred event if incurred
outside the agent's actual authority.
In all agency relationships, the principal
authorizes the agent to provide services or accomplish some task on behalf of
the principal and
under the principal's charge.
under the principal's charge.
In an agency relationship, the status of
an agent is based on what the parties agreed to rather than the actual working
relationship between
principal and agent.
principal and agent.
In creating an agency relationship,
consent occurs when the principal manifests some offer to form an agency.
In an undisclosed agency, the agent is not
contractually liable to the third party.
In the case of the death of a principal,
some state statutes permit the agent to continue to have actual authority in
the agency relationship,
until the agent learns of the death.
until the agent learns of the death.
_____ arises either when the parties in an
agency relationship expressly agree to create the relationship or when the
authority is implied
based on custom or course of past dealings.
Ratification
Actual authority
Retroactive power
Apparent authority
based on custom or course of past dealings.
Ratification
Actual authority
Retroactive power
Apparent authority
The increased political power of immigrant
groups is one of the factors that forced the federal government to legislate
federal protections for
employees in the early 1900s.
employees in the early 1900s.
The employment-at-will doctrine reflects
an employer's wide latitude in decision making when exercising the power and
right to terminate an
employee.
employee.
The Fair Labor Standards Act (FLSA) is
administered and enforced by the Equal Employment Opportunity Commission
(EEOC).
Generally, if a labor union chooses not to
bring a grievance to arbitration, the individual union member has the authority
to pursue a lawsuit
against the employer to enforce contract provisions.
against the employer to enforce contract provisions.
Even if a strike is commenced due to an
unfair labor practice, the striking employees are not entitled to immediate
restatement with back pay
once they unconditionally return to work.
once they unconditionally return to work.
Wilma has been working full time for a
large corporation for three years. Her mother has fallen ill and is in need of
continuous care for the next
few months. Wilma asks her employer for two months' medical leave and is granted approval. Which of the following will be applicable to
Wilma according to the Family and Medical Leave Act (FMLA)?
She must be immediately credited with seniority when she returns.
She is not entitled to any health care benefits during the leave period.
She is entitled to a regular salary while on leave.
She must be immediately reinstated at the same rate of pay when she returns.
few months. Wilma asks her employer for two months' medical leave and is granted approval. Which of the following will be applicable to
Wilma according to the Family and Medical Leave Act (FMLA)?
She must be immediately credited with seniority when she returns.
She is not entitled to any health care benefits during the leave period.
She is entitled to a regular salary while on leave.
She must be immediately reinstated at the same rate of pay when she returns.
Ted works at Silvia's Inn from Monday to
Friday. He works for 37 hours a week at a rate of $10 per hour. On a particular
Friday, Silvia asks
Ted to stay back and work two extra hours. According to the Fair Labor Standards Act (FLSA), which of the following statements is most
likely to be true in this scenario?
Ted is not entitled to overtime pay.
Ted will receive overtime pay at the rate of $15 an hour.
Ted will receive overtime pay at the rate of $20 an hour.
Ted is entitled to overtime pay only if he works three extra hours.
Ted to stay back and work two extra hours. According to the Fair Labor Standards Act (FLSA), which of the following statements is most
likely to be true in this scenario?
Ted is not entitled to overtime pay.
Ted will receive overtime pay at the rate of $15 an hour.
Ted will receive overtime pay at the rate of $20 an hour.
Ted is entitled to overtime pay only if he works three extra hours.
Which of the following is true of the
policies laid down by the Electronic Communications Privacy Act (ECPA)?
Employers are allowed to access an employees' office voice mail without their consent.
Employers do not have the right to track websites visited by employees in office systems.
Employers do not have the right to monitor personal calls of employees in the workplace.
Employers require employees' consent to count their keystrokes and mouse clicks in office systems.
Employers are allowed to access an employees' office voice mail without their consent.
Employers do not have the right to track websites visited by employees in office systems.
Employers do not have the right to monitor personal calls of employees in the workplace.
Employers require employees' consent to count their keystrokes and mouse clicks in office systems.
The Federal Unemployment Tax Act covers
the costs of administering state unemployment insurance and state job service
programs.
Social Security provides benefits for
workers who become disabled on the job.
Leon works in an office environment and,
during lunch, closes his office door and uses his personal laptop computer to
search the Internet for porn, accessing the company's server via an ethernet
cable connection. The company may monitor his computer usage even though he is
using a personally owned computer.
The term employment discrimination
encompasses workplace-related discrimination that may include the hiring
process and disciplinary
action but does not include the treatment of employees in terms of promotions and demotions, work schedules, and assignments.
action but does not include the treatment of employees in terms of promotions and demotions, work schedules, and assignments.
The Americans with Disabilities Act (ADA)
of 1990 requires the person in the protected class to receive equal treatment
to that of nonclass
members.
members.
As in all civil cases involving employment
discrimination, the initial burden of proof rests upon the plaintiff to prove
her case.
A state and local government affirmative
action program aimed at addressing inequalities in the workplace and in
education is constitutional
so long as it attempts to remedy an actual past practice of discrimination, and it does not employ a system of quotas.
so long as it attempts to remedy an actual past practice of discrimination, and it does not employ a system of quotas.
While state antidiscrimination statutes
are relatively conservative in exactly what constitutes a protected class,
federal statutes have
expanded protected-class membership.
expanded protected-class membership.
The Equal Employment Opportunity
Commission (EEOC) is a five-member commission whose members are:
appointed by the president with approval of the Senate.
appointed by the Supreme Court judge.
elected by labor unions to form a separate body.
appointed by the Senate to be a part of Congress.
appointed by the president with approval of the Senate.
appointed by the Supreme Court judge.
elected by labor unions to form a separate body.
appointed by the Senate to be a part of Congress.
Wang is an Asian candidate applying for
the position of a waiter at an Asian restaurant in Boston. Raj, the restaurant
owner, rejects Wang's
application because he believes that Asians do not make good waiters. Which of the following statements is most likely to be true in the
context of Title VII of the Civil Rights Act of 1964?
Under Title VII, Wang is being discriminated against on the basis of his membership to a protected class.
Under Title VII, Wang is being discriminated against on the basis of his membership to a specific gender.
Under Title VII, Wang is not being discriminated against because Raj, being an Asian himself, cannot discriminate against his
own group.
Under Title VII, Wang is not being discriminated against because he belongs to a majority ethnic group and members of majority
groups cannot be discriminated against.
application because he believes that Asians do not make good waiters. Which of the following statements is most likely to be true in the
context of Title VII of the Civil Rights Act of 1964?
Under Title VII, Wang is being discriminated against on the basis of his membership to a protected class.
Under Title VII, Wang is being discriminated against on the basis of his membership to a specific gender.
Under Title VII, Wang is not being discriminated against because Raj, being an Asian himself, cannot discriminate against his
own group.
Under Title VII, Wang is not being discriminated against because he belongs to a majority ethnic group and members of majority
groups cannot be discriminated against.
The theory of disparate treatment is based
on the _____.
Duke Power standard
Hopkins standard
Griggs standard
McDonnell Douglas standard
Duke Power standard
Hopkins standard
Griggs standard
McDonnell Douglas standard
A successful Age Discrimination in
Employment Act suit requires that the plaintiff affirmatively prove that age
was the direct reason for the adverse employment action suffered.
Under the Age Discrimination in Employment
Act, substantially younger is not defined, but many courts follow the general
rule that the age difference must be 10 years in order to qualify as
substantially younger.
Which of the following is not a protected
class under the original Civil Rights Act of 1964?
gender
age
race
national origin
gender
age
race
national origin
T/F: Implied contracts may be found
through language contained in an employee handbook or manual
T/F: Each state follows its own individual
whistle-blower statute
T/F: The centerpiece of a fiduciary
relationship is the agent's duty to act with due care when performing the
responsibilities of the agency
T/F: A revocation of the agency
relationship requires the principal and the agent to agree to terminate the
agency
T/F: In a disclosed agency situation, the
agent is not contractually liable to the third party
T/F: Your professor is a partially
disclosed agent representing your school
T/F: Rob agrees to act as an agent for
Diane in selling her car. Diane has a duty of loyalty to Rob
T/F: Courts will apply a subjective
standard when examining the existence of offer and acceptance by the parties
when creating an agency relationship
T/F: One significant benefit of an
employer completing an IRS Form SS-8 is that even if the employer does in fact
misclassify a worker, the proper completion of the form may evidence a good
faith effort by the employer reducing or even eliminating IRS penalties for
misclassification
T/F: Whether someone is an agent or not
depends on what is said in the agreement between the principal and the agent
T/F: A principal has the power to
terminate an agency relationship whether or not they have the legal right to
terminate that relationship
T/F: In an agency relationship the
principal's control must be total and continuous over the agent
T/F: Whether an agency is classified as
disclosed, undisclosed or partially disclosed, the principal has the duty to
fully perform the contract obligations
Sanchez borrowed money from Fifth National
Bank to buy a car. She defaulted on the loan. Fifth National hired Rex's
Recovery Service to repossess the car for a set fee. They were simply told to
locate and seize the car. Rex's would be classified as a/an:
Mike worked for Frank's Pizza as a driver
and is an agent. His duties consisted of making deliveries along a designated
route. One day Mike decided to see his girlfriend, Jackie, who lived 50 miles
out of his pizza route. While driving to his girlfriend's, Mike injured a
pedestrian, Chuck. The accident was caused because of Mike's negligent driving.
Chuck is now suing both Mike and Frank's for personal injuries. Under the
circumstances is Frank liable and why?
Joyce contracted with Mega Drug
Corporation to buy vitamins on behalf of Howard, a personal trainer. Howard
told Joyce to use her own name and not to disclose to Mega that she was working
for Howard. If Joyce signs the contract in her own name only and Howard won't
honor it who is liable?
The Happy Days Day Care is hiring a child
care worker. On their application they specifically ask if you've ever been
arrested. Tina has applied for a job at Happy Days and answered no to the
question. She has also answered no to the question asking if there is any
reason that she would not be qualified to work with children. Soon after Tina
is hired she severely shakes a baby to stop it from crying causing the baby
injuries. It is discovered at trial that Tina has been fired from numerous day
cares for baby shaking and other various offenses. If the baby's parents sue
Happy Days who is liable and for what?
What is another form of vicarious
liability?
Respondeat Superior makes a principle
liable for what?
If a principal would like to keep her
identity secret, she would use a/an:
Courts will apply the ________ analysis to
determine the classification of an agent
Generally, the agent's duty to keep an
accounting means that the agent must:
The IRS has developed a three prong status
to determine an agent's status, what are the three prongs?
T/F: Employers are not required to offer
their employees health care benefits
T/F: Employees classified as key employees
who take leave, are not automatically entitled to Family Medical Leave Act
reinstatement protections and guarantees
T/F: The Social Security Act is funded
through mandatory employment taxes paid by both the employer and employee
T/F: Jan has been fired by her employer
for poor job performance. Jan is still entitled to apply for and receive
employer provided health care under provisions of the Consolidated Omnibus
Budget Reconciliation Act
T/F: The Fair Labor Standards Act does not
cover all employees
T/F: Ben has applied for a job at a
restaurant. As a condition of employment, he may be required to take a
polygraph test
T/F: Federal Unemployment Tax Act covers
the costs of administering state unemployment insurance and state job service
programs
Employee protection from use of regular or
random drug or alcohol tests in the workplace is governed by?
Protection of employee medical information
is addressed by the:
Which of the following literary works,
although fictional, has been extremely influential in affecting American
statutory law and is often cited in legislative histories regarding employment
law?
Under the Health Care and Education
Reconciliation Act, employers offering high end health care policies in 2018
will be required to pay additional taxes to help fund the Act's plan. A high
end health care policy is defined as costing more than?
Once the union organizers obtain
authorization cards from at least ________ of the members of a bargaining unit
an election will be scheduled by the NLRB
Unsafe workplace conditions are monitored
and regulated under:
The Labor Management Relations Act gives
the President of the United States the right to suspend a strike for up to
________ in times of national emergency
If an employee is killed on the job, OSHA
requires that the employer notify them as soon as possible but no later than ________
after the accident
With regard to polygraph tests, who is
allowed to give them?
The Family Medical Leave Act provides that
eligible employees be permitted how much time off?
Management is permitted to voice
objections to the formation of a union under what act?
The Fair Labor Standards Act imposes
restrictions on hiring workers under what age?
In Falcon et al. v. Starbucks Corporation,
after Starbucks reclassified the assistant store managers (ASMs ) from exempt
to nonexempt for FLSA purposes, changing their job duties but not their labor
budgets and discouraging overtime, the court found:
T/F: An employee has filed a claim of
discrimination with the EEOC. If the EEOC investigates and determines that they
will not follow through with a law suit representing the employee, the employee
has no recourse and cannot file a private law suit
T/F: The most common form of sexual
harassment is quid pro quo harassment
T/F: Under the Age Discrimination in
Employment Act, substantially younger is not defined, but many courts follow
the general rule that the age difference must be 10 years in order to qualify
as substantially younger
T/F: The Equal Pay Act was written to
prohibit racial discrimination in pay
T/F: A successful Age Discrimination in
Employment Act suit required that the plaintiff affirmatively prove that age
was the direct reason for the adverse employment action suffered
T/F: Affirmative action programs are
designed to remedy an actual past practice of discrimination
T/F: A person must exhibit some sort of
distinctive physical characteristic, obvious to a neutral observer in order to
be considered as disabled
T/F: Under the Age Discrimination in
Employment Act to maintain a valid claim the replacement employee must be
substantially younger than the terminated employee and must be a member of a
recognized protected class
Name a class that is not protected under
the original Civil Rights Act of 1964?
April has refereed high school and women's
college soccer for ten years. She is fit, knows the rules without question and
has always received excellent evaluations. When she applies to referee men's
college games, the men's college referee administrator tells her that he can't
use her because women won't get the player's respect and that the game looks
more serious and acceptable with men refereeing. April is the victim of what
kind of discrimination?
Tom is a city policeman and is Mr. August
in the police charity calendar wearing only a pair of Speedos and a smile.
Chuck is a fellow cop and a homosexual. Every opportunity that he has, Chuck
brushes up against Tom and asks if Tom has ever been with a man. Chuck buys Tom
gifts and leaves them by Tom's locker. Tom throws the gifts away immediately.
Tom has asked Chuck to stop but Chuck just laughs and says that "I'll get
you someday". Tom is and has always been a heterosexual. Tom has
complained to his superiors pursuant to department policy but they claim it's
just horseplay and not serious. If Tom files a complaint with the EEOC does he
have a valid case and why?
Which of the following would likely not be
considered a major life activity supporting a disability claim?
In EEOC v. Asplundh Tree Expert Co., the
court dismissed the lawsuit against the defendant because?
The Equal Employment Opportunity
Commission was created by what act?
An employee must file charges of illegal
discrimination with the EEOC within ________ days of the adverse job action
The business necessity defense is a
defense to what kind of cases?
Kim, a CPA, works for a small accounting
firm consisting of two managing partners, six accountants and four secretaries.
During a skiing vacation, Kim has a serious fall and is paralyzed from the
waist down. While she cannot walk, her mind is not affected and she is 100%
capable of performing her accounting duties. She has asked the firm to widen
the aisles between cubicles so she can maneuver her wheel chair and to provide
a special desk that is wheel chair friendly. These accommodations would cost
less than $1,000, what is the company required to do?
The Equal Pay Act is an amendment to what
act?
Amanda works in an office environment with
50 employees. Once or twice a week, her boss Alan, tells her she has great legs
and that she should wear shorter skirts. He also tells her to let loose and
open another button on her blouse once in a while. She asks him to stop and
continues to wear knee length skirts and keeps her blouse buttoned to the neck.
He never touches her and he never makes these comments when someone else can
hear. When she gets her performance appraisal from Alan, he gives her an
excellent evaluation and a raise. After listening to Alan for six months she
files a complaint with the EEOC, does she have a valid claim and if so what
kind of claim?
T/F: Most employers are not subject to
affirmative action requirements
T/F: Disciplinary actions rarely give rise
to employment discrimination claims
T/F: An employee has filed a claim of
discrimination with the EEOC. If the EEOC investigates and determines that they
will not follow through with a law suit representing the employee, the employee
has no recourse and cannot file a private law suit
T/F: It may not be discriminatory to
require that persons in a protected class, in certain instances, be afforded
special rights
T/F: The Equal Employment Opportunity
Commission enjoys rule making as well as enforcement powers
T/F: Intent to discriminate must be proven
for a disparate treatment case to be successful
T/F: The Americans with Disabilities Act
defines a disability as being a physical impairment and does not include or
protect employees regarding mental impairments
T/F: Affirmative action programs are
designed to remedy an actual practice of discrimination
T/F: A plaintiff need not be in a minority
of a protected class to be covered under Title VII
T/F: Which of the following is a neutral
requirement that is likely to result in disparate impact?
Martha and Bill have applied for teaching
positions in your school's accounting department. Martha is a recent graduate
with her PhD in accounting and one published paper. She has no teaching
experience except for classes taught as a teaching assistant during her PhD
program. Bill also has a PhD in accounting and has been teaching for five years
at a major university. He has eight published papers. Both are hired as tenure
track assistant professors and assigned two 101 courses and one 102 course.
When Martha later discovers that Bill's salary is $10,000 higher than hers she
is furious and files suit under the Equal Pay Act. Will she be successful? Does
she have a valid cause of action?
Mike and Kathy are both tenured associate
professors in a school's English Department. Kathy is constantly asking Mike
out on dates, which he always refuses. He has asked her to stop asking.
Furthermore, Kathy is always making provocative comments to him, telling dirty
jokes and asking him about his preferences in women which embarrasses him and
has caused him to lose sleep. If Mike sues the school for permitting her
behavior, who will win the case and under what circumstances?
Once the plaintiff has established a prima
facie case under the McDonnell Douglas standard and the defendant has presented
justification for the actions taken, the plaintiff must now prove any of the
following except:
The Uniform Guidelines on Employee
Selection Criteria says that discrimination is likely if the pass rate of any
protected class is less than ________ of the pass rate of the most successful
race, sex or other protected class tested
Courts apply the ________ analysis to
determine the classification of an agent.
Karl is a driver for Arnold's Appliance
Store and delivers appliances to customers. One day, Karl negligently secures a
washer and dryer in the back of his truck, and while he is driving, the washer
falls out of the truck. Jan, driving behind the truck, sees the appliance
flying at her and swerves into a telephone pole. Which of the following is
correct?
If an agent acts in a disloyal manner and
realizes a personal profit from his or her acts, the court may order a return
of the funds, which is called:
Agency law generally exists on the state
statutory level and is based on:
In Hannington v. University of
Pennsylvania, the court had to determine whether an attorney acted under
apparent authority regarding the negotiation and signing of a settlement
agreement. The court determined that:
The shift from an agricultural society
toward industrial production began almost immediately after the end of the U.S.
Revolution. T/F
The Health Care and Education
Reconciliation Act requires that employers provide health care coverage to
employees by 2014. t/f
In Falcon et al. v. Starbucks Corporation,
after Starbucks reclassified the assistant store managers (ASMs) from exempt to
nonexempt for FLSA purposes, changing their job duties but not their labor
budgets and discouraging overtime, the court found that:
Leon works in an office environment and,
during lunch, closes his office door and uses his personal laptop computer to
search the Internet for porn, accessing the company's server via an ethernet
cable connection. The company may monitor his computer usage even though he is
using a personally owned computer. t/f
t/f. Leah is a first-year elementary
school teacher at a private religious school. The parents and kids love her,
and she gets along with everyone. One month after starting, she's called into
the headmaster's office and handed an envelope containing spring-break college
photos of her topless, guzzling beer and alcohol, while sitting in various
men's laps. The headmaster informs her that she is terminated immediately and
that she must clean out her desk and remove all personal belongings by the end
of the day. She demands to know where the headmaster got these photos, and he
tells her that the school monitors social networking sites. These pictures had been
posted to a site she no longer uses and had forgotten about. She will be
successful if she sues for wrongful termination based on invasion of privacy.
In a disparate impact case, if an employer
can show that a challenged employment practice is job-related and consistent
with business necessity, the plaintiff can still win by showing that:
An employee must file charges of illegal
discrimination with the EEOC generally within ________ days of the adverse job
action.
t/f The most common form of sexual harassment
is quid pro quo harassment.
The business necessity defense is a
defense to:
Mike and Kathy are both tenured associate
professors in a school's English Department. Kathy is constantly asking Mike
out on dates, which he always refuses. He has asked her to stop asking.
Furthermore, Kathy is always making provocative comments to him, telling dirty
jokes, and asking him about his preferences in women, which embarrasses him and
has caused him to lose sleep. If Mike sues the school for permitting her behavior:
The principal and agent are both liable in
which of the following relationships
An agent, unless otherwise authorized, may
substitute his or her own judgment for the principal's judgement under the duty
of
the duty of _ is the centerpiece of the
fiduciary obligation
the agent must act as a reasonable person
when conducting business on behalf of the principal under the duty of
which law overlaps with agency law
peculiar risk doctrine
after a certain period of time, employees
are entitled to the benefits of employer pensions even if they no longer work
for that organization under a principle called
a standard that is applied to all
employees or candidates for employment equally but nevertheless is shown to be
discriminatory is called a _______ standard
following an investigation by the EEOC,
should discrimination be found, the next step for the agency is to begin______
The Americans with disabilities Act does
not require an employer to provide accommodations that constitute an _________
on the employer
disparate treatment is analyzed using the
_______ standard
race, religion, color, gender, and
national origin are examples of ________
after the plaintiff has proved his or her
prima facie case of disparate treatment, if the employer provides a false
reason for its discriminatory actions, this is called ______
Mike is Kathy's employer. Mike tells her
that she will not get a raise or promotion unless she has sex with him. Mike
has committed ________ sexual harassment
Mixed motives discrimination is anaylzed
using the ________ standard
A disability, as defined in the Americans
with Disabilities Act, is an impairment that significantly limits a persons
ability to participate in a _____ activity
disparate impact is analyzed using the
_____ standard
the mandate given to the Equal employment
opportunity commission is that the commission is required to pursue any
discrimination based claims made by aggrieved employees
Stephen is 40 yrs old and has applied for
a job at a large computer game development company. He is told that he is
"over the hill" and not eligible for employment at that company.
Stephen does not have a valid age discrimination suit under the Age
discrimination in employment act b/c the act applies to those already employed,
not in the hiring process.
Betty Sue suspects that she was turned
down for a job as a server at Hooters because she is 40 pounds overweight. She
may conduct the EEOC which all investigate her case based on a Title VII
violation
once a employee has established that she
or he has a covered disability, the Americans with disabilities act requires
that the employer make reasonable accommodations allowing the employee to
perform essential functions of the job
In Aquino v Honda Inc, even though the
charges against Aquino for alleged vandalism were dropped, Hondas reasonable
belief, after its own investigation, met the burden of proving that Honda had a
legitimate, non discriminatory reason for his firing
most employers are not subject to
affirmative action requirements
disciplinary actions rarely give rise to
employment discrimination claims
in Oncale v Sundowner Offshore Services ,
the court determined that same sex harassment is a legitimate issue covered and
actionable under Title VII.
an employee has filed a claim of
discrimination with the EEOC. If the EEOC investigates and determines that it
will not follow through with a lawsuit representing the employee, the employee
has no recourse and cannot file a private lawsuit
race discrimination directed at white
employees violates Title VII if the employer's acts were motivated by race
Every time Mike passes Kathy in the
office, he rubs against her. Sometimes he walks up behind her and massages her
shoulders even though she has told him not to. lately he's been pinching her
butt when no one is watching. mike is committing quid pro pro sexual harassment
Federal laws concerning discrimination
expressly preempt state laws and prohibit states from imposing additional
obligations and legal responsibilities on employers not covered under the
federal statutes.
it may not be discriminatory to require
that persons in a protected class, in certain instances, be afforded special
rights
The EEOC enjoys rule making as well as
enforcement powers
Disparte impact claims under the Age
discrimination in Employment act do nowt require that the employer prove a
business necessity in order to defend its actions
after conducting an investigation of a
discrimination claim, if discrimination is found, the EEOC may immediately file
suit on behalf of the aggrieved employee
state and local affirmative action plans
in regard to race or gender based preferences in the hiring of government
contractors are subject to strict scrutiny
intent to discrimination must be proved
for a disparate case to be successful
the most common form of sexual harassment
is quid pro pro harassment
under the Age discrimination in Employment
Act, substantially younger is not defined, but many courts follow the rule that
the age difference must be 10 yrs in order to qualify as substantially younger
the equal pay act was written to prohibit
racial discrimination in pay
a successful age discrimination in
employment act suit requires that the plaintiff affirmatively prove that age
was the direct reason for the adverse employment action suffered
the americans with disabilities act
defines disability as being physical impairment and does not include or protect
employees regarding mental impairments
Affirmative action programs are designed
to remedy an actual past practice of discrimination
a person must exhibit some sort of
distinctive physical characteristic, obvious to a neutral observer in order to
be considered disabled
if the plaintiff proves her or his prima
facie case under the Mcdonnell Douglas standard the burden of proof shifts to
the defendant to evidence a legitimate and non discriminatory reason for the
discriminatory action
affirmative action sets and requires
quotas in order to meet racial and sexual equality
under the age discrimination act, to
maintain a valid claim, the replacement employee must be substantially younger
that the terminated employee and must be a member of a protected class
Emmanuelle has been the subject of intense
and continuous hostile work environment sexual harassment over a period of
months . if she quits before filing a complaint with the EEOC, she forfeits the
right to file the complaint and seek damages
a plaintiff need not be in a minority
within a protected class to be covered under Title VII
Genericization occurs when a trademark has
lost its distinctiveness and becomes a general term describing a type of
product rather than a specific company's
The doctrine of equivalence will negate
the effect of the doctrine of omission if the new item performs substantially
the same function as the already patented item.
Satires and parodies have generally been
deemed not to be copyright infringement due to the fair use doctrine.
If an item has been patented but has not
been marked as patented and infringement occurs, the patent holder is generally
barred from collecting damages.
Once a patent has been issued by the U.S.
Patent and Trademark Office, the patent cannot be challenged or revoked due to
the comprehensive investigation performed by the USPTO prior to issuance.
Suggestive trademarks gain trademark
protection only if they have acquired a secondary meaning.
A telephone book listing citizens' names,
addresses, and phone numbers may not be copyrighted.
Jessica was caught shoplifting at a
department store both by employees who witnessed the act and by cameras in the
store. The store's management may hold her as long as it takes to get her to
confess.
Disparagement has to do with industries,
companies, and corporations but not individuals.
Courts are bound by the Restatement of
Torts, once it is published.
Brad is drunk and driving his car 20 miles
over the speed limit. He hits Angelina, who is crossing the street against a
red light. Angelina has over $95,000 in medical bills and has significant pain
and suffering. If Angelina sues in a state that still follows the theory of contributory
negligence, she will get nothing.
Assume that Iowa has passed a law
requiring that anyone riding or operating a motorcycle wear a helmet. Mary
enters Iowa Harley-Davidson and wants to take a test ride. She doesn't have a
helmet with her and the dealership doesn't have one available in her size, so
the proprietor lets her go without one. If she crashes and is injured, the
proprietor has committed negligence per se.
Your cousin, who is a CPA, calls you and
says that a client paid him in diamonds and he's selling them. If you purchase
one of those diamonds, at the time of the sale your cousin would be considered
a merchant of those diamonds.
Johnson Builders is selling a newly built
home to Sheila. JRK Realtors is handling the transaction. This sale is covered
under Article 2 of the UCC.
UCC gap fillers will not be used and are
not applicable to contracts when the contract clearly specifies a contract term
or condition.
UCC risk of loss provisions will govern
the terms of a contract even if the parties have specified risk allocation in
the contract.
The 2003 revisions to the UCC have been
adopted by only about half of the states.
In an assignment or delegation, any
third-party rights or duties occur after the contract is formed.
Substantial performance will be enforced
only if the deviation from complete performance is not material to the
contract.
Craig is a licensed plumber and has a
contract to install a replacement toilet for Mary. When Craig realizes that he
has booked two appointments simultaneously, he calls Brian, another licensed
plumber, and asks him to install Mary's toilet. Craig has assigned his duties
to Brian.
A unilateral contract is formed when a
promise requires acceptance by performance.
A valid contract is one that has all the
necessary elements and, thus, can be enforced.
A handyman goes to the wrong house by
mistake and cleans the gutters while the homeowners are at work. The homeowners
will have to pay for the service under the quasi-contract theory of unjust
enrichment.
Under most circumstances, acceptance
cannot be imposed or inferred from an offeree's silence after receiving an
offer.
Reasonableness of an offer requires that
the offeror have an objective intent to contract when making the offer.
The mailbox rule determines when a contract
is considered to be deemed accepted by the offeree, thus depriving the offeror
of the right to revoke the offer.
Helen's cat Fluffy has run away, and she
places reward posters throughout her neighborhood. Mark sees one of the reward
posters and spends the next six hours searching for Fluffy. While Mark is
searching the neighborhood, Fluffy gets hungry and comes home.
A contract in which each component of the
contract is dependent on every other component is called:
A valid contract is one that has all the
necessary elements and, thus, can be enforced.
When an offer and agreement exist between
parties, this is called:
Aimee goes online and orders a pair of
jeans, three T-shirts, and a pair of boots. This is an example of:
In general, contracts for services are
governed by:
An agreement between two adults to pay
$300 cash for a bicycle is an example of a contract that is:
An agreement to buy cocaine from a dealer
is:
Aimee goes online and orders a suit for
work that consists of a jacket and skirt. This is an example of:
All contracts can be described in seven
ways.
Boris skydives from a plane and gets
tangled in a tree, hopelessly suspended and swinging precariously in his
parachute from the branches of the tree. Natasha sees that he is in trouble and
comes to his rescue. Once Boris is safely on the ground, he gratefully promises
to give Natasha half of his life savings account. When he changes his mind,
Natasha will probably be unsuccessful in enforcing his promise.
Aiden says to Bob, "I'll sell you this
rare book for $1,000." Aiden is the:
Josh is negotiating the sale of his car
with Jonathan. Jonathan asks if the car has ever been in an accident, and Josh
replies, "No, it has never been in an accident." In fact, the car was
nearly totaled the year before when Sheila, Josh's girlfriend, was driving
Josh's car, hit a wet spot, and skidded into a pole. She had the car repaired
without telling him about the accident. Josh has committed:
Amanda, a recent university graduate,
needed a car to get to her new job. To help Amanda secure a loan for the car,
Ted, a friend, agreed to pay the loan should Amanda default. Ted's promise is
enforceable as long as he goes to the bank, declares his promise to guarantee
Amanda's loan in front of witnesses, and shakes hands on the deal, giving his
word.
Jeff goes to a car dealership and the
salesperson tells him that the car he's looking at is a great car and an
excellent value. The statements made by the salesperson, if untrue, will not be
adequate to create either an innocent misrepresentation or a fraudulent
misrepresentation.
Larry has had a few beers and is starting
to get a bit drunk. He isn't acting strange, and in conducting conversations
with others he's slurring only an occasional word or two. Larry, should he
enter into a contract in this condition, would be considered mentally
incompetent and his contract would be void.
Contractual consideration is defined as
the thought process a party uses to decide whether or not to accept the offer
and enter into a contract.
Generally, mutual mistakes will often lead
to the court allowing an avoidance of a contract; however, a unilateral mistake
is not usually grounds to cancel a contract.
Which of the following promises ordinarily
need not be in writing to be enforceable?
Offers that the offeree partly performed
or detrimentally relied on are:
Kathy and Tom have entered into a contract
in which Mike has been named and included as an intended beneficiary by Kathy.
Should Tom or Kathy breach the contract, Mike may sue both Tom and Kathy for
breach of contract.
A party to a contract may be discharged
from performance due to operation of law if the other party unilaterally alters
the contract.
Which of the following is not classified
as an equitable remedy?
Oscar is speeding and driving
inattentively when he runs into Felix, who is driving very cautiously. As a
result of the accident, Felix's car needs $2,500 worth of repairs and Felix
loses a week's salary because he has to take off from work to recover from
injuries sustained during the crash.
Which of the following involves a
third-party substitution?
When an accord and satisfaction is agreed
to, the original obligation subject to the accord is immediately discharged.
Patios R Us contracts with Karl's Concrete
to have 35 yards of concrete delivered to a job site it is working on. Payment
is to be made 30 days after delivery. Five days after the concrete is
delivered, Patios R Us files for bankruptcy and the filing is accepted by the
court. Karl's cannot sue to enforce the contract and receive payment.
Moe has entered into a contract with
Larry. Subsequently, Moe assigns his rights in that contract to Curley. Which
of the following would not prevent that assignment?
Mel is under contract with a textbook
publisher to write an instructor's manual to accompany a new textbook. The
contract states that the instructor's manual is to be completed by August 1. On
July 1, the publisher calls Mel and asks for an update. Mel states that he's
working hard and making progress. He then states that the August 1 deadline is
"doable but it's going to be tough." Based on Mel's statement, the
textbook publisher may claim an anticipatory repudiation and find another
author to complete the project.
The Chicago Cubs major-league baseball
team is in the playoffs and doing well. Behind the left-field wall there is an
apartment building, and the owner advertises, "Space available on the
apartment building roof with a clear view of the field for the World Series.
Bring a lawn chair, your radio, and a cooler and enjoy the game. Just $50 per
game." Bart, a lifelong fan, answers the ad and pays the building owner
$100 to reserve space for the first two games. Unfortunately, the Cubs start
playing poorly and don't make it to the World Series.
Cathy's Coaster Company uses cork in all
of the protective drink coasters that it manufactures. If Cathy's enters into
an agreement with a cork exporter from Portugal to purchase all of the cork it
needs to produce its products, this would be:
Acme Rocket Company is shipping 500 toy rockets
by boat to Rockets R Us. Acme is located in Miami, and Rockets R Us is located
in Boston. If goods are shipped FOB Miami:
Shovels R Us sends a purchase order to
Acme Snow Shovel Inc., for 500 shovels to be delivered by September 30, 2014,
in time for the winter season. Acme returns an acknowledgment form indicating
that the shovels will be delivered on March 1, 2015. The acknowledgment letter
forms a valid contract.
Wrongfully revoking an acceptance will
constitute a breach of contract by the buyer.
If two companies enter into a sales
contract and the shipping terms are omitted from the agreement, the contract
will automatically become a shipping contract.
The International Chamber of Commerce
abbreviation indicating that goods are to be picked up by the buyer and not
delivered is:
The mirror image rule is not enforced
under UCC standards.
UCC gap fillers will not be used and are
not applicable to contracts when the contract clearly specifies a contract term
or condition.
Your cousin, who is a CPA, calls you and
says that a client paid him in diamonds and he's selling them. If you purchase
one of those diamonds, at the time of the sale your cousin would be considered
a merchant of those diamonds.
On February 1, Frank's Fedora
Manufacturers sends an offer to Metropolitan Outfitters by letter with all
price, quality, quantity, and delivery terms clearly stated, indicating that
the offer will remain open until October 1. On September 1 Metropolitan sends
an acceptance of the offer to Frank's with no material alterations to any of
the stated terms in the offer. The acceptance makes the contract valid and
enforceable.
Mike is having coffee in a coffee house
when he sees Jordan, who is the dean of a Midwest business school. Mike used to
teach at Jordan's prior school and was considered a very valuable faculty
member. They haven't seen each other for years, and Jordan has no idea what
Mike has been doing or where he's currently working. She tells him that she has
a position for him if he's interested. The next day Mike quits the university
he's under contract with and signs a contract with Jordan's school. Jordan's
school can be sued for tortious interference with existing contractual
relationship.
The Restatement (Third) of Torts is
currently the most recent edition.
A commercial airliner crashed in the
middle of the Atlantic. The cause of the crash has been proved to be a wrongly
installed part in one of the engines during routine maintenance. If a
negligence lawsuit is brought against the airline, it will be based on:
Employers, in some states, enjoy an
absolute privilege when giving employment references as long as the reference
is factual and without malice.
Which of the following is not a defense to
defamation?
The civil counterpart to theft is:
A person cannot be guilty of negligence if
he or she has no duty owed to the plaintiff.
When Ford runs a commercial stating that
Fords are better than Chevrolets and that "you'll be happier if you buy a
Ford," Ford is committing trade libel.
Professor Smith announces to his dean that
the students in his noon class are the worst students that he has ever had and
that they should never have been admitted to the school. The students are
actually as qualified as any other students admitted to the school. The
students may sue Professor Smith for slander.
A party who is injured by another's
negligence but is found to have committed comparative negligence will recover
nothing.
Which of the following would generally not
be patentable?
The standard that must be met for a
plaintiff to win a trademark infringement claim is likelihood of confusion.
A patent holder should mark its product as
patented in order to achieve the fullest protections. Each of the following is
an acceptable means of marking the product except:
A patent equates to a governmentally
sanctioned monopoly right.
All trade secrets are protectable by
either patent or copyright laws.
If a student goes to the library and
plagiarizes text from a book or other publication, he or she is guilty of
indirect infringement.
Which of the following is not an example
of a trademark lost, or in danger of losing protection, due to its becoming a
generic term?
Mike has been hired by a publishing
company to write a companion book for a particular text sold to college
students. In 2010 Mike completes the companion book, and he signs over his
copyright to the publisher. The publisher actually publishes the book in 2013.
When will the publisher's copyright run out and expire?
Satires and parodies have generally been
deemed not to be copyright infringement due to the fair use doctrine.
The Computer Software Copyright Act
defined computer software programs as:
Each contract should cover a singular
promise, and if multiple promises are involved, multiple contracts should be
created.
Express contracts arise from the parties'
conduct.
Divisible contracts are often referred to
as severable contracts in many states.
Jason writes a check to the university
bookstore to pay for textbooks and supplies. This is an example of an informal
contract.
Under a bilateral contract, there is no
contract until the offeree performs the requested act.
A contract for installing a new furnace is
an example of a hybrid contract.
An enforceable contract has four necessary
elements: mutual assent, capacity to contract, consideration, and legal purpose
In general, contracts for services are
governed by
ABC Land Co. is negotiating the sale of an
office building to Mega Co. Which laws will govern the contract for the sale of
the building?
When an offer and agreement exist between
parties, this is called:
When the reason and outcome of a contract
are legal, the contract has:
Which of the following is formed to remedy
unjust enrichment?
An offer of a reward, if it is fulfilled,
forms:
Mike is walking through a parking lot and
finds Kathy lying unconscious. He puts her in his car and takes her to the
hospital. The hospital saves her life, and when she becomes conscious, it
presents her with a bill.
A contract in which one party may
disaffirm or enforce the contract is:
Ally, a minor, purchases a car from a
used-car dealer. The law allows minors the right to cancel a contract until the
time the minor turns 18. The contract between Ally and the dealer is
Real estate deeds and mortgages that
require a seal to be enforceable are considered:
The mailbox rule determines when a
contract is considered to be deemed accepted by the offeree, thus depriving the
offeror of the right to revoke the offer.
If an offer does not specify a required
type or form of acceptance, the offeree is required to provide a written
acceptance for valid mutual assent to be proved.
Uncle Buck has lent you $10,000 for
tuition and living expenses. The agreement was oral. This contract violates the
statute of frauds, so it is unenforceable and you need not repay the loan.
Larry has had a few beers and is starting
to get a bit drunk. He isn't acting strange, and in conducting conversations
with others he's slurring only an occasional word or two. Larry, should he
enter into a contract in this condition, would be considered mentally
incompetent and his contract would be void.
Generally, mutual mistakes will often lead
to the court allowing an avoidance of a contract; however, a unilateral mistake
is not usually grounds to cancel a contract.
An agreement to purchase $499 worth of
land does not have to be in writing to be enforceable.
In Harley-Davidson Motor Co. v.
PowerSports Inc., the court permitted PowerSports to retain its Harley-Davidson
franchise because PowerSports' decision to become a publicly owned corporation
had nothing to do with its commitment to sales and service and thus was deemed
not material to the negotiations, so no fraud occurred
Jon works for a major bank. The revised
employee handbook that he received 5 years ago says that all employees with 25
years of service will receive a retirement party. He is about to hit 25 years
of service and has announced his retirement. His manager tells him that the
company, on the basis of his years of service, will throw him a party and
present him with a gold watch. Jon retires on his 25th anniversary, and his
manager announces that the company will not throw the party or give him the
watch.
Robert is about to graduate college, and
his parents tell him that because he is the first member of the family to
graduate college, they want to buy him a new, but inexpensive, car. They have
the money to buy the car, and Robert is excited about getting his gift. Robert
owns a used car but has never owned a new car, so this will be his first. He
decides to keep his used car because he had been promised a new car by his
parents for his high school graduation and never got it. On graduation day, his
parents tell him that they have decided to use the car money for a vacation and
there will be no new car.
When a party breaches a contract, the
nonbreaching party always has the option of seeking legal or equitable
remedies.
Kent Corp. (KC), a general contractor
building a new dorm at a university, contracted with Fine Rugs Inc. (FRI) to
have a certain grade of industrial rugs installed in the dorm. The contract
price was $180,000. After the rugs were installed, KC was dissatisfied with the
rug quality. FRI insisted that the rugs installed were appropriate to the
contract specifications and demanded full payment. KC sends FRI a check for
$120,000, which KC believes is the proper value for the rugs installed, and
marks the check "Paid in Full." FRI writes "Under Protest"
on the check and deposits it. FRI may now, in most states, successfully sue KC
for the balance of $60,000.
Anticipatory repudiation may be used when
a party has knowledge that either a complete or a partial breach will occur by
the other party.
Each of the following is a discharge by
mutual consent except:
accord and satisfaction
novation
rescission
frustration of purpose
accord and satisfaction
novation
rescission
frustration of purpose
In DiFolco v. MSNBC, a TV commentator
e-mailed her supervisors indicating that she wished to have a meeting to
discuss her exit from the shows and to give MSNBC ample time to replace her,
but she also wrote that she wanted to be part of the MSNBC team "for a
long time to come." MSNBC claimed anticipatory repudiation. The court:
Which of the following is rarely awarded
in contract cases?
Fred's Flooring (FF) contracted with Harry
homeowner to install wood flooring throughout Harry's home. Harry was to purchase
the flooring, and the contract was solely for installation. Payment was to be
20 percent at the time that the work commenced and 80 percent once the flooring
was installed. Harry purchased the flooring materials and paid the 20 percent,
so FF began work. When FF's work was halfway completed, Harry realized that he
didn't have the money to pay FF on completion, so he bolted the doors and
refused access. If FF wants to rescind the contract and be paid for work
completed, FF would sue for:
The Communications Decency Act of 1996:
Products liability law arises from:
Bill is a technician at a university
chemistry lab and is in charge of safety inspections and prevention of injury
due to faulty equipment. One morning, as a result of his inspection, Bill discovers
a gas burner with a broken valve. Bill gets distracted and fails to put an
"OUT OF ORDER/DO NOT USE" sign on the faulty burner. When the morning
class arrives, Halle uses the faulty burner and is burned when it catches fire.
Bill's negligence is based on:
The fact that the actual negligent act
must directly cause the injury is called the:
Bill is a technician at a university
chemistry lab and is in charge of safety inspections and prevention of injury
due to faulty equipment, and Bill's job includes the repair of faulty
equipment. One morning, as a result of his inspection, Bill discovers a gas
burner with a broken valve and does a very poor job of repairing it, using
techniques not considered proper or acceptable. When the morning class arrives,
Halle uses the faulty burner and is burned when it catches fire. Bill's
negligence is based on:
Finley is a U.S. senator. While at a
friend's wedding, he comments that another senator, Glen, is corrupt and is an
alcoholic and drug addict. A reporter overhears this statement and includes the
conversation in a written report that is published in the state's largest
newspaper. Glen is called before a Senate investigatory committee, and his
reputation is permanently scarred. Is Finley guilty of defamation?
In Belanger v. Swift Transportation Inc.,
after Belanger had an accident driving a company vehicle, the accident was
reported to a government website. Belanger claimed that Swift acted with malice
and lost any reference-related privilege by reporting information to a
third-party website.
Mike has admired Monica for a long time
and has wanted to date her but is too shy around girls to ask. He is a football
player with a reputation of being the toughest player on the team. Monica is
scared of Mike because of his size and reputation. One day Mike summons the
courage and approaches Monica, who has her back to him and doesn't know he's
there. He puts his arms around her and gives her a gentle kiss before letting
go. He can't believe what he did, apologizes, and runs away. Monica is slightly
shaken but physically unharmed. Mike has committed:
A commercial airliner crashed in the
middle of the Atlantic. The cause of the crash has been proved to be a wrongly
installed part in one of the engines during routine maintenance. If a
negligence lawsuit is brought against the airline, it will be based on:
T/F: General partnerships are not created
by filing a form with a government agency
T/F: One disadvantage of a sole
proprietorship business entity is that it is restricted to the principal and
the principal's immediate family in terms of number of employees that may work
for the business
T/F: Wayne Lewis wants to start a sole
proprietorship named Lewis Plumbing Services. Because it will be a sole
proprietorship, Wayne has no filing requirements other than obtaining the
appropriate business license from the local and state government where the
business will be located in
T/F: With regard to dissociation and
dissolution, the Revised Uniform Partnership Act adopted and reserved the same general
rules and procedures as its predecessor, the Uniform Partnership Act
T/F: A sole proprietorship automatically
is dissolved when the owner dies
T/F: A limited partnership is formed by
the limited partner filing a certificate of limited partnership with the
appropriate state governmental authority
T/F: If someone successfully sues a sole
proprietorship, they must exhaust the businesses assets before they may go
after the principal's personal assets
T/F: An advantage of operating as a sole
proprietorship is that personal liability for any business losses is limited to
the owner's investment in the business
T/F: If a sole proprietorship loses money,
the principal may deduct the losses from her own personal tax liability if any
T/F: A limited partnership is required to
have two or more limited partners
T/F: To date, every state in the union has
adopted the Revised Uniform Partnership Act except the state of Louisiana
Frank and Jesse are operating as a general
partnership. A question has arisen not covered under their partnership
agreement and also not addressed by the Revised Uniform Partnership Act. What
will the courts do to resolve the situation? What law will they look to to
resolve the situation?
With regard to taxation of partnerships:
what kind of tax information must a partnership file?
A limited partnership requires what kind
and how many partners?
Mike lends money to Kathy as a business
loan to Kathy who is capitalizing her start up sole proprietorship named
Kathy's Things. If Mike must sue for repayment, he would sue?
A business which exists in fact although
not formally recognized is referred to as being?
Lisa and Tara are operating a business as
a general partnership without an express partnership agreement. Should a
dispute arise, the courts will look to ________ to resolve the issue regarding
operation of the partnership.
What kind of partnership requires a formal
filing to be recognized as a valid business entity?
Bill is a general partner in a four member
limited partnership with two general and two limited partners. The partnership
is silent with regard to the duration of the partnership and Bill wishes to
retire, can he retire? Does he have to fill out any specific paperwork or wait
a certain amount of time? Will the partnership continue to exist?
Roger is a limited partner in a business.
To retain his limited liability protection he must not do what within the
business?
T/F: General partnerships are not created
by filing a form with a government agency
T/F: In all forms of business entities, the
entity itself pays taxes on money earned by or through the entity
T/F: General partnerships are pass-through
entities regarding taxation, however; limited partnerships are not pass-through
entities for taxes
T/F: Wayne Lewis wants to start a sole proprietorship
named Lewis Plumbing Services. Because it will be a sole proprietorship, Wayne
has no filing requirements other than obtaining the appropriate business
license from the local and state government where the business will be located
in
T/F: Under the Revised Uniform Limited
Partnership Act, limited partners may act as consultants and may contribute
their expertise to the limited partnership
T/F: Mike is a limited partner in Big
Blue, LP. The partnership agreement permits him to have a say in the removal of
general partners and the blocking of new partners. This agreement will
jeopardize his limited partner status
T/F: In the absence of an agreement to the
contrary, the Revised Uniform Partnership Act mandates that general partnership
profits be split equally amongst the partners
T/F: The Revised Uniform Limited
Partnership Act requires that there be a written partnership agreement
regarding limited partnerships
T/F: One disadvantage of a sole
proprietorship business entity is that it is restricted to a single location
and cannot expand
T/F: Joint ventures are governed by the
same legal principles as a general partnership
Frank and Jesse are operating as a general
partnership. A question has arisen not covered under their partnership
agreement and also not addressed by the Revised Uniform Partnership Act. What
will the courts do to resolve the situation? What law will they look to?
In a general partnership an unequal split
of profits may be agreed to based on the partnership agreement, but losses are
split up how?
With regard to taxation of partnerships
what kind of tax information must they file?
T/F: Regarding limited partners, they may
not withdraw before the time that the partners have agree that the partnership
will terminate
Redrock GP has decided to go out of
business. The sale of the partnership assets and the making of payments to
creditors will occur during the ________ phase of the closing of a partnership.
Principals generally have no personal
liability for the business entity's debts regarding which kind of business
entity?
A general partnership may be formed by
what kind of agreement?
What kind of business entity does not
require two or more principals?
T/F: Some states do not require a written
management agreement regarding LLCs
T/F: LLPs may choose to be taxed like a
corporation or choose pass-through taxation treatment
T/F: When a member of an LLC dies, the
business entity automatically ceases to exist
T/F: The management structure of a
member-managed LLC is similar to that of a general partnership
T/F: All states require LLPs to have a
written partnership agreement
T/F: Requiring a franchisee to purchase
all franchise related materials and supplies, trademarked and otherwise, from
the franchisor violates the Small Business Franchise Act
T/F: Jones LLC and Smith LLC both have ten
members and five managing members. Both entities go into dissolution. The
procedures for dissolution including preferences of members in terms of who is
paid first and so on will be identical for both companies
T/F: The operating agreement of the LLC
often controls the amount and methods of capitalizing the business
T/F: Financial information provided to a
prospective franchisee must be audited
T/F: Trish is a partner in an LLP and the
partnership is having a cash flow problem. To alleviate the problem the
partnership has initiated a capital call for each partner to contribute an
additional $25,000 to the business. If Trish cannot come up with the necessary
funds, she may be forced to sell her interest in the partnership
T/F: LLCs are pass-through entities for
tax purposes, however; LLPs are taxed at the entity level without tax liability
passing to partners other than their personal salary income if any
T/F: States may require that LLPs carry
liability insurance to protect clients and customers as a condition of LLP
formation
T/F: When completing the certificate of
organization, the organizers of an LLC are not required to disclose how the
business is to be managed
T/F: Many states have eased filing
requirements to create an LLC from requiring extensive amounts of information
to now requiring minimal information similar to that required in a corporate
filing
T/F: Some states recognize LLCs but do not
permit partnership taxation at the state level
T/F: LLCs are required to name a member as
its registered agent and may not use a commercial registered office provider
LLCs were originally created by the which
legislature?
Which type of business entity requires the
most disclosures and is the most lengthy and complex to create?
Federal regulations regarding franchises
are primarily designed to ensure ______ _______ of all information relating to
a franchise company prior to a franchise investment
An LLC offers principals the same
liability coverage as principals in ______ with pass through taxation
LLPs are often currently used to protect
family businesses as a way to resolve issues regarding what?
Personal financial contributions may be
required by previous agreement with regard to what kind of business entity?
What Act provides the following
protections to franchisees: a required 30 day period for the franchisee to cure
contract defaults; freedom to work outside of the franchise as long as the
franchisee does not work in competition with the franchise; the right to purchase
materials from vendors cheaper than the franchisor as long as the quality is
comparable?
T/F: Business trust beneficiaries are
issued stock as evidence of their ownership rights in trust assets
In Lieberman v. Wyoming.com, LLC,
Lieberman dissociated from the LLC and demanded cash for his share of the
company. The remaining members voted to continue the company and the operating
agreement discussed distribution in the cases of dissolution but not simple
dissociation. The court decided that:
T/F: Debentures are unsecured promises to
pay back money with interest at a certain date backed by the strength of the
general credit of the corporation
T/F: A corporation exists as an
independent person separate from its principals
T/F: To qualify for Subchapter S status, a
supermajority of the shareholders must consent to the Subchapter S designation
T/F: A corporation is considered formed
the moment the articles of incorporation are filed by the principals
T/F: One benefit of the Subchapter S
corporation is that there is no double taxation
T/F: Unless limited by the articles of
incorporation, shareholders may vote to remove a director with or without
cause, however; the courts may only remove a board member for cause
T/F: A new startup corporation has gone to
a bank for a commercial loan. Recognizing the startup status of the business
and the limited assets the corporation currently possesses, the bank, to
protect its interests, may require that either collateral be pledged or a
personal guarantee be signed by shareholders but may not require both
T/F: Courts are generally inclined to be
predisposed to piercing the corporate veil whenever a corporation causes
economic harm to others
T/F: Joe and Josephine have started a
plumbing business and have incorporated. They invest nothing into the
corporation and the corporation has minimal assets. One day Josephine
negligently damages a main pipe in a customer's home causing the basement to
flood and resulting in $20,000 in damages. The homeowner's only remedy is to
sue the corporation and because the corporation has no funding and minimal
assets, the homeowner must bear the loss because Joe and Josephine are shielded
from liability due to the corporate protections the business entity affords
them
T/F: Kate owns 1000 shares of stock in a
corporation. As an owner of the corporation by virtue of her stock ownership,
if she enters into a contract on behalf of the corporation the company will be
bound by her actions
T/F: Eight businesswomen have formed a
privately held corporation. Their stock certificates and the stock register of
the corporation are public documents
Le Magasin de Vêtements, Inc. is a
clothing retailer incorporated in France. If they transact business in New
York, Le Magasin de Vêtements would be characterized as what type of
corporation?
An enterprise may not be a Subchapter S
corporation if it owns more than ________ of the stock of a subsidiary
corporation
T/F: Poor Management and decision making
performed by inadequately trained or educated managers is a factor used by
courts to determine whether to pierce the corporate veil
These factors: inadequate capitalization;
evidence of fraud or willful misconduct; failure to follow necessary corporate
formalities - are factors used by the courts to determine whether or not to do
what?
The main disadvantage of choosing a
publicly held corporate form to operate a business is?
Thirteen sorority sisters decide to start
a dog walking business. They incorporate under the name Pro Canine Walkers,
Inc. and advertise their services throughout the city in newspapers and with
flyers they post. All stock is owned by the thirteen principals and none is
offered to anyone outside of the thirteen. This corporation would be classified
as what kind of corporation?
In H. Carl McCall, Trustee of the New York
Common Retirement Fund, et al., Derivatively on Behalf of Columbia/HCA
Healthcare Corporation v. Scott, suit was brought claiming a breach of their
fiduciary duties by the board with regard to alleged fraudulent billing
practices. The board defended by citing the corporate charter which limits the
liability of directors for breach of duty claims as long as they did not act in
bad faith. The court determined that:
The owners of a corporation are the?
T/F: Venture capital firms are generally
long term investors
The following factors: they generally
concentrate on one particular industry; they usually insist on substantial
control of the corporation being funded through membership on its board or
through appointments to certain officer positions; and they are generally a
source of expertise in operations and expansion of the corporation being funded
- are factors of what type of business entity?
Saul was elected to the board of trustees
of Round Way Corp. four years ago. He makes sure everyone knows he's a board
member and always brings it up at parties. Unfortunately he cares more about
the prestige than doing a good job so he hasn't attended board meetings nor is
he attending committee meetings to which he's been assigned. If the insiders at
Round Way enter into a series of bad business deals causing financial loss to
the corporation can or will Saul be held liable and why or why not?
The corporation is considered to come into
existence when?
Fred and Barney have incorporated and
obtained a $100,000 loan payable with interest over five years in the corporate
name. After paying on the loan regularly for two years, the business falters
due to the economy and they default on their loan. Their business has no
assets, do Fred and Barney have any personal liability for the debt?
Happy Hops Brewery, Inc. has found that
there business is expanding very quickly. The decision to fire three new
delivery drivers would be made by whom?
These factors: they may issue only one
class of stock; taxation is pass-through similar to partnership taxation; and
they many not have more than 100 shareholders - are factors of what type of
business entity?
T/F: Subchapter S corporations may be
domestic or foreign but cannot be alien
Who has the power to do each of the
following factors: veto a board decision to issue more capital stock; veto a
board decision to pursue venture capital financing; approve structural changes
in the corporation through the amending of the articles of incorporation; elect
and remove directors?
T/F: Shareholders generally have the power
and right to elect and remove officers
T/F: The primary market consists of
securities sales in public markets while the secondary market consists of
security sales in private placements
T/F: The SEC has the power to initiate
criminal actions against individuals or companies that violate security laws
T/F: Only the Congress may enact
securities regulations and only the courts may interpret securities statutes
T/F: Preferred stock is the most
frequently used form of equity instrument
T/F: The SEC has the power to suspend or
revoke the licenses of brokers that violate securities laws
T/F: Public corporation disclosures and
filings are made available to the general public
T/F: Preferred stock always has voting
rights
T/F: Assumption of risk by the investor is
a defense available for allegations of '33 Act violations
T/F: The promissory note securing a home
mortgage is a security instrument
T/F: Blue-sky laws refer to federal
security laws that preempt state security laws
T/F: Securities may not be sold or
marketed to the public until the SEC has completed its review phase and the
registration becomes effective
T/F: Most common stock enjoys voting
rights; however, common stock may be sold without voting rights
T/F: The foundation and underlying
principle of all securities regulation is disclosure
T/F: The Prospectus is a required
preregistration document
Micro bonds appeal to small business
ventures who wish to take advantage of bond financing in the ________ range
Whether or not a dividend is paid depends
on which body of people within a business agreeing to pay the dividend
Kate is an underwriter who acted as a
third party conducting a sale of securities between Fox Co. and an investor.
Subsequent to the sale it is discovered that the disclosures made by Fox Co.
were fraudulent. The investor has sued both Fox Co. and Kate. What is Kate's
best defense to avoid liability?
The corporate counsel's opinion verifying
the business ventures adherence to corporate formalities and compliance and
opinion of the corporation's accounting firm is contained in the?
The Securities Act of 1934 focuses on
which market?
T/F: Common stock is an equity instrument
T/F: Debentures, bonds and promissory
notes are debt instruments
What is a regulatory agency that is
independent and is not under the direct control of the president?
Under the emergency escrow provisions
created under the Sarbanes-Oxley Act the SEC may require what?
Eve is a promoter and has approached Adam
with an investment opportunity. Eve anticipates a generous profit and informs
Adam that he too can realize a generous profit also. This opportunity is not
being offered to others. Assuming all other requirements to classify this as a
security are in evidence, the commonality of this transaction would be
described as what kind of commonality?
The SEC maintains ________ regional
offices throughout the United States where much of its day-to-day work is done
Sales of securities to accredited
investors is one form of what?
T/F:
Some states do not require a written management agreement regarding LLCs.
Some states do not require a written management agreement regarding LLCs.
T/F:
LLCs may choose to be taxed as a pass-through entity or may elect to be taxed as a corporation.
LLCs may choose to be taxed as a pass-through entity or may elect to be taxed as a corporation.
T/F:
LLCs are not permitted to capitalize by selling equity ownership in the LLC itself.
LLCs are not permitted to capitalize by selling equity ownership in the LLC itself.
T/F:
The certificate of organization may restrict membership in an LLC to only those possessing a professional license in a named field.
The certificate of organization may restrict membership in an LLC to only those possessing a professional license in a named field.
T/F:
The name of an LLC must contain a designator such as "Company," "Limited," "Limited Liability Company," or "LLC."
The name of an LLC must contain a designator such as "Company," "Limited," "Limited Liability Company," or "LLC."
T/F:
LLPs may choose to be taxed like a corporation or choose pass-through taxation treatment.
LLPs may choose to be taxed like a corporation or choose pass-through taxation treatment.
T/F:
When a member of an LLC dies, the business entity automatically ceases to exist.
When a member of an LLC dies, the business entity automatically ceases to exist.
T/F:
The management structure of a member-managed LLC is similar to that of a general partnership.
The management structure of a member-managed LLC is similar to that of a general partnership.
T/F:
Partners in an LLP may choose to have LLP income taxed as a corporation.
Partners in an LLP may choose to have LLP income taxed as a corporation.
T/F:
The IRS has classified the LLC as a type of corporation for tax purposes.
The IRS has classified the LLC as a type of corporation for tax purposes.
T/F:
All states require that LLPs have a written partnership agreement.
All states require that LLPs have a written partnership agreement.
T/F:
An LLC can last until a specified term expires.
An LLC can last until a specified term expires.
T/F:
Jones LLC and Smith LLC both have 10 members and 5 managing members. Both entities go into dissolution. The procedures for dissolution, including preferences of members in terms of who is paid first and so on, will be identical for both companies.
Jones LLC and Smith LLC both have 10 members and 5 managing members. Both entities go into dissolution. The procedures for dissolution, including preferences of members in terms of who is paid first and so on, will be identical for both companies.
T/F:
In an LLC, the members may act as agents of the LLC, but they will not be personally liable to third parties who successfully sue the LLC.
In an LLC, the members may act as agents of the LLC, but they will not be personally liable to third parties who successfully sue the LLC.
T/F:
The operating agreement of the LLC often controls the amount and methods of capitalizing the business.
The operating agreement of the LLC often controls the amount and methods of capitalizing the business.
T/F:
About half of the states provide the same level of protection to general partners in an LLP as is provided to a limited partner in a limited partnership.
About half of the states provide the same level of protection to general partners in an LLP as is provided to a limited partner in a limited partnership.
T/F:
LLPs may be capitalized through debt from private or commercial lenders.
LLPs may be capitalized through debt from private or commercial lenders.
T/F:
Trish is a partner in an LLP, and the partnership is having a cash flow problem. To alleviate the problem, the partnership has initiated a capital call for each partner to contribute an additional $25,000 to the business. If Trish cannot come up with the necessary funds, she may be forced to sell her interest in the partnership.
Trish is a partner in an LLP, and the partnership is having a cash flow problem. To alleviate the problem, the partnership has initiated a capital call for each partner to contribute an additional $25,000 to the business. If Trish cannot come up with the necessary funds, she may be forced to sell her interest in the partnership.
T/F:
LLC members are ALWAYS required to complete a certificate of membership interest, evidencing the individual member's interest in the business entity.
LLC members are ALWAYS required to complete a certificate of membership interest, evidencing the individual member's interest in the business entity.
T/F:
LLCs are pass-through entities for tax purposes; however, LLPs are taxed at the entity level without tax liability passing to partners other than their personal salary income if any.
LLCs are pass-through entities for tax purposes; however, LLPs are taxed at the entity level without tax liability passing to partners other than their personal salary income if any.
T/F:
States may require that LLPs carry liability insurance to protect clients and customers as a condition of LLP formation.
States may require that LLPs carry liability insurance to protect clients and customers as a condition of LLP formation.
T/F:
The Uniform Limited Liability Company Act preempts all state laws in order to maintain consistency throughout the U.S. business community.
The Uniform Limited Liability Company Act preempts all state laws in order to maintain consistency throughout the U.S. business community.
T/F:
A corporation may be a principal of an LLC.
A corporation may be a principal of an LLC.
T/F:
When completing the certificate of organization, the organizers of an LLC are not required to disclose how the business is to be managed.
When completing the certificate of organization, the organizers of an LLC are not required to disclose how the business is to be managed.
T/F:
Many states have eased the filing requirements for creating an LLC, switching from requiring extensive amounts of information to now requiring minimal information similar to that required in a corporate filing.
Many states have eased the filing requirements for creating an LLC, switching from requiring extensive amounts of information to now requiring minimal information similar to that required in a corporate filing.
T/F:
Some states recognize LLCs but do not permit partnership taxation at the state level.
Some states recognize LLCs but do not permit partnership taxation at the state level.
T/F:
An LLC is required to name a member as its registered agent and may not use a commercial registered office provider.
An LLC is required to name a member as its registered agent and may not use a commercial registered office provider.
T/F:
The organizers of an LLC, who sign the certificate of organization, are required to be residents of the state in which the LLC is being formed.
The organizers of an LLC, who sign the certificate of organization, are required to be residents of the state in which the LLC is being formed.
T/F:
Both managing members and controlling members owe a fiduciary duty to other members.
Both managing members and controlling members owe a fiduciary duty to other members.
T/F:
Every state in the United States recognizes the existence of LLCs.
Every state in the United States recognizes the existence of LLCs.
LLCs were originally created by the:
Formation of an LLC requires the filing
of:
The origins of LLPs were rooted in
protection of:
Though they may elect a different
structure, for tax purposes LLCs are typically treated as:
The first LLP legislation was enacted in:
The ability to flow through to the
investors the tax deductions and losses that are typically generated by an
emerging company or a company with significant up-front debt is an advantage of
a:
Carlos is a member of an LLC along with
three others. After one year, despite their best efforts, the business closes
and the bank that extended them a loan sues for repayment. The bank may:
LLPs were created to
Typically, day-to-day decision making in
an LLC is performed by:
In 1997, the IRS made LLCs:
Burt has gone to a commercial bank to
negotiate a loan for the LLC in which he is a member. He tells the bank that he
is authorized to act on behalf of and to bind the company. What is the best way
for the bank to verify whether Burt does in fact have the authority he claims?
Voting rights of LLC principals are
governed by:
LLPs are formed with the filing of
________ with the proper public official.
The ability to distribute earnings without
incurring double-level taxation is an advantage of a
An LLC offers principals the same
liability coverage as that of:
LLCs share characteristics in common with
each of the following EXCEPT:
Several people have decided to go into
business as an LLC. To cover all contingencies, they want to specify what
constitutes an act of dissociation and outline the procedures upon dissolution.
This information would be included in:
With regard to taxation, LLPs are treated
as:
LLPs are often currently used to protect
family businesses as they provide a way to resolve:
Personal financial contributions may be
required by previous agreement with regard to
If an LLP does not have a partnership
agreement, the courts will look to ________ to resolve internal management
disputes.
In an LLP, any income is taxed:
Because it is not a taxable entity, an
LLP:
Which of the following would NOT generally
be formed as an LLP?
When an LLP is formed, who files the
initial paperwork?
All income and losses of an LLP are
reported:
Although many LLCs are treated as
pass-through entities, an LLC's members may elect to be taxed as a:
The amount and methods of capitalizing an
LLC are often controlled by the
In Lieberman v. Wyoming.com, LLC,
Lieberman dissociated from the LLC and demanded cash for his share of the
company. The remaining members voted to continue the company, and the operating
agreement discussed distribution in the case of dissolution but not simple
dissociation. The court decided that:
T/F:
Corporate bylaws are public documents that must be filed with the appropriate state corporation office.
Corporate bylaws are public documents that must be filed with the appropriate state corporation office.
T/F
Debentures are unsecured promises to pay back money with interest at a certain date and are backed by the strength of the general credit of the corporation.
Debentures are unsecured promises to pay back money with interest at a certain date and are backed by the strength of the general credit of the corporation.
T/F:
A corporation exists as an independent person separate from its principals.
A corporation exists as an independent person separate from its principals.
T/F:
To qualify for Subchapter S status, a supermajority of the shareholders must consent to the Subchapter S designation.
To qualify for Subchapter S status, a supermajority of the shareholders must consent to the Subchapter S designation.
T/F:
A corporation is considered formed the moment the articles of incorporation are filed by the principals.
A corporation is considered formed the moment the articles of incorporation are filed by the principals.
T/F:
One benefit of the Subchapter S corporation is that there is no double taxation.
One benefit of the Subchapter S corporation is that there is no double taxation.
T/F:
Corporations may be created by written agreement between the principals, and no strict or formal filing is required as long as the agreement is written.
Corporations may be created by written agreement between the principals, and no strict or formal filing is required as long as the agreement is written.
T/F:
Officers and directors owe fiduciary duties to the corporation and its shareholders; however, none of the shareholders owe such duties because they cannot bind the company.
Officers and directors owe fiduciary duties to the corporation and its shareholders; however, none of the shareholders owe such duties because they cannot bind the company.
T/F:
Any corporation that does not make money is classified as a nonprofit corporation.
Any corporation that does not make money is classified as a nonprofit corporation.
T/F:
The authority of an officer to bind the corporation must expressly flow from the bylaws or through the board of director mandates.
The authority of an officer to bind the corporation must expressly flow from the bylaws or through the board of director mandates.
T/F:
Corporations are afforded full First Amendment political speech protection.
Corporations are afforded full First Amendment political speech protection.
T/F:
A closely held corporation may be privately held or publicly held depending on the status determined at creation.
A closely held corporation may be privately held or publicly held depending on the status determined at creation.
T/F:
Shareholders are the owners of the corporation and, in part, act principally through electing and removing officers.
Shareholders are the owners of the corporation and, in part, act principally through electing and removing officers.
T/F:
All publicly held corporations are classified as public corporations.
All publicly held corporations are classified as public corporations.
T/F:
Unless limited by the articles of incorporation, shareholders may vote to remove a director with or without cause; however, the courts may remove a board member only for cause.
Unless limited by the articles of incorporation, shareholders may vote to remove a director with or without cause; however, the courts may remove a board member only for cause.
T/F:
A new start-up corporation has gone to a bank for a commercial loan. Recognizing the start-up status of the business and the limited assets the corporation currently possesses, the bank, to protect its interests, may require that either collateral be pledged or a personal guarantee be signed by shareholders but may not require both.
A new start-up corporation has gone to a bank for a commercial loan. Recognizing the start-up status of the business and the limited assets the corporation currently possesses, the bank, to protect its interests, may require that either collateral be pledged or a personal guarantee be signed by shareholders but may not require both.
T/F:
Once a corporation is recognized as existing by the state, the corporation automatically becomes liable for all contracts that a promoter had entered into on behalf of the corporation.
Once a corporation is recognized as existing by the state, the corporation automatically becomes liable for all contracts that a promoter had entered into on behalf of the corporation.
T/F:
An insurance company cannot qualify for Subchapter S corporate status.
An insurance company cannot qualify for Subchapter S corporate status.
T/F:
A start-up business planning to incorporate must file for incorporation in the state in which it originally plans to do business.
A start-up business planning to incorporate must file for incorporation in the state in which it originally plans to do business.
T/F:
The Revised Model Business Corporation Act provides that a self-dealing transaction is not a breach of the duty of loyalty if a majority of disinterested parties approve the transaction after disclosure of the conflict.
The Revised Model Business Corporation Act provides that a self-dealing transaction is not a breach of the duty of loyalty if a majority of disinterested parties approve the transaction after disclosure of the conflict.
T/F:
For a corporation to be privately held, the number of shareholders will be limited as will the permitted total of gross revenues.
For a corporation to be privately held, the number of shareholders will be limited as will the permitted total of gross revenues.
T/F:
Kathy is the president of a corporation. She has just made the news by being discovered with a male prostitute while at a conference. Mike, a shareholder, may successfully present a proposal at the next shareholder meeting calling for a shareholder vote to have her removed from office.
Kathy is the president of a corporation. She has just made the news by being discovered with a male prostitute while at a conference. Mike, a shareholder, may successfully present a proposal at the next shareholder meeting calling for a shareholder vote to have her removed from office.
T/F:
Courts are generally inclined to be predisposed to piercing the corporate veil whenever a corporation causes economic harm to others.
Courts are generally inclined to be predisposed to piercing the corporate veil whenever a corporation causes economic harm to others.
T/F:
The Revised Model Business Corporation Act mandates that all corporations other than single-member corporations maintain a board of directors with at least three members who are independent of the officers and shareholders.
The Revised Model Business Corporation Act mandates that all corporations other than single-member corporations maintain a board of directors with at least three members who are independent of the officers and shareholders.
T/F:
Joe and Josephine have started a plumbing business and have incorporated. They invest nothing into the corporation, and the corporation has minimal assets. One day Josephine negligently damages in a main pipe in a customer's home, causing the basement to flood and resulting in $20,000 in damages. The homeowner's only remedy is to sue the corporation, but the corporation has no funding and only minimal assets. Thus the homeowner must bear the loss because Joe and Josephine are shielded from liability due to the corporate protections the business entity affords them.
Joe and Josephine have started a plumbing business and have incorporated. They invest nothing into the corporation, and the corporation has minimal assets. One day Josephine negligently damages in a main pipe in a customer's home, causing the basement to flood and resulting in $20,000 in damages. The homeowner's only remedy is to sue the corporation, but the corporation has no funding and only minimal assets. Thus the homeowner must bear the loss because Joe and Josephine are shielded from liability due to the corporate protections the business entity affords them.
T/F:
A nonprofit corporation is not permitted to make or produce revenue
A nonprofit corporation is not permitted to make or produce revenue
T/F:
Kate owns 1,000 shares of stock in a corporation. As an owner of the corporation by virtue of her stock ownership, if she enters into a contract on behalf of the corporation, the company will be bound by her actions.
Kate owns 1,000 shares of stock in a corporation. As an owner of the corporation by virtue of her stock ownership, if she enters into a contract on behalf of the corporation, the company will be bound by her actions.
T/F:
Eight businesswomen have formed a privately held corporation. Their stock certificates and the stock register of the corporation are public documents.
Eight businesswomen have formed a privately held corporation. Their stock certificates and the stock register of the corporation are public documents.
T/F:
Corporate bondholders are creditors of the corporation but are not shareholders.
Corporate bondholders are creditors of the corporation but are not shareholders.
T/F:
Privately held corporations are more common than are publicly held corporations.
Privately held corporations are more common than are publicly held corporations.
Which of the following is an INCORRECT
statement?
In Smith v. Van Gorkom, the court had to
determine whether the business judgment rule protected board members who
permitted the sale of a significant amount of stock by the retiring chairman of
the board at an undervalued price, devaluing the company. The court stated each
of the following EXCEPT:
Le Magasin de Vêtements Inc., is a
clothing retailer incorporated in France. If it transacts business in New York,
Le Magasin de Vêtements would be characterized as:
An enterprise may not be a Subchapter S
corporation if it owns more than ________ of the stock of a subsidiary
corporation.
Each of the following is a factor used by
courts to determine whether to pierce the corporate veil EXCEPT:
Creation and internal governance of
corporations is governed by:
A disadvantage of choosing a publicly held
corporate form to operate a business is:
Privately held corporations may issue a
________ in lieu of conducting a formal annual meeting.
Which of the following gives a person the
right to vote at an annual meeting?
In Florence Cement Company v. Vittraino,
Florence sought to pierce Shelby's corporate veil and hold the principals
personally liable, claiming Shelby mixed personal and business transactions and
had engaged in fraud in a loan application. The appeals court held that:
Thirteen sorority sisters decide to start
a dog-walking business. They incorporate under the name Pro Canine Walkers
Inc., and advertise their services throughout the city in newspapers and on
flyers they post. All stock is owned by the 13 principals, and none is offered
to anyone outside the 13. This corporation would be classified as a:
In H. Carl McCall, Trustee of the New York
Common Retirement Fund, et al., Derivatively on Behalf of Columbia/HCA
Healthcare Corporation v. Scott, suit was brought claiming a breach of
fiduciary duties by the board with regard to alleged fraudulent billing
practices. The board defended by citing the corporate charter, which limits the
liability of directors for breach-of-duty claims as long as they did not act in
bad faith. The court determined that:
Bonds Inc., is incorporated in the state
of Florida. In Florida, Bonds would be characterized as:
A corporation formed for the purpose of
maintaining a charitable operation is called a:
The owners of a corporation are the:
The corporation with the most shareholders
is the
Which of the following is NOT true
regarding venture capital firms?
Offering or trading ownership interests in
corporations is governed by:
Saul was elected to the board of trustees
of Round Way Corp. four years ago. He makes sure everyone knows he's a board
member and always brings it up at parties. Unfortunately, he cares more about
the prestige than doing a good job, so he hasn't attended board meetings or
meetings of committees to which he's been assigned. If the insiders at Round
Way enter into a series of bad business deals causing financial loss to the
corporation:
Corporate officers are:
The corporation is considered to come into
existence when:
Initial public offerings (IPO) occur when:
Fred and Barney have incorporated and
obtained a $100,000 loan, payable with interest over five years, in the
corporate name. After paying on the loan regularly for two years, the business
falters due to the economy, and they default on their loan. Their business has
no assets.
Happy Hops Brewery Inc., has found that
its business is expanding very quickly. The decision to fire three new delivery
drivers would be made by:
Which of the following is an INCORRECT
statement regarding Subchapter S corporations?
The document filed with the state that
begins the incorporation process in the majority of states is called the:
Delaware is a popular state for many
corporations to incorporate in. Each of the following is a Delaware
incorporation advantage EXCEPT:
Under the Revised Model Business
Corporation Act, if a promoter acts on behalf of a corporation knowing that
incorporation has not yet been completed and liability occurs:
Shareholders generally have the power and
right to do each of the following EXCEPT:
Robert Hill Corp. is incorporated in the
state of Delaware. If it transacts business in Iowa, Robert Hill would be
characterized in Iowa as:
LLPs are formed with the filing of
________ with the proper public official.
If an LLP does not have a partnership
agreement, the courts will look to ________ to resolve internal management
disputes.
LLPs may choose to be taxed like a
corporation or choose pass-through taxation treatment.
LLCs share characteristics in common with
each of the following except :general partnerships.
limited partnerships.
corporations.
sole proprietorships.
limited partnerships.
corporations.
sole proprietorships.
Some states recognize LLCs but do not
permit partnership taxation at the state level.
Which of the following would not generally
be formed as an LLP? three frat brothers opening a bar
two attorneys operating a law firm
four licensed physical therapists running a clinic
twenty CPAs running an accounting firm
two attorneys operating a law firm
four licensed physical therapists running a clinic
twenty CPAs running an accounting firm
Both managing members and controlling
members owe a fiduciary duty to other members.
In an LLP, any income is taxed:
A corporation may be a principal of an
LLC.
The management structure of a member-managed
LLC is similar to that of a general partnership.
In Florence Cement Company v. Vittraino,
Florence sought to pierce Shelby's corporate veil and hold the principals
personally liable, claiming Shelby mixed personal and business transactions and
had engaged in fraud in a loan application. The appeals court held that:
Each of the following is a factor used by
courts to determine whether to pierce the corporate veil except:poor management
and decision making by an inadequately trained or educated manager.
inadequate capitalization.
evidence of fraud or willful misconduct.
failure to follow necessary corporate formalities.
inadequate capitalization.
evidence of fraud or willful misconduct.
failure to follow necessary corporate formalities.
The corporation with the most shareholders
is the:
Any corporation that does not make money
is classified as a nonprofit corporation.
Corporate bylaws are public documents that
must be filed with the appropriate state corporation office.
Fred and Barney have incorporated and
obtained a $100,000 loan, payable with interest over five years, in the
corporate name. After paying on the loan regularly for two years, the business
falters due to the economy, and they default on their loan. Their business has
no assets.
Which of the following is an incorrect
statement?
A corporation may file suit in its own name without the principals filing suit.
incorrect. A corporation may form a contract in its own name without the principals guaranteeing the contract.
A corporation can be sued without the principals being sued.
A corporation may not incur obligations separate from those of its principals.
A corporation may file suit in its own name without the principals filing suit.
incorrect. A corporation may form a contract in its own name without the principals guaranteeing the contract.
A corporation can be sued without the principals being sued.
A corporation may not incur obligations separate from those of its principals.
A corporation formed for the purpose of
maintaining a charitable operation is called a:
In H. Carl McCall, Trustee of the New York
Common Retirement Fund, et al., Derivatively on Behalf of Columbia/HCA
Healthcare Corporation v. Scott, suit was brought claiming a breach of
fiduciary duties by the board with regard to alleged fraudulent billing
practices. The board defended by citing the corporate charter, which limits the
liability of directors for breach-of-duty claims as long as they did not act in
bad faith. The court determined that:
The document filed with the state that
begins the incorporation process in the majority of states is called the
General Partnerships
Fiduciary Duties
Limited Partnership liability is
When a limited partnership interest is sold
to the public the transaction is subject to federal and state___laws
Partnership
What may a limited partner perform in a
limited partnership
The principal is responsible for the
unpaid debt in
What business entity is the most logical
for a start up business with low annual revenues and expenses
In a limited partnership the _________is
typically responsible for filing the information return with taxing authorities
A partnership is taxed like a _________
which means the partnership itself does not pay taxes, rather taxes are
accounted for on an individual partner tax returns.
Who operates the business and how the
business is operated is the function of
A written partnership agreement is
required for an entity to exist as a partnership
Voluntary_______ occurs when a partner
gives notice of intent to withdraw from the partnership
Formation
States that have not adopted RUPA follow
the provisions found in the
Sole proprietorships are usually funded
through
Death or personal bankruptcy of the owner
is an example of how a sole proprietorship is terminated by
Certificate of limited partnership
Limited partnerships are ________entities
for tax purposes meaning the entity itself does not pay taxes
Winding up
An LLC is governed through its
State laws that govern LLCs include
provisions for both initial ______ and default rules in case the owners do not
set their standards of operation
LLCs may be taxed as
Dissociation occurs when
LLPs are taxed as
Most states have what uniform statute as
the model of their goverance of LLC
LLC offers business owners the liability
protection of a
Owners of a limited liability company
(LLC) are called
The duty of loyalty attempts to protect
shareholders from
Promoter
In some instances the board of directors
may be reported in the
Directors
Bylaws
A ____capital can help provide a company
with a substantial amount of money as well as expertise
The S in a S Corporation references a
subchapter in the
A bond
Bylaws
Officers and Directors must always make
the right decisions on behalf of a corporation or they will be personally
liable
Corporations have many of the same rights
as an individual
Owners of a corporation
An S corporation is limited
to____shareholders
A debenture
The number of shareholders who must be
present at a meeting to hold to a vote
Courts
apply the ________ analysis to determine the classification of an agent.
Courts
apply a subjective standard when examining the existence of offer and
acceptance by the parties when they created an agency relationship.
The
IRS has developed a three-prong test to determine an agent's status. Which of
the following is not a prong in this test?
Generally, regarding employment-at-will,
employees may be fired just because the boss doesn't like them.
Unsafe
workplace conditions are monitored and regulated under:
The
shift from an agricultural society toward industrial production began almost
immediately after the end of the U.S. Revolution.
If
a union chooses not to bring a grievance to arbitration, the individual union
member always has the right to pursue the matter through a lawsuit to enforce
union provisions.
Your
school's football coach has just been fired. When the athletic director informs
him of the termination, he tells the coach that although he has had recent
winning seasons, the inability to make it into postseason play and his
inability to groom players for the pros has weighed prominently in the
decision. The coach is also told that his recruiting has not been effective and
that his fund-raising has been disappointing. The AD then tells him that his
pretty-boy image makes him look too effeminate, he dresses like a nerd, and he
doesn't portray the proper image of a head football coach desired by the
school. The coach's best theory for pursuing a discrimination lawsuit is:
Which
of the following is a neutral requirement that is likely to result in disparate
impact?
Tom,
a city policeman, is featured as Mr. August in the police charity calendar
wearing only a pair of Speedos and a smile. Chuck is a fellow cop and a
homosexual. Every opportunity that he has, Chuck brushes up against Tom and
asks if Tom has ever been with a man. Chuck buys Tom gifts and leaves them by
Tom's locker. Tom throws the gifts away immediately. Tom has asked Chuck to
stop, but Chuck just laughs and says, "I'll get you someday." Tom is
and has always been a heterosexual. Tom has complained to his superiors
pursuant to department policy, but they claim it's just horseplay and not
serious. If Tom files a complaint with the EEOC:
A
limited liability company (LLC) is formed by filing _____ with the state public
filing official in the secretary of state's corporation bureau.
Limited
liability companies (LLCs) are frequently governed by agreement of the parties
in the form of a statement of qualification.
Which
of the following statements accurately differentiates between the management of
a limited liability company (LLC) and a limited
Liability partnership
(LLP)?
Most
states distinguish between a member-managed LLC and a manager-managed LLC. LLCs
are managed through managing members, whereas an LLP is managed by managing
partners or an executive committee.
In
choosing a business entity, principals of the business should consider the
extent to which they are personally liable for debt and other contract or tort
liabilities of the business entity itself.
The Revised Uniform Limited Partnership Act
(RULPA) formally requires a partnership agreement to govern a limited
partnership.
Which of the following statements accurately
differentiates between a general partnership and a limited partnership?
One
of the primary differences between general partners and limited partners is the
extent to which they are permitted to be involved in day-to-day operations of
the business. General partners manage the business and are permitted to bind
the partnership. Limited partners may engage in consulting and contribute
expertise but may not engage in management activities such as supervision of
employees.
Matthew Granger is a member of the board of
directors at Produxicore Inc. Over a period of one year, Matthew failed to
attend most of the board meetings claiming that he was unaware of their
occurrence. During the meetings
that he did attend, he was not up-to-date with the company's developments. He
did not read the reports he was presented and
was unfamiliar with the company's financial records. In this scenario, Matthew
Granger breached his duty of care primarily through _____.
The Revised Model Business Corporation Act
(RMBCA) provides that anyone purporting to act on behalf of a corporation,
knowing incorporation has not yet occurred, is jointly and severally liable for
all liabilities created by the
acts.
A primary market is one in which investors
buy and sell issued securities among themselves.
The Private Securities Litigation Reform Act
(PSLRA) of 1995 provides safe harbors from lawsuits that shield a company and
its officers and directors so long as the principals acted in good faith and
disclosed all relevant facts.
One who has experience, business savvy, and
knowledge of a market to the extent that the law imputes a certain cognizance
of investment risk and the ability to protect his or her own interests is
referred to as a(n):
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