ALC 2 LEGAL ENVIRONMENT OF
BUSINESS
1. What are items of personal property that are attached to real property and cannot
be removed without substantial damage called?
-Connectors, Relaters, Entanglements, Fixtures
2. Which of the following statements best describes an offer under UCC
-An offer is not defined by UCC, An offer is an invitation to buy or sell between
merchants, An offer is anything writing sufficient to describe the goods, An offer is
contained in the standard business forms.
3. A product that was sold without a component part properly fastened to the
product is an example of a ___ defect
-Design, Manufacturing, Defective warning, Non of the above
4. A ___ is created when two or more persons agree to place their money, labor, or
skills in a business and to share the profits and losses
-Sole proprietorship, General partnership, Limited partnership, C corporation
5. The ____ defense shields a manufacturer from liability for a defective design if no
safer product design is generally recognized as being possible
-Contractor, Innovative, State-of-the-art,
6. Contract law comes from which of the following?
-Case law, Statutes, Tradition, All the responses are correct
7. Which of the following restricts the statute of limitations as a defense in a
product liability lawsuit?
-A revival statute, A liability statute, A repose statute, Both a revival statute and a
repose statute.
8. The preemption defense involves certain ____, which set minimum safety
standards for products.
-Federal laws, Court decisions, State laws, Private guidelines
9. Under the rule applied in most states, which of the following justifies holding an
acquiring corporation liable to a party injured by a defect in a product sold by the
acquired corporation?
- The new company is a continuation of the predecessor corporation, The acquiring
corporation is in a better position to bear the risk than the consumer, The
transaction was entered into escape liability, All of the responses are correct.
,10.A statute of ___ prevents recovery for product injuries by limiting the time period
for recovery from the date when the injury occurred
-Limitations, Repose, Recovery, All of the above
11. Under the UCC, which statement is not true regarding a buyer’s right to reject
nonconforming goods?
-The buyer may reject any or all of the goods, The right to reject the goods can be
waived inadvertently, The buyer may treat the goods as if it owned them, A buyer
who has taken possession of goods must hold the goods for a time sufficient to
permit the seller to remove them.
12. If a product is unavoidably unsafe, the ___ determines whether the dangerous
product s also defective.
-Adequacy of the warning label, Obviousness of the risk, care in design and
manufacturer, Extent of the danger
13. ___ is the process by which a country asserts a right to regulate activities that
occur beyond its borders.
-Internationalization, Nationalization, Extraterritoriality, None of the above
14. ___ tariffs require the importer to pay a percentage of the value of imported
merchandise.
-Ad valorem, Ad hoc, Harmonized, Customs valuation
15. A ___ contract is a promise given in an exchange for another promise.
-Unilateral, Bilateral, Mutual, Collateral
16. Under the UCC statue of frauds, which of the following terms must be in a
writing order to satisfy the statute?
-The price, The quantity, The identity of the parties, The time and place for delivery
17. Which of the following is true regarding acceptance?
-In the absence of provision in an offer regarding how acceptance is to be made,
acceptance is effective upon dispatch into a mailbox, Acceptance is never effective
until it is received, An offereor may not by law specify that an offer can be accepted
only by facsimile to a stated fax number and that acceptance is not effective until
actually received, An offeror may revoke an offer so long as the revocation is made
before an acceptance is received.
18. To which of the following does article 2 of the UCC apply?
-The sale of goods, The rendering of services, The sale of land, Both of the sale of
goods and the rendering of services
19. Which of the following is governed by Article 2 of the UCC?
,-A contract for sale in a commercial building, A contract sale of office supplies, An
employment contract, A life insurance contract
20. Which of the following will not allow a consumer to recover under a breach of
warranty?
-The buyer made inappropriate use of the goods, The goods were defective at the
time of the sales, The loss of injury was caused by the defect, The seller has no
affirmative defense
A blank_____ corporation is owned by a limited number of shareholders.
-Public, Private, Close, None of the response is correct
A member of the board who also serves as an officer is a(n) blank_____ director.
-Inside, Interested, Outside, Employed
The rules that govern the internal operation of a corporation are called
the blank______
-Corporate charter, Bylaws, Articles of incorporation, Corporate articles
Small corporations can avoid double taxation by electing to be treated as
a(n) blank_______.
-C corporation, Close corporation, LLC, S corporation
A blank_____ is a public offer to all shareholders of a corporation to buy their shares
at a stated price, usually higher than the market price.
-Tender offer, Leveraged buyout, Target bid, Merger
In a blank_____ merger, the shares in the disappearing corporation are automatically
converted into shares in the surviving corporation.
-Cash out, Non cash, Freeze out, Liquidation
In a blank_____, a stock purchase is financed by debt.
- cash out merger, freeze out acquisition, Leverage buyout, None of these response
are correct
A partnership is not automatically dissolved upon a partner's blank______, and the
partners holding a majority of the partnership interests may elect to continue the
general partnership.
-Death, Bankruptcy, Withdrawal, All of the response are correct
The blank_____ doctrine prevents a third party who acts as if it were doing business
with a corporation from later claiming that the corporation is not really a
corporation.
-de jure corporation, de facto corporation, corporation by estoppel, alter ego
, Which of the following statements is NOT true regarding the advantages and
disadvantages of a sole proprietorship?
- A sole proprietorship can be created without formal agreements or state filings.,
The proprietor reports income from the business on a personal tax return., The
proprietor alone bears liability for the losses., It is usually easy for sole
proprietorships to raise capital.
Which of the following statements is NOT true regarding limited partnerships?
- General partners of a limited partnership remain jointly and severally liable for
partnership obligations.. Limited partners assume no liability for partnership debts
beyond the amount they have contributed., Limited partners are responsible for the
management of the partnership., Limited partnerships are often used to raise
capital.
Which of the following requirements is NOT required by a corporation to qualify for
S corporation status?
- The corporation must have only one class of stock., The corporation must file a
timely election to be treated as an S corporation., The corporation must have no
more than twenty-five shareholders., The corporation generally may not own more
than 80 percent of another corporation.
A blank_____ combines the tax advantages of a pass-through entity with the limited
liability advantages of a corporation.
-Limited liability company, de jure corporation, joint venture, general partnership
The blank_____ set forth the steps that must be taken to establish a corporation in
that state.
- Uniform Federal Rules, corporate statutes of each state, corporate bylaws, none of
the responses are correct
If incorporators cannot show substantial compliance with statutes regarding
incorporation but can show that they were unaware of any defect and acted in good
faith, a court may treat the entity as a(n) blank_____.
- de jure corporation, real corporation, de facto corporation, equitable corporation
_____ law legal systems primarily rely on case law and precedents.
-Common, Civil, Statutory, Codified
The Seventh Amendment to the U.S. Constitution guarantees the right to a jury
trial blank______.
- "in all legal suits", "in all civil and criminal suits", "in suits at common law", "in all
civil and criminal suits" and "in suits at common law"
