Deck 14: A: Landmark in the Legal Environment:

Question 1

Forms of business organizations that limit the liability of their owners are available to businesspersons around the world.Among the features that such firms have in common,in most nations

A)articles of organization must be filed to form the enterprise.
B)one of the owners must be a foreign entity.
C)the organization can have an unlimited number of owners.
D)the owners are not required to choose persons to manage the business.

Answer 1

A

Question 2

Simone is a manager of Rolling Hills Resort LLC,a limited liability company.Rolling Hills is formed in a state that does not explicitly create fiduciary duties for LLC managers but does require the exercise of good business judgment.Unless a court rules otherwise,Simone owes fiduciary duties to

A)Rolling Hills's members.
B)Rolling Hills's suppliers.
C)Rolling Hills's customers.
D)none of the choices.

Answer 2

D

Question 3

Matrix Corporation provides the funds to make Over the Top,a film that is critical of Nathalie,who is a presidential candidate.According to a decision of the United States Supreme Court,corporate funding of independent political broadcasts

A)cannot be limited.
B)cannot be used to advocate the election or defeat of a candidate.
C)is restricted to "electioneering cmmunication."
D)will open the floodgates for the influence of corporations on elections.

Answer 3

A

Question 4

Metro Credit Corporation lends to borrowers to finance the construction of new houses and the sale and purchase of existing homes.Despite a decline in the housing market and other "red flags," Metro's directors do not change the lending practices of the firm,which suffers significant losses.The directors are most likely liable for a breach of

A)no duty,right,or rule
B)the business judgment rule.
C)the duty of loyalty.
D)the right of compensation.

Question 5

Riverside Development Inc.is a U.S.corporation.Riverside and other U.S.corporations have a right under the First Amendment

A)to fund political broadcasts.
B)of access to the courts and can sue and be sued.
C)to due process.
D)of freedom from unreasonable searches and seizures.

Question 6

Far Afield Inc.announces its intent to acquire Eversmall Company.Despite this announcement,Eversmall's directors do not prepare for a buyout-they do not determine a price or seek out other buyers,and negotiate with Far Afield for only a short time.Former Eversmall shareholders allege that the directors breached their fiduciary duties.The directors' best defense is

A)the right to indemnification
B)the business judgment rule.
C)the shareholders' preemptive rights.
D)the limited liability of the corporation.

Question 7

OK Prime Beef Corporation employs Peyton.In the legal system of the United States and most Western countries,OK can be held liable for an act of Peyton under

A)no legal theory.
B)the codification of Islamic law in the sharia.
C)the strict belief of individual responsibility.
D)the doctrine of respondeat superior.

Question 8

Vigor Fitness Corporation uses a Web site to provide downloadable information to prospective franchises.This online information is the equivalent of an offer that must comply with

A)no law.
B)the Franchise.com "Green Light" format.
C)the Federal Trade Commission's Franchise Rule.
D)the Uniform State Franchise Disclosure Act.

Question 9

Yao is considering forms of business organization for his Web site consulting firm.Most states allow a limited liability company to have

A)any number of members that are foreign entities.
B)no members that are foreign entities.
C)one member that is a foreign entity.
D)two members that are foreign entities.

Question 10

Wood Works,LLC,is a limited liability company.Unless indicated otherwise on Wood Works's federal tax form,the firm will be taxed as

A)a corporation.
B)a partnership.
C)a sole proprietorship.
D)none of the above.

Question 11

Farouk,Ltd.,employs Ghali.In the system of law applied in Middle Eastern countries,Farouk can be held liable for an act of Ghali under

A)no legal theory.
B)the codification of Islamic law in the sharia.
C)the strict belief of individual responsibility.
D)the doctrine of respondeat superior.

Question 12

Jewel Property Company hires Klint,an independent contractor,to wash the windows of Jewel's commercial building.Jewel's tenant Lucy is injured when Klint closes a window on her hand.In determining whether Jewel is liable for Lucy's injury,the most important factor is

A)Jewel's employment of Klint.
B)Jewel's investigation of Klint's background and experience.
C)the condition of the premises,especially the window.
D)the degree of control that Jewel maintained over Klint's actions.

Question 13

Beyond Gamez,Inc.,a video game retailer based in California,does business in all fifty states exclusively online.According to New York state tax law,an out-of-state online retailer must collect and remit state taxes to New York if the retailer

A)plans to establish a substantial physical presence in New York.
B)targets a potential marketing base in New York.
C)maintains a Web site accessible in New York.
D)pays a party within New York to solicit business for its products.

Question 14

Eduard is a shareholder of Deutsche Internationale,a German firm.In Germany

A)most claims against firms are alleged in shareholders' derivative suits.
B)the law does not provide for derivative litigation.
C)derivative actions can only challenge directors' actions that shareholders could not legally ratify.
D)if a derivative action is unsuccessful,a firm can sue the plaintiff.

Question 15

Gass Propane Company hires Hick,an independent contractor,to make deliveries.During a delivery,Iggy is killed in an accident caused by Hick's negligence.Iggy's widow Jade files a suit against Gass,asserting that the employer is liable.Gass argues that it had no control over the manner in which Hick did his work.The court is most likely to hold that Gass is

A)liable because Gass employed Hick.
B)liable because Gass should have investigated Hick's qualifications.
C)not liable because Gass did not control Hick's work.
D)not liable because the delivery vehicle was probably faulty.

Question 16

Kirby is a manager of Jumpstart Fitness LLC,a limited liability company.Jumpstart is formed in a state that imposes fiduciary duties on LLC managers.Kirby owes these duties to

A)Jumpstart's members.
B)Jumpstart's suppliers.
C)Jumpstart's customers.
D)none of the choices.

Question 17

Roshini is a shareholder of Satsui,Ltd.,a Japanese firm.Roshini brings a derivative action against the company.If the action is unsucessful,Satsui

A)can sue Roshini for damages.
B)must pay Roshini's legal fees.
C)must apologize to Roshini.
D)must accept Roshini's apology in lieu of costs,fees,or damages.

Question 18

Heinz Kirche,GmbH,is a German Gesellschat mit beschranker,or "company with limited liability." A significant difference between a GmbH and a U.S.limited liability company (LLC)is that

A)German law imposes many restrictions on the operations of GmbHs.
B)German law imposes no restrictions on the operations of GmbHs.
C)U.S.law requires an LLC to have an operating agreement.
D)U.S.law requires that an LLC be owned by shareholders.

Question 19

First Editions,Inc.,a book dealer based in Texas,does business in all fifty states exclusively online.According to a decision of the United States Supreme Court,for an individual state to compel an out-of-state business to collect and remit state taxes,the business must have in that state

A)a substantial physical presence.
B)a potential marketing base.
C)an accessible Web site.
D)a party paid to solicit business for its products.

Question 20

Dingo Bangles Company wants to present information in "disclosure documents" via the Internet to prospective franchisees.Among other legal requirements with which Dingo must comply,prospective franchisees must

A)agree to settle any lawsuits that may arise over the documents.
B)be able to download or save all electronic documents.
C)provide e-mail addresses for Dingo to verify users' authenticity.
D)register with the Federal Trade Commission via Dingo's Web site.

Question 21

Rene,who has a disability,applies for a job with Sanitary Dental Labs,Inc.According to the Equal Employment Opportunity Commission,Sanitary may ask whether Rene can do the job.But the employer may not ask how Rene would do the job unless

A)Rene's disability is not obvious.
B)Sanitary asks the question of all applicants for that job.
C)Sanitary assures Rene that the question is truly "off the record."
D)Sanitary brings up the subject during the interview.

Question 22

Pharma Meds Corporation employs Ogilvie under an employment contract that sets out a specific amount of money to be paid for certain results over a stated period of time.During the term of the contract,it becomes clear that the results are not likely to be attained.Pharma then gives Ogilvie the option of accepting a lesser position with fewer duties for less money.Ogilvie accepts via e-mail,but soon files a suit against Pharma for breach of the original contract.The court is most likely to rule that Ogilvie's e-mail

A)showed only an agreement to agree.
B)accepted the proposed modification of the employment contract.
C)constituted a non-binding,non-contractual communication.
D)contained an acceptance but is unenforceable because it is electronic.

Question 23

AgriEquip Service & Supply,Inc.,sends Merilyn an e-mail in which AgriEquip offers to employ her for certain hours and a specific amount of money over a limited period of time.She responds with a counteroffer that reduces the hours and increases the money.AgriEquip e-mails an acceptance.Merilyn performs,but AgriEquip refuses to pay.She files a suit against AgriEquip for breach of contract.The court is most likely to rule that the e-mail

A)showed only an agreement to agree.
B)was an agreement to the essential terms of an employment contract.
C)constituted an unenforceable,non-existent contract.
D)contained a contract but is unenforceable because it is electronic.

Question 24

Women's groups contend that sexual harassment is viewed with "quiet tolerance" in corporations based in

A)Asia.
B)Europe.
C)North America.
D)South America.

Question 25

Belle is an employee of Capital Corporation,a U.S.firm.Dana is an employee of Esta,Ltd.,a European firm.The problem of sexual harassment in the workplace is

A)confined to Europe alone.
B)confined to Europe and the United States.
C)confined to the United States alone.
D)worldwide.

Question 26

Darla,who has a disability,applies for a job with Elite Auto & Truck Company.According to the Equal Employment Opportunity Commission,before Elite makes a job offer,the company may ask Darla

A)how many days she was sick last year.
B)questions about previous workers' compensation claims.
C)special questions about the extent of her disability.
D)whether she can meet the attendance requirements.