Midterm 2 Flashcards
The Americans with Disabilities Act permits employers to take adverse employment actions based on assumptions about individuals who associate with people who have disabilities.
False
Affirmative action programs are often found to be unconstitutional because they deprive members of protected classes of equal protection.
False
Under the Uniformed Services Employment and Reemployment Rights Act, any person who has served in the military is entitled to more favorable treatment in the workplace than a co-worker who has not served.
False
Disparate-impact discrimination occurs when a protected class is adversely affected by the practice or procedure of an employer who intended that result.
False
An employer must reasonably accommodate its employees’ religious practices, but only if they are based on the doctrines of a traditionally recognized religion.
False
Rosario is a chef and caterer who hires out on a per-project basis to companies with on-location work sites, as well as to hosts of banquets, corporate meetings, concerts, weddings, and other events. In this capacity, Rosario is
An independent contractor
A court can order the dissolution of a partnership if the business can only be operated at a loss.
True
Start-Up LLC is a limited liability company without a written operating agreement. Among the members, a dispute arises concerning the division of profits. Under most LLC statutes, the profits will be
divided equally among the members
A partner who withdraws from a partnership for a term before its expiration date can be held liable for any resulting losses.
True
Nina, the owner of Organic Farm, a sole proprietorship, wants to obtain additional capital to operate. This can be accomplished by
Any of the choices
A limited liability partnership allows professionals to avoid personal liability for the malpractice of other partners.
True
One of the essential elements of a general partnership is the right to participate in the control of a business.
True
Without creating a separate business organization, Rey starts up Street Cruisers, a pre-owned auto sales enterprise. This enterprise is
A sole proprietorship
A syndicate may be organized as a corporation or a partnership, or in some situations as no recognizable form of business organization.
True
Paving LLC is a foreign limited liability company in the state of Ohio. In dealing with Paving, Ohio will apply the law of the state where the firm
was formed.
Like partners, unless otherwise agreed, joint venturers have an equal voice in controlling a venture-related project.
True
When a member of a limited liability company guarantees payment of a loan to the firm, the member is personally liable for the obligation.
True
A cooperative can be incorporated.
True
Pay-More Convenience Stores, Inc., is a franchisor. Randy operates a Pay-More franchise. Seth is one of Randy’s employees. As a franchisor, if Pay-More controls the day-to-day operations of the business to a significant degree, it may be liable for tortious acts by
Pay-More, Randy, or Seth.
As a means of controlling quality, a franchise agreement can limit the franchisee’s ability to sell the franchise to another party.
True
Del owns Everlast Painting, a sole proprietorship. Del’s liability is
unlimited.
To prevent deception, all representations by a franchisor to a prospective franchisee must have a reasonable basis at the time they are made.
True
The Uniform Partnership Act governs the operation of partnerships in spite of a different agreements among the partners.
False
When the promoter of a limited liability company enters into a preformation contract on the firm’s behalf, the company must adopt the contract to enforce it.
True
Among the factors, an entrepreneur will consider in selecting an organizational form for a business is the liability of the owners for the acts of the firm.
True
Bev owns and operates City Delivery Service as a sole proprietorship. When she dies, the business will automatically
dissolve.
Espresso Brew Inc. uses a Web site to provide downloadable information to prospective franchisees. This electronic information is the equivalent of an offer that must comply with
the Federal Trade Commission’s Franchise Rule.
Otto is a limited partner in Port Exports, a limited partnership. By participating in the firm’s management, Otto is liable for its obligations
to the full extent.
Limited legal liability can be an advantage for a small business wishing to raise capital.
True
Ford is the sole proprietor of Go, a game subscription service. As a sole proprietor, on the business’s profits, Ford pays
only personal income taxes.
If the members of a limited liability company want to reinvest profits in the business, they may opt for the firm to be taxed as a corporation.
True
Dissociation terminates some of the rights of the dissociated partner, requires the firm to buy his or her interest, and alters the parties’ liability to third parties.
True
In many instances, agency law governs the relationships among partners.
True
Cal, Dex, and Erin agree to be partners in Fajitas, splitting the profits equally. Cal contributes 65 percent of the capital. When Fajitas is dissolved, its liabilities are greater than its assets. The losses are paid by
all of the partners in proportion to their shares of the profits.
A partner can be held liable for a partnership obligation only if he or she participated in, or knew about, whatever it was that gave rise to the obligation.
False
The management of a limited liability company must include at least one of the members.
False
A share exchange can be used to create a holding company.
True
A takeover is the acquisition of control over a corporation through a purchase of substantially all of its assets.
False
The initial board of directors of a corporation is normally appointed by the incorporators when the corporation is created.
True
As a director of InstaTalk Inc., Jim has a right of inspection. This right can be restricted by
None of the choices
A short-form merger is the acquisition of control over a corporation through a purchase of stock.
False
Merger and consolidation refer to two legally distinct proceedings, but consolidation is also used to refer to all types of corporate combinations.
True
Under the doctrine of respondeat superior, a corporation can be held liable for
torts committed by its agents or officers.
The sale and distribution of the assets of a business on its termination is
Liquidation
To focus on individual subjects and increase efficiency, a corporate board can delegate certain tasks to committees of directors.
True
Lipstick Inc. merges with Mascara Inc. Only Mascara remains. The articles of merger
amend the articles of merger.
Shareholders, not directors, make major corporate policy decisions.
False
A businessperson who enters into a contract with an investor on behalf of a future corporation is not personally liable on the deal, even though the firm is not yet formed, because the nature of investment is risk.
False
Roy is a director of Sales Inc. Sales enters into a contract with TeleCenter Corporation in which Roy has a personal interest. Roy must
make full disclosure of the conflict of interest.
A corporate officer is liable to the corporation or its shareholders for a bad business decision.
False
Robotics Inc. is a corporation. Its express powers can be found in
All of the choices
The board of directors hires the corporation’s officers, and normally can remove them at anytime with or without cause.
True
The business judgment rule may apply to determine whether directors acted reasonably in resisting a takeover attempt.
True
A corporate director may not
engage in self dealing.
A de jure corporation is one that is formed to accomplish a single purpose within a limited time.
False
A corporation is recognized under U.S. law as a person.
True
Most likely to appear in the articles of incorporation are the names of the company’s initial
registered office and agent
In a consolidation, two or more corporations combine in such a way that only one of the corporations continues to exist.
False
If a director commits a breach of fiduciary duty, the shareholders have the inherent power to remove the director from office by a majority vote.
True
Because state corporate laws differ, persons wishing to incorporate may look for the state that offers the most advantageous tax or other provisions.
True
Only one of the boards of directors of the corporations involved must approve a merger.
False
A court will pierce the corporate veil of a corporation when the corporate privilege is abused for personal benefit.
True
Sweetwater Corporation is incorporated in Texas. Outside that state, within the United States, the firm is
a foreign corporation.
One corporation that owns all of the shares of another corporation is a subsidiary corporation.
False
Revenue Inc. owns more than 90 percent of the shares of Sales Corporation. A copy of a plan for a merger of Revenue and Sales must be sent to each shareholder of
Sales
A corporation needs to be careful about whom it hires because a firm may be liable for the misconduct of its employees.
True
Because of their positions within the corporation, directors cannot be held liable for the crimes of corporate employees.
False
When dissolution takes place by voluntary action, the members of the board of directors act as trustees of the corporate assets.
True
Many bailments do not include all of the elements of a contract.
True
Adverse possession is a means of obtaining title to land without delivery of a deed.
True
Mike owns a beach house in North Carolina in fee simple. This ownership interest is
Potentially infinite in duration
If confusion of property occurs as a result of the act of some third party, the owners of the goods share ownership in order of seniority.
False
The owner of real property has relatively exclusive rights to the airspace above the land.
True
Under the takings clause of the Fifth Amendment to the U.S. Constitution, private property may be taken for public use without “just compensation.”
False
An ad is more likely to be considered fair if its benefit to consumers or the competition outweighs any injury it might cause to the interests of consumers.
True
The Telemarketing Sales Rule applies to any offer—domestic or foreign—made to consumers in the United States.
True
A fee simple absolute is an estate or interest in land with no limits in terms of disposition or duration.
True
Blue Water Power Corporation wants to begin operations that include the discharge of waste into navigable waters. Under the Clean Water Act, Blue Power must install certain equipment
before beginning operations
A creditor can always require the signature of a cosigner on a credit application.
False
Jade owns a loft that she leases to Key and Liu. If Jade sells the loft, Key and Liu
become the tenants of the new owner
The Truth-in-Lending Act applies to a loan between two consumers because in that transaction, the lender is a person who in the ordinary course of business is extending credit.
False
Generally, online ads—unlike other ads—can be less than truthful and not every claim must be substantiated.
False
Under the Fair Credit Reporting Act, a consumer can request the identity of anyone who has received a credit agency’s report on the consumer.
True
Personal property can be converted into real property by being permanently attached to it.
True
Digital goods, including virtual goods, are personal property with real value.
True
The delivery of documents that represent the rights to property can be sufficient to transfer that property to the recipient.
True
Consumer Staples Inc. includes in its advertising obvious exaggerations, vague generalities, and puffery about its products. The firm may be subject to sanctions for
None of the choices
An easement is the right to go onto land owned by another and take away some part of the land itself or some product of the land.
False
Accession occurs when someone acquires title to a valuable piece of personal property by assuming a position of power.
False
A license is a personal privilege that cannot be withdrawn or revoked.
False
With respect to bailed goods, common carriers are absolutely—strictly—liable.
True
Advertising will be deemed deceptive if it includes a claim that omits a material fact about a product.
True
With a tenancy at will, either party can terminate the tenancy without notice.
True
A bailee has a right to the reimbursement of costs incurred in keeping the bailed property, even in a gratuitous bailment.
True
A finder of mislaid property has no obligation to return the property to the true owner.
False
Without a permit from the U.S. Army Corps of Engineers, Condos Corporation fills a wetlands area that it owns in preparation for the construction of a housing complex. Under the Clean Water Act, this is most likely
a violation
A business that believes a federal agency’s action threatens the environment can use an environmental impact statement as a means to challenge it.
True
Because no one can actually hold a piece of land, certain rights and duties are recognized to constitute the ownership interests in real property.
True
When one tenant in common dies, that party’s interest in the property automatically passes to the surviving owners.
False
Ogle owns a phone, a tablet, and a patent on an app. Ogle’s intangible property includes
the patent.
The owner of a life estate has the same rights as a fee simple owner, including the right to sell the property or pass it to his or heirs.
False
The distinction between real and personal property is important because how property is acquired is determined by its classification.
True
A promise to make a gift tomorrow or next year is a gift.
False
Credit Loan Company extends credit in the ordinary course of its business. Under the Truth-in-Lending Act, Credit Loan must inform potential borrowers of
Credit Loan’s credit terms.
The covenant of quiet enjoyment forms the essence of the landlord-tenant relationship.
False
When a joint tenant dies, his or her interest in the property passes to his or her chosen heirs.
False
Before being transported, hazardous waste produced by the operations of Fabrication Inc. must be properly labeled and packaged under the Resource Conservation and Recovery Act by
Fabrication Inc
Apparent authority in an agency relationship arises when the principal causes the agent to reasonably believe that he or she has the authority to act.
False
Steel Mill Inc., employs five hundred workers. For the Occupational Safety and Health Administration, Steel must do all of the following except
pay employees higher wages for working in more dangerous areas.
A business necessity is a defense against employment discrimination based on the genuine requirements of a business.
True
Interstate Commodities Inc. keeps a file of I-9 verifications forms, which are required by the Immigration Reform and Control Act. To monitor compliance with the act, random audits and enforcement actions are conducted by
the federal government
Watercraft Inc. employs Vern as a sales agent for a trial period. At the end of the period, Watercraft and Vern disagree on the amount of the commissions Vern is due for sales that he made. Vern may demand
an accounting.
During an employee’s leave under the Family and Medical Leave Act, an employer must continue to compensate the employee to avoid the potential negative effect of unpaid leave on interstate commerce.
the Equal Employment Opportunity Commission.
A principal who creates an exclusive agency and then competes with the agent can be held liable for the agent’s lost profits or sales.
True
The Age Discrimination in Employment Act prohibits employment discrimination on the basis of age against individuals up to forty years of age.
False
During collective bargaining sessions, both parties may engage in hard bargaining, but the process must be geared to reaching a compromise.
True
Both parties to an agency relationship have the power and the right to terminate the relationship at any time.
False
Actual authority in an agency relationship arises from what a principal makes clear to a third party.
False
Emmett, an agent for Fridley, signs an agreement with Glover on Fridley’s behalf but neglects to tell him that the agreement requires the payment of a certain tax. The government prosecutes Fridley for failing to pay the tax. He is
liable, because notice to Emmett is notice to Fridley.
The equal dignity rule requires that a principal and an agent act in good faith and with mutual respect in their dealings with each other.
False
Health Clinic Inc. has no written employment manual or oral discharge policy, avoids abusive treatment of its staff, and acts to prevent illegal and unsafe activities. The clinic freely hires and fires its employees, who are similarly free to quit at any time. With respect to the employment-at-will doctrine, this is
exemplary of the doctrine.
Denny works for Engineers P.A. While working on an Engineers project, Denny is injured. Under state workers’ compensation laws, he will be compensated only if the injury was
accidental.
Good faith in collective bargaining between a union and an employer does not include
rejecting a proposal without offering a counterproposal.
A whistleblower is an employee who publicly reveals a co-worker’s unsafe or illegal activity.
False
The Equal Pay Act requires equal pay for male and female employees working at the same establishment, regardless of the work they do.
False
Disparate-impact discrimination occurs when a protected class is adversely affected by the practice or procedure of an employer who intended that result.
False
Mica is an employee of Natural Gas Company and a member of a union of company employees. Under federal law, Mica and other union members have the right to
bargain collectively with their employer through their representative.
An employer may be able to avoid liability for sexual harassment by taking prompt remedial action.
True
Bey indicates that he is acting as an agent on behalf of an unidentified client—Cuisine LLC—when he enters into a contract with Diners Bistro. Cuisine is
a partially disclosed principal.
An employer must reasonably accommodate its employees’ religious practices, but only if they are based on the doctrines of a traditionally recognized religion.
False
Under the Uniformed Services Employment and Reemployment Rights Act, any person who has served in the military is entitled to more favorable treatment in the workplace than a co-worker who has not served.
False
The Americans with Disabilities Act permits employers to take adverse employment actions based on assumptions about individuals who associate with people who have disabilities.
False
Rosario is a chef and caterer who hires out on a per-project basis to companies with on-location work sites, as well as to the hosts of banquets and other events. In this capacity, Rosario is
an independent contractor.
The Immigration Act limits the number of legal immigrants entering the United States.
True
An agency relationship can arise by ratification, which involves a determination of intent expressed by words or conduct.
True
Pseudo Drugs Inc. is convicted of trafficking in counterfeit prescription drugs. As a penalty, the company may be ordered to pay restitution to the trademark holders in an amount equal to
their lost net profits.
A defendant may be able to limit liability for injuries caused by a defective product by showing that a plaintiff’s negligence contributed to the injuries.
True
Touch Screens Inc. makes and markets tablets. When problems develop with Touch products or sales, the company may be liable in product liability for any of the following except
an ineffective marketing plan.
Prognosis Inc. owns a brain-computer interface that enables physicians to diagnose and treat some diseases quickly and accurately. Federal copyright protection extends to
the parts of the app that can be read by computers.
For cause in fact to become a relevant issue in a product liability suit, a plaintiff must first establish proximate cause.
False
Interactive Entertainment Corporation markets its products online. Through the use of cookies, Interactive Entertainment and other online marketers can
track individuals web browsing activities.
Dana downloads music into her computer’s random access memory, or RAM, without authorization. This is
copyright infringement.
Courts apply a “reasonableness” test to determine if a warning adequately alerts consumers to a product’s risks.
True
To test computer security and conduct encryption research, Solutions Inc. circumvents the encryption software and other antipiracy protection of Tech Corporation’s software. Under the Digital Millennium Copyright Act, this is
a “fair use” exception to the provisions of the act.
Rue obtains permission from Saga Company to use the firm’s game app on Rue’s mobile devices, but Rue does not obtain ownership rights in the app. This is
a license.
A manufacturer or seller has a duty to warn about a risk that is obvious or commonly known.
False
Because federal wiretapping law was enacted before social media networks existed, it does not apply to communications through social media.
False
Soda Bubbles Corporation makes soft drinks. Toby drinks a Soda beverage, which proves defective and injures him. One justification for holding Soda strictly liable for the harm caused to Toby is that
Soda is in a better position than Toby to bear the cost of her injury.
To be protected under the Copyright Act, a work must be
original and fixed in a durable medium.
Leigh buys Masters of Business, a copyrighted book. Under the first sale doctrine, Leigh can legally
sell the book to another person.
United Inc., a U.S. film production company, files a suit against Video Ltd., a Mexican production firm, for infringement of intellectual property rights under Mexico’s national laws. Both the U.S. and Mexico are signatories of the TRIPS agreement, under which United is entitled to
the same rights and protection under Mexican law as Video.
Payback Inc. discovers that defamatory statements about its policies are being posted in an online forum. Q Web Inc., the Internet service provider whose users are posting the messages, refuses to reveal the users’ identities. To obtain those identities, Payback should initially
file suit against the anonymous users.
To bring a product liability lawsuit on the ground of misrepresentation, the plaintiff must not have relied on the misrepresentation.
False
Galaxy Research Inc. uses a mark associated with its name to distinguish its services from those of other tech firms. This mark is
a service mark.
Certain business processes are copyrightable.
False
Without permission, Race Runners Inc. uses a trademark that is similar to the registered mark of Swiftfoot, Inc. This use of the mark constitutes trademark dilution
if the use diminishes the distinctive quality of the work.
In posting statements or photos to a social media site, a person clearly has a reasonable expectation of privacy.
False
A product will be considered defective when the omission of reasonable warnings renders the product not reasonably safe.
True
Motor Corporation (MC) makes cars and trucks. National Sales Company sells all MC vehicles. Open Road Inc. leases only the cars. Under product liability laws, liability for injuries or damage caused by an MC vehicle may be imposed on
MC, National Sales, or Open Road
Quint is injured when a can of Remove-It explodes into flames. Solvents Inc. manufactured the Remove-It. Under product liability laws, Quint’s options include
suing Solvent’s Inc.
With respect to spam, thirty-seven states
prohibit or regulate it.
Pricing information is not a trade secret.
False
Federal law permits the sending of unsolicited commercial e-mail to randomly generated e-mail addresses.
False
Paving Corporation taps into the computer network of Roadwork Inc., a competitor, and downloads confidential business data without Roadwork’s knowledge or authorization. This is most likely
a theft of trade secrets.
Cybersquatting is illegal only if a domain name is identical to the trademark of another, not if the name is merely confusingly similar.
False
