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Questions
Q:
Cielo is fifteen. In most states, Cielo would be considered a minor because she is under the age of
a. sixteen.
b. eighteen.
c. twenty.
d. twenty-one.
Q:
Boyd is a minor. As a minor, Boyd has the capacity to enter into
a. an invalid contract.
b. an unavoidable contract.
c. a valid contract.
d. no contract.
Q:
A corporation in the United States that has been incorporated in another country is referred to as a(n) ________ corporation.
A) foreign
B) domestic
C) onshore
D) alien
Q:
Which of the following is a definition of a foreign corporation?
A) a corporation with incorporations in multiple states
B) a corporation in the state in which it was incorporated
C) a corporation in states other than the one in which it was incorporated
D) a corporation in the United States which has been incorporated in another country
Q:
Ken relinquishes the right to his son Lee's control, care, custody, and earnings. This act is
a. a disaffirmance.
b. an emancipation.
c. a ratification.
d. a necessary.
Q:
Which of the following type of shops is unlawful under the provisions of the Taft -Hartley Act?A) union shops B) closed shopsC) modified union shops D) open shops
Q:
________ corporations are corporations that have many shareholders and whose securities are often traded on organized securities markets.
A) Closely held
B) Nonprofit
C) Publicly held
D) Professional
Q:
Cherry and Basil are minors who marry each other. Their minority status may be terminated under the laws of
a. all states.
b. most states.
c. some states.
d. no states.
Q:
A corporation is referred to as a(n) ________ corporation in the state in which it was formed.
A) foreign
B) domestic
C) alien
D) multinational
Q:
Windshield Repair Shop (WRS) promises to pay Vincent $1,000 a week to work for WRS. Vincent accepts and quits his job with Ultra Glass. WRS fails to provide a job for Vincent. Vincent has a cause of action based on
a. an illusory promise.
b. a release.
c. past consideration.
d. promissory estoppel.
Q:
A panel of persons who are elected by shareholders that make policy decisions concerning the operation of a corporation is known as the ________.
Q:
Dex and Carmen are in an auto accident. Dex offers Carmen $2,000 if she promises not to pursue her potential legal claim against Dex. Carmen agrees. Later, Carmen discovers that it will cost $1,500 to repair her car and $4,000 to cover the medical expenses for a latent injury.
In Carmen's suit against Dex to recover her repair and medical expenses, Carmen will most likely recover
a. half the amount to pay the costs over what Dex already paid Carmen.
b. nothing.
c. the estimated amount to pay those costs and any other liability.
d. the exact amount to pay those costs and no more.
Q:
The board of directors makes policy decisions concerning the operation of a corporation.
Q:
Which will NOT affect the elasticity of demand for labor?A) the labor intensity of the production processB) the elasticity of supply for laborC) the elasticity of demand for the goodD) the substitutability of capital for labor
Q:
Dex and Carmen are in an auto accident. Dex offers Carmen $2,000 if she promises not to pursue her potential legal claim against Dex. Carmen agrees. Later, Carmen discovers that it will cost $1,500 to repair her car and $4,000 to cover the medical expenses for a latent injury.
The agreement between Dex and Carmen is
a. a covenant not to sue.
b. an accord and satisfaction.
c. a release.
d. promissory estoppel.
Q:
Shareholders have unlimited liability for the debts and obligations of a corporation.
Q:
Webline Retail Sales, Inc., promises its salaried employees a bonus at the end of the year if management thinks it is warranted. This promise is
a. enforceÂable.
b. unenforceÂable because it is not supported by consideration.
c. unenforceÂable because the dollar amount is missing.
d. unenforceÂable because the employees are paid salaries.
Q:
Corporations are not allowed to enter into contracts in their own name.
Q:
Todos Ltd. agrees to supply United Steel, Inc., with minerals from Venezuela. When the govÂernÂment is unexpectedly overthrown in a revolution, Todos can obtain the goods only at a much higher price. United agrees to pay but later files a suit to recover the difference. The court will most likely rule that
a. a change in government is a risk ordinarily assumed in business.
b. an unforeseen difficulty supported the contract modification.
c. Todos engaged in extortion or the so-called holdup game.
d. Todos had a preexisting duty to supply the goods at the initial price.
Q:
Corporation codes regulate the formation, operation, and dissolution of corporations.
Q:
Baked Goods Company agrees to supply Comida Café with all the corn chips that it reÂquires for a year. A sudden demand for ethanol results in a shortage of corn, and the price rises sharply. Baked Goods asks Comida to pay a higher price for the chips. This request is
a. invalid as an attempt at extortion or the so-called holdup game.
b. invalid under the preexisting duty rule.
c. valid as a risk ordinarily assumed in business.
d. valid due to the unforeseen difficulty of the sudden price increase.
Q:
One organization in the United States today that is exempt from antitrust laws isA) the automobile industry. B) professional baseball.C) the oil industry. D) the steel industry.
Q:
Shareholders are owners of a corporation who elect the board of directors and vote on fundamental changes in the corporation.
Q:
Quality Steel Corporation files a suit against Rite Tool Company, claiming that the consideration for their contract is inadequate. The court will most likely not examine the adequacy of the consideraÂtion if
a. it is obvious that the consideration is adequate.
b. Rite Tool asserts that there is adequate consideration.
c. something of value passed between the parties.
d. the consideration is worth more than $100.
Q:
________ are a panel of decision makers who are elected by the shareholders.
A) Registered agents
B) Corporate officers
C) Stakeholders
D) Board of directors
Q:
Brad defends against a breach-of-contract suit by College Credit Corporation by claiming that their deala student loan accruing interest at a certain rate and payable beginning on a certain datewas unfair because the consideration for their contract was inadequate.
If, as Brad claims, the consideration in this problem is inadequate, it may indicate a lack of
a. accord in Brad's satisfaction with the value of the deal.
b. bargained-for exchange or mutual assent.
c. flexibility on the part of College Credit to accommodate Brad's needs.
d. "heft," "substance," or "weight" in the terms of the contract.
Q:
The ________ own(s) a corporation.
A) shareholders
B) board of directors
C) CEO
D) corporate officers
Q:
Brad defends against a breach-of-contract suit by College Credit Corporation by claiming that their deala student loan accruing interest at a certain rate and payable beginning on a certain datewas unfair because the consideration for their contract was inadequate.
"Adequacy" of consideration refers to
a. "how much" consideration is given.
b. legally sufficient value in the eyes of the law.
c. the intangible value to a contracting party of a thing exchanged.
d. the substantiality of the consideration exchanged.
Q:
The ________ is a general rule of corporate law that provides that generally, shareholders are liable only to the extent of their capital contributions for the debts and obligations of their corporation and are not personally liable for the debts and obligations of the corporation.
A) limited-purpose clause
B) limited liability of shareholders
C) preferred shareholder rule
D) nonparticipating shareholder rule
Q:
The Food and Drug Administration (FDA) is an agency that would enforceA) social regulation. B) economic regulation.C) antitrust laws. D) price discrimination.
Q:
Brad defends against a breach-of-contract suit by College Credit Corporation by claiming that their deala student loan accruing interest at a certain rate and payable beginning on a certain datewas unfair because the consideration for their contract was inadequate.
A court is most likely to evaluate the adequacy of considÂeraÂtion if
a. a thing exchanged has no intangible value to one of the parties.
b. something exchanged is not of direct economic or financial value.
c. the items exchanged were of unequal value.
d. there is a gross disparity in the value of the consideration exchanged.
Q:
Owners of a corporation who elect the board of directors and vote on fundamental changes in the corporation are known as ________.
A) corporate officers
B) shareholders
C) registered agents
D) managing directors
Q:
A severable contract is unenforceable as a violation of public policy.
Q:
Which of the following entities elects members of the board of directors for a corporation?
A) the CEO
B) the corporate officers
C) the shareholders
D) the employees
Q:
An illegal contract is valid if the parties to it were unaware of the illegality.
Q:
The ________ Act of 2002 is a federal statute enacted by Congress to improve corporate governance.
A) Brown-Kaufmann
B) Lanham
C) Glass-Steagall
D) Sarbanes-Oxley
Q:
An exculpatory clause in an employment contract is not enforceable if the clause is against public policy.
Q:
Many multinational corporations conduct business in another country by using a(n) ________.
Q:
A concentration ratio is used toA) determine whether a market structure is oligopoly.B) determine the importance of labor in the production process.C) determine the degree of homogeneity in the market.D) see if a firm qualifies for federal assistance.
Q:
Adhesion contracts are often held to be contrary to public policy.
Q:
A corporation that uses subsidiary corporations to operate in more than one country cannot be termed as a multinational corporation.
Q:
A covenant not to compete in the sale of an ongoing business is unenforceable.
Q:
Explain the CEO and CFO certification provision of the Sarbanes-Oxley Act (SOX) of 2002.
Q:
A covenant not to compete is enforceable only if it is necessary to restrain trade.
Q:
Explain the concepts of winding up, liquidation, and termination.
Q:
If the purpose of a licensing statute is to protect the public from unlicensed practitioners, a contract with an unlicensed professional is illegal.
Q:
Involuntary dissolution of a corporation that is ordered by the secretary of state if a corporation has failed to comply with certain procedures required by law is known as ________.
Q:
Which of the following statements about a monopolistically competitive firm is TRUE?A) A monopolistically competitive firm does not always equate marginal cost to marginal revenue because it uses other means to maximize profits.B) A monopolistically competitive firm maximizes profits by charging a price equal to marginal cost.C) A monopolistically competitive firm produces the quantity at the point at which the demand curve crosses the marginal cost curve.D) A monopolistically competitive firm maximizes profits when it produces the quantity at which marginal cost equals marginal revenue.
Q:
If there is a statute that prohibits a certain action, a contract to do it is unenforceable.
Q:
The ________ Act prohibits public companies from making personal loans to their directors or executive officers.
Q:
A usurious contract involves the purchase and sale of usable goods.
Q:
A corporation is dissolved upon the effective date of the articles of dissolution.
Q:
A guardian can enter into legally binding contracts on behalf of a mentally incompetent person.
Q:
Private companies and nonprofit organizations are also influenced by the Sarbanes-Oxley Act's accounting and corporate governance rules.
Q:
A person who enters into a contract when he or she is intoxicated can void the contract if the terms are obviously favorable to the other party.
Q:
ʺUnlike a perfect competitor, a profit -maximizing monopolist produces at an output rate at which marginal revenue exceeds marginal cost.ʺ Do you agree or disagree? Why
Q:
The Sarbanes-Oxley Act prohibits public companies from making personal loans to their directors or executive officers.
Q:
Parents are ordinarily liable for the contracts made by their minor chilÂdren, even if the children acted on their own.
Q:
The Sarbanes-Oxley Act requires CEO and CFO certification for annual and quarterly reports.
Q:
A minor's right to disaffirm a contract terminates sixty days after the contract's date.
Q:
After a corporation has commenced business or issued shares, the corporation can be ________ if the board of directors recommends dissolution and a majority of voting shareholders favors dissolution.
A) rescinded
B) remanded
C) administratively dissolved
D) voluntarily dissolved
Q:
A minor may disaffirm a contract only if the subject matter is illegal.
Q:
According to priority, which of the following claimants is the last to be paid after a corporation's assets have been liquidated?
A) creditors
B) common stockholders
C) preferred shareholders
D) bond holders
Q:
A situation in which the price charged is greater than societyʹs opportunity cost would lead toA) market failure. B) marginal monopoly pricing.C) marginal profits. D) marginal cost pricing.
Q:
A minor may disaffirm a contract only after attaining the age of majority.
Q:
According to the provisions set forth by the Sarbanes-Oxley Act, the ________, a federal government agency, may issue an order prohibiting any person who has committed securities fraud from acting as an officer or a director of a public company.
A) United States International Trade Commission
B) Federal Reserve System
C) Federal Communications Commission
D) Securities and Exchange Commission
Q:
Contractual capacity refers to the legal ability to enter into a contract.
Q:
Explain the business judgment rule and its relationship to the fiduciary duty of care owed by corporate officers and directors.
Q:
A director or corporate officer who usurps a corporate opportunity would be violating the director's fiduciary duty called the ________.
Q:
The doctrine of promissory estoppel requires a clear and definite promise.
Q:
A(n) ________ is a member of a board of directors who is not an officer of the corporation.
Q:
A covenant not to sue is the substitution of a contractual obligation for a legal action.
Q:
For a perfectly competitive firm, which of the following is NOT true?A) The average revenue curve, the demand and the marginal revenue curves are identical. B) The total revenue curve begins at the origin and slopes upward as output increases.C) The slope of the total revenue curve is equal to the product price. D) The total revenue curve is horizontal.
Q:
A covenant not to sue is against public policy.
Q:
________ is a doctrine that says if a shareholder dominates a corporation and uses it for improper purposes, a court of equity can disregard the corporate entity and hold the shareholder personally liable for the corporation's debts and obligations.
Q:
A release does not require consideration to be legally binding.
Q:
A requirement that a greater than majority of shares constitutes a quorum of the vote of the shareholders is known as the ________ requirement.
Q:
An accord and satisfaction requires that the amount of a debt be certain.
Q:
A system in which a shareholder can accumulate all of his or her votes and vote them all for one candidate or split them among several candidates is known as ________.
Q:
An illusory promise is a promise that is enforceable without consideration.