Bus Law 250 Final Exam Essay

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A partially disclosed principal is also known as:
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an unidentified principal.
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Tad, the manager of an apartment complex, rented an apartment to Dominique. A few weeks later, Dominique complained that the hot water did not work. Tad hired Hometown Plumbers to fix the hot water, but the job was not successful. A few days later Dominique moved out since she had no hot water. She sued the landlord and Tad for breach of contract. Which of the following statements is correct?
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The landlord is liable, but not Tad.
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Grant, the production manager at Grisday, was told by his supervisor to hire Darrell, a 15- year-old, to operate an industrial machine. Hiring the 15-year-old violates the child labor laws. Grant:
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should not hire Darrell. Grant has a duty to obey Grisday’s instructions only if they are legal and ethical.
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Jerry agreed to show Jackie’s car to a potential buyer. Jackie was not able to be home since she had to attend a meeting. After showing the car, Jerry left the keys in it and the car was stolen. Which statement is correct?
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Since Jerry is a gratuitous agent, he will only be liable for the loss of the car if his conduct constitutes gross negligence.
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Katie borrowed $2,500 from Lauren. They agreed that Lauren could take a grouping of Katie’s antiques as collateral. If Katie could not pay, then Lauren could sell the antiques to recover her money. When Katie could not pay off the loan, Lauren sold the antiques and paid Katie the proceeds after deducting the balance of the loan. Which of the following statements is correct?
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A. This is an irrevocable agency relationship. b. All these answers. c. Katie has neither the power nor the right to terminate the relationship. d. This is a power coupled with an interest.
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Express authority can be created by:
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A. words spoken directly to the agent. b. All these answers. c. written words given to one person to give to another person, the agent. d. conduct.
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D2D Accounting hired Coco, a CPA, to prepare tax returns. Which statement is correct?
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Coco, as a CPA, is an agent with special skills. She is held to a higher duty than ordinary negligence.
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Katie borrowed $2,500 from Lauren. They agreed that Lauren could take a grouping of Katie’s antiques as collateral. If Katie could not pay, then Lauren could sell the antiques to recover her money. When Katie could not pay off the loan, Lauren sold the antiques and paid Katie the proceeds after deducting the balance of the loan. Which of the following statements is correct?
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Only Lauren can terminate the relationship.
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Chiao has agreed to install a new shower in the bathroom of Tiffany’s house for $1,000. Chiao is:
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an independent contractor.
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If the agent is disloyal to the principal:
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a. the agency agreement automatically terminates and the principal may rescind the transaction. b. All these answers. c. the principal has a right to recover any profits earned as a result of his agent’s disloyal conduct. d. the principal has the right to collect any actual damages sustained as a result of the agent’s disloyalty
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Jilly is a salesperson in a hardware store. As such, she:
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a. is an agent of the store. b. All these answers. c. has implied authority to conduct sales transactions. d. has express authority to conduct sales transactions.
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Conner hired Travis to sell his house. Which statement is correct?
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Conner is Travis’s principal.
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The death of the agent:
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automatically terminates the agency relationship.
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Mack, Lera, and Tito are considering forming a business. What factors should they consider in making a choice of organization?
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a. Whether there is personal liability for the owners. b. How the owners will be taxed. c. All of these answers. d. Ease of creation and operation.
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The term “S Corporation” comes from:
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the Internal Revenue Code.
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Corporations can continue without the existence of their founders, and therefore have:
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perpetual existence.
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The form of business ownership that is the most easily transferable is the:
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corporation.
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Mack, Lera, and Tito are considering forming a business. What factors should they consider in making a choice of organization?
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a. Whether there is personal liability for the owners. b. How the owners will be taxed. c. All of these answers. d. Ease of creation and operation.
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Which of the following would not be personally liable for the debts of the business?
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A general partner in a limited liability limited partnership.
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The term “S Corporation” comes from:
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the Internal Revenue Code.
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Corporations can continue without the existence of their founders, and therefore have:
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perpetual existence
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Janet was a limited partner in a retail business that was sued by a customer who fell in the store. The customer claimed the business was negligent in caring for its floors. Which statement best describes Janet’s potential liability?
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Janet can only be liable to the amount of her investment
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Henry and Ty have pooled their money together to buy real estate but have filed no formal papers to form a business. Henry, a lawyer, handles all the legal matters and Ty, a real estate broker, finds buyers for the property they have subdivided. Henry and Ty are engaged in a:
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partnership.
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Which of the following forms of organization is a compromise between starting one’s own business as an entrepreneur and working for someone else as an employee?
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Franchise.
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The form of business ownership that is the most easily transferable is the:
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corporation.
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A limited liability company, unlike a Subchapter S corporation, can have members that are:
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a. partnerships. b. nonresident aliens. c. All of these answers. d. corporations.
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Jake, his parents, and three brothers own all the stock of their family farm corporation. This corporation, which is taxed as a corporation, is probably:
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a closely held corporation.
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In order to obtain limited liability, Tim and Delia formed an LLC to operate their catering business. They sometimes deposited the proceeds from catering jobs into their personal checking accounts and if they needed to pay personal bills and were short of funds, they used the business account. If creditors of the business cannot get payment for their invoices, is there anything a court can do to help the creditors?
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Yes. Courts would be likely to disregard the LLC form and hold Tim and Delia personally liable for the business debts.
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E. I. Sorenson is a writer with a best selling novel. He wishes to create a corporation called “Sorenson, Inc.” He will be the only shareholder. Can Sorenson incorporate his business of writing?
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Yes, this would be the incorporation of a sole proprietorship.
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Celia wishes to buy a national franchise. What information is the seller legally required to provide before she buys the franchise?
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a. Whether the company has gone through bankruptcy proceedings in the prior 10 years. b. All fees required to be paid. c. All of these answers. d. Any litigation against the company for the prior ten years and any claims the company made against franchisees during the prior year.
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Jimmy was a partner in a partnership, but quits. What has just occurred?
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Dissociation.
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Arthur, Juan, and Monica form a partnership. There is no agreement as to the duration of the partnership. The partnership is a:
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partnership at will.
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Which of the following is a rightful dissociation?
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A partner in a partnership at will serves notice that he intends to withdraw.
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Which of the following would be evidence that two people intend to be partners?
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a. An agreement to share profits of a business. b. Agreeing to share in the business’s losses. c. Referring to each other as “partners.” d. All of these answers.
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Which of the following is true of a partnership?
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a. Each partner has equal rights in the management and conduct of the business, unless the partners agree otherwise. b. Partners are agents of the partnership and have the power to bind the partnership through actual, implied, or apparent authority. c. If the partnership is large, usually one or a few partners are designated as managing partners or members of an executive committee. d. All of these answers.
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Brad, Janet, and Ravi are partners. Their agreement did not address dissociation nor how long the partnership would last. Brad decided to leave the partnership. When Brad serves notice he intends to withdraw:
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the partnership can either buy him out and continue in business or wind up the business and terminate the partnership.
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Marsha is a partner with Hank and Mark. She sells her interest in the partnership to Matt. Which statement below is the most accurate?
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Hank and Mark must approve the sale for Matt to become a full partner.
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Meredith and Todd have a written agreement wherein they will share the losses of their joint business. This agreement is _________ that they are partners.
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strong evidence
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Ingrid and Astrid formed a partnership in which they agree to share profits 60 percent to Ingrid and 40 percent to Astrid. Losses will be shared:
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60 percent to Ingrid and 40 percent to Astrid, unless otherwise agreed.
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Drake dissociated from a partnership. To protect himself from debts of the partnership after he leaves, Drake should:
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file a statement of dissociation with the Secretary of State.
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Frank, Monica, and Carl are partners. They have purchased an elegant Victorian home and converted it into an office for their partnership. Carl decides to use the partnership’s office to host some evening parties. Carl has a sideline business of arranging expensive gatherings and charging each person a handsome price to attend these “elite” parties. When Frank and Monica find out what Carl is doing, they demand that he pay them for the use of the property. How much money, if any, is Carl required to pay the partnership?
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He must turn over any profits he earned from this activity.
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Ending a partnership involves which of the following three steps?
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Dissolution, winding up, and termination.
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Alexandra and Ted own a small restaurant as partners. Ted works several hours a day cooking, waiting on tables, doing the books, and so forth. Ted believes he is entitled to be paid at least a standard wage for all his work since, at the present time, the part-time kitchen helpers earn more than he does! Alexandra claims Ted is not entitled to anything other than one-half the net profits. Is Alexandra right?
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Yes, as there is no agreement between Alexandra and Ted allowing for either of them to be paid wages for work done at the restaurant.
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Which of the following statements is correct?
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a. Notes are short-term debt and may be secured or unsecured. b. Debentures are long-term unsecured debt. c. All these answers. d. Bonds are long-term debt secured by company assets.
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SuperCo. is incorporated under Delaware law. It is registered to do business in New York. Legally, in New York SuperCo. is known as what kind of corporation?
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Foreign.
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Under most state statutes, a corporation may:
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include in its charter a provision indemnifying directors unless they have engaged in intentional misconduct or bad faith.
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George owns 100 shares of cumulative preferred stock in Seaside Transport, Inc. Jackie owns 50 non-cumulative preferred shares, and Orwell owns 120 shares of common stock. Seaside does not pay dividends in 2007. In 2009:
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a. Jackie cannot receive the dividends Seaside could not afford to pay in 2007. She will just lose them. b. Orwell cannot receive any 2009 dividends until George is paid for the 2007 dividends. c. All of these answers. d. George and Jackie must receive their 2009 dividends before Orwell is paid any 2009 dividends.
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A corporation is not allowed to issue dividends to shareholders unless it is:
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solvent.
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What is meant by the term “piercing the corporate veil”?
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Corporate shareholders may be held personally liable to a person damaged by an act of the corporation.
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Sylvia decided to incorporate her business under the name Tourny, Inc. Before Tourny was incorporated, Sylvia signed a contract in the name of Tourny, Inc. to lease a storefront. Sylvia did not tell the other party that Tourny was not yet formed. Sylvia is:
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personally liable on the lease.
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The executives of Frankvo Corporation have decided they need to sell 60,000 additional shares of stock to finance their plans. The executives:
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are limited by the number of shares authorized in the corporate charter, but this number can be increased by amending the charter and paying a fee
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CleanCorp Corporation’s purpose clause in its charter states, “To operate a home-cleaning service business.” After a few years of successful operation, CleanCorp is offered the challenge of landscaping a neighboring business. If CleanCorp accepts the offer, it would be violating its charter under:
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the ultra vires doctrine.
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SuperCo. occasionally sells products in Michigan. It does not have an office in that state and does not advertise in Michigan. The company’s marketing representatives are based in New York but do travel to Michigan once a year to attend a trade show. Which statement is correct?
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SuperCo. is not required to register in Michigan because it does not have an ongoing presence in Michigan.
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A corporation by estoppel is based on what rather than strict legal rules?
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Fairness.
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Dan decided to incorporate his business under the name of “Zimmy.” In addition to “Zimmy,” the Model Act requires that Dan include which of the following words, or an abbreviation thereof?
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a. “Limited.” b. “Incorporated.” c. Any of these answers. d. “Corporation.”
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The Model Business Corporation Act states: “All corporate powers shall be exercised by or under the authority of, and the business and affairs of the corporation managed by or under the direction of its:
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board of directors.”
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A manager who has engaged in self-dealing has violated the _________ to the corporation.
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duty of loyalty
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The term “corporate manager” refers to:
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a. directors. b. None of these answers. c. corporate officers. d. Both of these answers.
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A board of directors is considering whether to invest a great deal of money into research and development. Such a decision could have a long-term beneficial effect for the company’s future. As an alternative, the board could forego the expenditure into research and development and buy back its own shares in order to immediately increase the company’s reserves. Which of the below groups would most likely favor the option to increase the company’s reserves and not invest in more research and development?
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Shareholders.
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Who has the authority to manage the corporate business?
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Directors
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A director violates the corporate opportunity doctrine if he or she competes with the corporation, unless the disinterested directors __________ the director’s actions.
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approve of
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Management’s duty to have a rational business purpose, avoid illegal behavior, and make informed decisions refers to its:
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duty of care.
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Which of the following is the most appropriate term to use when describing management’s duty to its shareholders?
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Fiduciary duty
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A manager used her position in the company to develop a new business the company might have pursued. This is a breach of the
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duty of loyalty.
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Which of the following is not true in applying the Williams Act?
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A bidder must keep a tender offer open for at least 30 business days initially.
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When establishing takeover defenses, shareholder welfare must be the board’s:
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primary concern.
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In the late 1960s a shareholder of the company that owned the Chicago baseball team sued the company because the directors refused to install lights in Wrigley Field. The court decided that the directors:
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had a rational purpose for not installing lights and were not liable for doing anything improper
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A majority of shareholders of Arcon Co. wish to expel Gabe, a minority shareholder. In most states, the company cannot expel Gabe unless:
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a. it pays a fair price for Gabe’s stock. b. Neither of these answers is correct. c. there is a legitimate business purpose for expelling him. d. Both of these answers are correct
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Frank is a controlling shareholder in E-town, Inc. Frank:
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a. may not enter into unfair business transactions with the corporation. b. All of these answers. c. has a fiduciary duty to minority shareholders. d. may not exclude minority shareholders from beneficial arrangements involving stock
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Ruth, a shareholder in QuimCon, Inc., notified QuimCon’s board of directors that the corporation had been wronged and asked the board to bring a lawsuit in the corporation’s name. In response to Ruth’s demand, the board:
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a. can file suit on behalf of the corporation. b. All of these answers. c. can reject Ruth’s demand or simply fail to respond. d. can appoint a Special Litigation Committee
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Corinne is the CEO of Eastwestern Corporation. Who sets her compensation?
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The board of directors.
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Which of the following is correct concerning the SEC regulations on shareholder resolutions?
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a. The proposals cannot be used to seek to satisfy a personal grievance against the company. b. All these answers. c. The proposals cannot relate to the ordinary business operations of the corporation. d. The proposals must relate to operations accounting for at least 5 percent of total assets, gross sales, or net earnings
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Who has the right to manage the business of a corporation?
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The board of directors
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A “fundamental change” in a corporation would be illustrated by:
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E-town, Inc. merging with Witter Corporation. b. All of these answers. c. the voluntary dissolution of Frank, Inc. d. the amendment to bylaws of Chandler Company
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Quickness House breached a contract with SuperCo. The breach resulted in the loss of a great deal of money to SuperCo. The board of directors for SuperCo. vote not to sue the supply house since it believes the legal costs would be more than it would probably recover. If a group of shareholders wish to sue the supply house, this would:
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have to be a derivative lawsuit.
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Laverne is a shareholder of Hasmet Corp. She would like to inspect and copy the company’s minute book, accounting records, and shareholder lists. Under what circumstances is Laverne allowed to inspect or copy corporate records?
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Laverne has a legal right to inspect and copy corporate records if she acts in good faith and has a proper purpose.
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A “fundamental change” in a corporation would be illustrated by:
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a. E-town, Inc. merging with Witter Corporation. b. All of these answers. c. the voluntary dissolution of Frank, Inc. d. the amendment to bylaws of Chandler Company.
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What authorizes someone else to vote in place of the shareholder?
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A proxy.
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Who has the right to manage the business of a corporation?
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The board of directors.
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Which of the following is correct concerning the SEC regulations on shareholder resolutions?
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a. The proposals cannot be used to seek to satisfy a personal grievance against the company. b. All these answers. c. The proposals cannot relate to the ordinary business operations of the corporation. d. The proposals must relate to operations accounting for at least 5 percent of total assets, gross sales, or net earnings.
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Corinne is the CEO of Eastwestern Corporation. Who sets her compensation?
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The board of directors.
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Trina just purchased 5 shares of common stock in TriHeart, Inc. for $250. Trina has the right to:
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vote to elect directors.
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Boondock, Inc. is planning its annual shareholder meeting on June 15. The company:
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must send notices to everyone who owns stock on the “record date,” which can be no more than 70 days before the meeting.
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Jane is not employed by E-town, Inc. but she is a member of E-town’s board of directors. Jane is:
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an outside director.
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Ruth, a shareholder in QuimCon, Inc., notified QuimCon’s board of directors that the corporation had been wronged and asked the board to bring a lawsuit in the corporation’s name. In response to Ruth’s demand, the board:
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a. can file suit on behalf of the corporation. b. All of these answers. c. can reject Ruth’s demand or simply fail to respond. d. can appoint a Special Litigation Committee.
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Phoebe, a shareholder of GroCon, Inc., was unhappy with how the corporation was being managed. Phoebe wanted to be a member of GroCon’s board of directors. Which statement is correct?
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Phoebe cannot require that the company put her name in the proxy statement; she must prepare and distribute her own proxy.
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Frank is a controlling shareholder in E-town, Inc. Frank:
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a. may not enter into unfair business transactions with the corporation. b. All of these answers. c. has a fiduciary duty to minority shareholders. d. may not exclude minority shareholders from beneficial arrangements involving stock.
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A majority of shareholders of Arcon Co. wish to expel Gabe, a minority shareholder. In most states, the company cannot expel Gabe unless:
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a. it pays a fair price for Gabe’s stock. b. Neither of these answers is correct. c. there is a legitimate business purpose for expelling him. d. Both of these answers are correct.
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Summary judgment is appropriate when:
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there are no essential facts in dispute.
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A United States district court is:
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the primary federal trial court.
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Discovery comes in many forms, including:
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a. physical and mental examinations. b. All of these answers. c. interrogatories. d. depositions.
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After answering a summons and complaint, Watson received a set of written questions from the plaintiff’s attorney. He was directed to respond to the questions in writing under oath. This discovery technique is called:
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interrogatories.
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A civil case generally proceeds as follows:
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complaint, answer, discovery, trial, verdict
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Which of these statements is NOT true about the jury selection process?
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The court’s goal is to select a biased jury
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The United States has taken a position that legal issues are best resolved by lawsuits involving parties with conflicting interests presenting their strongest possible case to a neutral factfinder. Because of this, the legal system in the United States is considered:
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an adversary system.
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Which is NOT a true statement regarding arbitration?
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The decision of the arbitrator is not binding.
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An inmate in a state prison claims his United States constitutional rights prohibiting cruel and unusual punishment are being violated by the state correctional facility. This case:
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is a federal question case over which the federal courts have jurisdiction.
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Jackie, a resident of Oregon, was involved in an auto accident while in Idaho. The other party lives in Wyoming. Jackie wishes to recover the $28,000 cost to repair her car. The most appropriate court for her to file her lawsuit is in a:
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state court in Idaho.
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Fupta and Shakesville Productions are each applying for a television license. In deciding which applicant is better qualified, the FCC will hold an initial hearing before:
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an administrative law judge.
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TIPCO Coal, Inc. mines and ships more than seven million tons of coal annually. TIPCO is comprehensively regulated by the U.S. Bureau of Mines. The U.S. Bureau of Mines may conduct a surprise inspection of one of TIPCO’s mines:
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without a search warrant to ensure safety.
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At what level do administrative agencies exist?
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The state level. c. The local level. d. The federal level
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TIPCO Coal Corporation is interested in the inspections that the U.S. Bureau of Mines has conducted over the past year. To secure this information, TIPCO should:
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make a Freedom of Information Act request
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The purpose of the Freedom of Information Act (FOIA) is:
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to give citizens, businesses, and organizations access to information that federal agencies are using
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If the President vetoes a bill and if both the House and Senate repass the bill by a two-thirds margin, the bill
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becomes law
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Marcus lifts weights and is very strong. One afternoon he witnesses a car accident in which the driver is trapped inside the car. Generally, Marcus:
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has no legal duty to try to rescue the driver
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Lalaina wishes to learn what records the IRS has about her. Under the Freedom of Information Act (FOIA):
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Lalaina is entitled to all information the IRS has about her.
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The Consumer Product Safety Commission (CPSC) is an independent federal administrative agency. Which statement is correct about the chairperson?
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The chairperson cannot be fired by the President since the CPSC is an independent agency.
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Which statement is correct concerning judicial review of an administrative agency’s action?
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Courts usually accept the facts of the case as determined by the agency and often defer to the agency’s interpretation of the law.
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The majority of work done by legislative bodies is performed in:
answer

committees
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The Civil Rights Act of 1964, a federal statute, forbids discrimination on the basis of national origin in employment. The Equal Employment Opportunity Commission (EEOC) is the administrative agency that oversees the law. The EEOC issued Guidelines on Discrimination because of National Origin. According to one of the guidelines, the EEOC will presume a violation of the law if an employer sets a work requirement that employees must speak only English in the workplace. What kind of rule is this?
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An interpretive rule
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The Federal Trade Commission promulgated Telemarketing Sales Rules regulating the activities of telemarketers. One of the rules prohibits telemarketers from calling a person’s residence at any time other than between 8:00 a.m. and 9:00 p.m. This legislative rule has the effect of a:
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statute
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A congressman introduces a bill in the House of Representatives. If the bill is approved by the House committee specializing in that subject, the bill will go to:
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the full House
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All of the following are key powers associated with the position of President EXCEPT:
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judicial review.
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Which of the following limitations does not apply to the government in civil proceedings to take a person’s liberty or property?
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The Equal Protection Clause
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Which type of speech may be outlawed altogether without violating the Constitution?
answer

Misleading commercial speech
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By creating three independent and equal branches of the federal government, the U.S. Constitution:
answer

limited the federal government’s power
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Fundamental rights include all EXCEPT the right to:
answer

drive
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Samson was arrested for wearing a t-shirt, during the Vietnam War, that said, “F*** the draft,” a protest against involuntary induction into the military. His action is protected under which amendment?
answer

first
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Generally, constitutional protections do NOT apply to:
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acts of obscenity.
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The “dormant” aspect of the Commerce Clause
answer

is also known as the “negative” aspect
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Judicial review can best be described as the power of federal courts to:
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review state and federal legislative and executive action
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Judicial review is the power of the federal courts to declare a statute or governmental action:
answer

void.
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A woman wishes to attend an all-male, publicly supported college. She claims the college is violating the Equal Protection Clause of the Constitution. What level of scrutiny will the court use when deciding this case?
answer

Intermediate scrutiny
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Talia and her friends burn an American flag as an act of political protest. Talia is arrested for violating a state law that prohibits flag burning. The Supreme Court has ruled that laws making it illegal to burn an American flag:
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are void because they violate a person’s right to freedom of speech
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he Supreme Court’s approach during the period from the 1950s through the 1970s in deciding cases on constitutional grounds is described as:
answer

judicial activism
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The elements in a defamation case are:
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defamatory statement; falseness; communication; and injury
question

Trek, Inc. wanted Druce, a professional basketball player, to endorse its products. Druce, however, was not interested. Trek was not deterred and hired a person who looked and sounded liked Druce for its commercials. Which of the following is correct?
answer

Trek’s conduct raises the issue of commercial exploitation
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In order for a plaintiff to win a case involving intentional infliction of emotional distress, she must prove the defendant:
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acted in an extreme and outrageous manner
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A successful plaintiff often receives money for:
answer

lost earning capacity. c. medical expenses. d. pain and suffering
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The First Amendment guarantee of freedom of speech is:
answer

not an absolute right
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Which of the following is a true statement about tort reform?
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Congress has proposed and debated bills placing limits on tort awards, but so far has not enacted such legislation.
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Public officials and public figures receive __________ from defamation than ordinary people.
answer

less protection
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Townsend won a lawsuit against Hardwick for intentionally inflicting emotional distress. The jury awarded Townsend $500,000 in compensatory damages. It also awarded Townsend $4 million in punitive damages because Wickson was quite wealthy and the jury thought a large amount was necessary for Wickson to feel the punishing effects of the judgment. How does the jury’s award fit into the guidelines offered by the U.S. Supreme Court?
answer

The punitive award is excessive because the Supreme Court has stated that the trial court may not use the defendant’s wealth as an excuse to award an unreasonably high award.
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Luke was employed by Major Markdown Store. Luke’s manager directed him to check the prices of dog food at Lotsa Deals Store. The manager of Lotsa Deals Store saw Luke writing down prices and asked him to leave. Luke, fearful that he would be fired by Major, refused to leave. Luke committed the tort of:
answer

trespass
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A public official or public figure can win a defamation case:
answer

only by proving actual malice.
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Which of the following is a valid defense to a defamation claim?
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The statement was only an opinion. c. The statement was true. d. The person making the statement made it only to the plaintiff, not to any third parties.
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Spino, Inc. entered into a one-year, $1 million contract with Elana, a sports celebrity, to promote Spino’s products. Sportz Inc., a competitor of Spino, was interested in having Elana promote its products and knew of her contract with Spino. Sportz offered Elana a three-year, $5 million contract. Elana left Spino and signed with Sportz. Which statement is correct?
answer

Sportz is liable for tortious interference with a contract.
question

Darrell was standing in a cafeteria line holding a plate. Tommy was upset with Darrell. Tommy turned Darrell around and grabbed the plate out of Darrell’s hand. Tommy then held the plate up and threatened to break it over Darrell’s head. Tommy has committed:
answer

both an assault and a battery.
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In awarding punitive damages, a court must consider:
answer

the ratio between the harm suffered and the award. c. the reprehensibility of the defendant’s conduct. d. the difference between the punitive award and any civil penalties used in similar cases.
question

Laurie is incorporationg her business. Laurie’s home state is WIsconsin. Business will be conducted in California, Michigan, and Pennsylvania. Laurie:
answer

Can incorporate the business in any state.
question

Unless the form provides for a longer period; a proxy is valid for how long under the Model Act?
answer

11 months
question

Debra And Lawrence have an equal partnership. This year, after expenses, the partnership had a profit of $200,000. Debra and Lawrence will each pay taxes:
answer

$100,000
question

The proceeds, if any, of a derivative lawsuit go to:
answer

The corporation
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C & E, unmarried, run an ice cream shop. The business isn’t incorporated and they have filed no formation papers w/the state their business is a:
answer

partnership
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Which of the following is NOT a method to acquire control of a company?
answer

make an initial public offering.
question

When a principal is partially disclosed:
answer

the agent and principal will be jointly and severally liable on the contract.
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Which is NOT required of an agency relationship?
answer

consideration
question

The doctrine of estoppel would most often apply in situations of:
answer

apparent authority
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For the business judgement rule to apply:
answer

the director must act in the best interests of the corporation.
question

What is meant by “piercing the corporate veil”?
answer

Corporation shareholders may be held personally liable to a person damaged by an act.
question

Which describes duty of loyalty?
answer

Prohibits making a decision that benefits the decision-maker at the expense of the corporation.
question

Mega Corp. purchased 10,000 shares of its own stock that had previously been owned by private investors. The stock repurchased is called:
answer

Treasury Stock
question

An agency relationship can be created:
answer

by the conduct of the parties
question

K is the chief Financial Officer of Yonkka, Inc. He is also a member of Yonkka’s board of directors, K is:
answer

an inside director.
question

In a civil case, the plaintiff must prove the case:
answer

by a preponderance of the evidence.
question

6. When an appeal is filled with the U.S. Supreme Court, the Supreme Court:
answer

has discretion as to which cases it hears.
question

A company that makes a commercial with a person who does an excellent, realistic job of pretending to be a famous movie star could be sued by the real actor for the tort of:
answer

commercial exploitation
question

Important steps in the criminal process, in proper order, include:
answer

probable cause hearing, search, arrest, indictment, arraignment, plea bargain, and trial.
question

A 6 year old was seriously injured when he stuck a fork into an electrical outlet. His parents sued the restaurant where the incident happened, claiming it should have had child protective guards on the outlets. Whether the restaurant is liable will be dependent upon whether:
answer

the incident was reasonably foreseeable.
question

A resident of Oregon, was involved in a auto accident while in Idaho. The other party lives in Wyoming. Randi wishes to recover the $28,000 cost to repair her car. The most appropriate court for her to file her lawsuit is in a:
answer

state court in Idaho.
question

The doctrine of state decisis:
answer

makes the law more predictable.
question

The purpose of the FOIA (Freedom Of Information Act):
answer

to give citizens, businesses, and organizations access to information that federal agencies are using.
question

Brady, a six-year-old child, was seriously injured when he stuck a fork into an electrical outlet. His parents sued the restaurant where the incident occurred, claiming it should have had child protective guards on the outlets. Whether the restaurant is liable will be dependent upon whether:
answer

the incident was reasonably foreseeable.
question

In a comparative negligence state, if the plaintiff in a negligence lawsuit is found to be 30 percent negligent, the plaintiff would recover:
answer

70 percent of the damages.
question

Raymond was waiting for a bus at a bus stop. Across the street and down the block, a mechanic negligently overinflated a tire he was intending to put onto Jan’s pickup truck. The exploding tire injured Jan and frightened a neighborhood dog, which ran down the street and knocked Raymond down, injuring his knee. Raymond sued the mechanic. In applying the Palsgraf v. Long Island Railroad Co. decision to this case, Raymond would:
answer

lose because, although the mechanic’s conduct was negligent toward Jan, it was not a wrong in relation to Raymond, who was far away. The mechanic could not have foreseen injury to Raymond and therefore had no duty to him
question

A customer in a restaurant would be considered ________ to whom the restaurant owner owes a duty ________.
answer

an invitee; of reasonable care
question

Who is the “reasonable person” when referred to in negligence cases?
answer

The reasonable person is used to establish the standard of conduct of an average person under the same circumstances.
question

Conner was driving his truck when a board fell out of the truck bed and onto the road. Krista, who was driving behind Conner’s truck, tried to avoid the board, swerved and struck a telephone pole, causing her severe injuries. Which of the following is correct?
answer

In a comparative negligence state, the actions of Conner and Krista will be weighed to determine liability.
question

A landowner’s highest duty is owed to:
answer

invitees.
question

The test of “foreseeability” is generally used to determine the existence of which element of a negligence case?
answer

Duty of due care
question

Under a state law, a pet snake owner is absolutely liable to any person who is injured by a snake. This is an example of:
answer

strict liability.
question

Palsgraf v. Long Island Railroad Co. addressed the issue of:
answer

furnishing alcohol to minors.
question

Punitive damages are awarded
answer

to punish the defendant
question

A contractor used dynamite to loosen a rocky hillside. The blast from the dynamite caused a house foundation to crack. The house was located over a half-mile away from the dynamite site. The contractor was careful when using the dynamite and no allegation of negligence is made. However, the house owner claims the contractor is liable for damage to the foundation. Which statement regarding this situation is correct?
answer

The contractor is liable under the concept of strict liability
question

Which of the following is NOT a protection afforded criminal defendants by the Bill of Rights?
answer

The protection against friends incriminating other friends.
question

Choctor Corp. started a compliance program to prevent and detect criminal conduct within the company and had specific, high-level officers in charge of overseeing the program. The company effectively communicated the program to its employees and monitored those employees who were in a position to cheat. It promptly disciplined anyone who broke the law. One effect of having this program is:
answer

federal investigators might be convinced to limit any prosecution to those directly involved rather than attempting to get a conviction against high-ranking officers or against the company itself
question

A crime is a violation of ________ law.
answer

a. statutory b. common c. federal d. Potentially, any one of these.
question

British Petroleum, found guilty of two serious environmental violations as discussed in the textbook:
answer

was fined a total of $62 million for both criminal violations.
question

A felony is distinguished from a misdemeanor based upon:
answer

the length and place of possible imprisonment.
question

Raina is an undercover police officer. One evening she is posing as a prostitute in a bar. Harold, a salesman who is attending an out-of-state convention, begins talking with Raina. After about ten minutes, Raina suggests going to her room for a good time but points out he will need to “donate” $100 to her. Arriving at Raina’s hotel room, Harold asks if she is a policewoman. Raina lies and says she is not. When Harold gives her $100, Raina shows him her identification and arrests him. Which of the following is correct?
answer

b. Harold appears to have been the victim of entrapment since Raina lied about being a police officer. c. Harold appears to have been the victim of entrapment since Raina was the one who suggested the activity that resulted in Harold’s arrest. d. Neither of these is correct.
question

Wardow Corp. was convicted of violating federal RICO laws. Accordingly:
answer

individuals may file civil lawsuits against the company for violating the RICO statute to recover losses sustained by the criminal act. b. the government may file criminal charges against both the company and the individuals associated with the criminal acts. c. the government may file a civil lawsuit against the company to obtain injunctions and other relief. d. All these answers.
question

Roger stole a stereo from an electronics store. What crimes has Roger committed?
answer

Larceny.
question

The Miranda warning insures that the criminal suspects understand their constitutional rights relating to:
answer

self incrimination.
question

Kira, an employee of Amex Corporation, committed a serious criminal act in an attempt to obtain a large sales order for her employer. A court found her guilty of the felony and also found the corporation guilty of criminal conduct. The company was fined $1 million. The court:
answer

acted properly in this case.
question

Illegally obtained evidence is not permitted to be used at a criminal trial based upon the:
answer

exclusionary rule
question

William burned his own warehouse in order to collect on a fire insurance policy. William has committed:
answer

arson.

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