Deck 18: Legal Issues: Recognizing Your Small Business Needs

Question 1

Torts can arise when a person's legal rights are violated in ways other than from a breach of contract.

Answer 1

True

Question 2

A trade secret is not created by the government.

Answer 2

True

Question 3

When using a retainer,the attorney does not get paid until you get paid.

Answer 3

False

Question 4

Clients and attorneys start with a natural conflict of interest related to money.

Question 5

The name of your business can be called its doing business as (dba)name.

Question 6

If the business is a corporation or an LLC,the owner can "only" lose what he or she has in the business.

Question 7

The Sarbanes-Oxley Act covers small businesses that are not publicly traded.

Question 8

A trademark once granted lasts for 10 years and can continue to be renewed for another 5 years at a time.

Question 9

Small businesses almost always do better before judges and almost never do better before arbitrators.Therefore,the court becomes a preferred choice for small business owners over arbitrators in contract disputes.

Question 10

All contracts have to be in writing to be enforceable.

Question 11

In the case of mediation,the dispute is put to a neutral third party who is a judge.

Question 12

It is important to always keep issues of legality in the back of your mind when negotiating without a lawyer present.

Question 13

The total liability issue in general partnerships is like that of sole proprietorship,therefore,partnerships are something to avoid.

Question 14

If you want to ensure control over the selling process,make it very clear on the Web site that the representations of merchandise or services are not actual offers to the buyer.

Question 15

In the case of a professional corporation,the shareholders are responsible for debts of the corporation.

Question 16

Copyright involves the expression of ideas as well as the idea themselves.

Question 17

Small-claims courts work only when you are owed money,can prove it,and have exhausted other procedures like calls and letters to the customer.

Question 18

In business negotiations,if one side wins,the other side loses.

Question 19

The major advantage of sole proprietorship is that the legal entity is separate and distinct from its owners as individuals.

Question 20

Patents are essentially monopolies granted to inventors by the U.S.government giving patent owners the exclusive rights to make,use,or sell that invention for a certain period of time.

Question 21

Which among the following is a disadvantage of sole proprietorships?

A)No specific tax advantages
B)Difficult to organize,operate,and dissolve
C)Owner has to share profits
D)Inadequate management and employee skills

Question 22

The person being sued is referred to as a

A)plaintiff.
B)defendant.
C)lawyer.
D)judge.

Question 23

All business forms are types of separate,legal entities EXCEPT

A)partnerships.
B)sole proprietorships.
C)LLCs.
D)corporations.

Question 24

Which of these is a disadvantage of corporations?

A)Impersonal
B)Limited life
C)Unlimited liability for the firm's debt
D)Limited capital

Question 25

_____ is the filing made with a state in which the business operates disclosing the trade name or assumed name of the business along with the owners of the business.

A)Fictitious name filing
B)dba name filing
C)Trade name filing
D)Progressive name filing

Question 26

Burdensome procedures,reports,and statements required by governments are disadvantages of which of the following?

A)Corporations
B)Limited partnership
C)Sole proprietorships
D)General partnerships

Question 27

Unless advised otherwise by your attorney,the best choice for a new small business is a

A)partnership.
B)C corporation.
C)sole proprietorship.
D)limited liability company.

Question 28

Fee paid by a client to an attorney for legal services that is dependent upon the outcome of a case is referred to as

A)contingency fees.
B)hourly fees.
C)flat fees.
D)retainers.

Question 29

A _____ is a unit recognized as having rights and duties apart from the owners of the company.

A)plaintiff
B)defendant
C)legal entity
D)sole proprietorship

Question 30

Which of these is an advantage of sole proprietorship?

A)Secrecy
B)Can have representative management
C)Relatively permanent
D)Ease of raising large amounts of cash

Question 31

Which of these countries has one of the most litigious societies in the world?

A)France
B)Japan
C)Switzerland
D)Germany

Question 32

A method of billing for lawyers in which a fixed amount is paid for a certain task is called

A)hourly fees.
B)flat fees.
C)retainers.
D)contingency fees.

Question 33

There are two basic categories of information available to small business owners:

A)legal and commercial.
B)free and paid.
C)consumer-related and industry-related.
D)online and in-print.

Question 34

Which of these is NOT an element to most aspects of business law?

A)Taking care of the associated paperwork.
B)Finding the right information.
C)Negotiating the specific outcome you want.
D)Providing the service to other clients in the group.

Question 35

When using a(n)_____,the attorney will be paid a specified amount every month regardless of the workload for that month.

A)hourly fee
B)flat fee
C)retainer
D)contingency fee

Question 36

The party who files a law suit is called a

A)plaintiff.
B)defendant.
C)sole proprietor.
D)judge.

Question 37

This type of fee is typical in accident situations,but is not usually used in everyday contract and business-related matters.

A)Hourly fees
B)Flat fees
C)Contingency fees
D)Retainers

Question 38

For start-ups,the most popular business form is the

A)corporations.
B)partnerships.
C)sole proprietorships.
D)LLCs.

Question 39

Which of the following is true regarding a small-claims court?

A)These courts will accept cases where the stakes are as large as $100,000.
B)Most of these courts are designed so that ordinary citizens can bring their cases in.
C)This legal option is available to entrepreneurs who can afford an attorney.
D)These courts should be the first course of action for entrepreneurs in case of any problems.

Question 40

Which of the following is an advantage of corporations?

A)Personal in nature
B)Low incorporation fees and taxes
C)Ease of conducting business in another state
D)Relatively permanent

Question 41

This is a choice LLCs can make on their tax returns to be taxed as a corporation or a partnership.

A)Check the box taxation
B)Double taxation
C)Pass through taxation
D)Single taxation

Question 42

Which form of business requires no government permission to set up?

A)Limited partnerships
B)Corporation
C)Professional corporation
D)Sole proprietorship

Question 43

Which among the following is a disadvantage of partnerships?

A)Lack of division of labor
B)Difficulty in raising capital
C)Complex procedures involved in set up
D)Death of any one of the partners terminates the partnership

Question 44

The difficulty and costs involved in maintaining the legal form of a business relates to

A)the personal liability of the business owner.
B)the complexity and organizational costs in setting up and maintaining an entity.
C)the control of the business.
D)the ability of the business to raise capital.

Question 45

If your business was facing vicarious liability,which of these arguments may be helpful in deflecting the liability?

A)Ignorance
B)Independent contractor argument
C)Financial inability argument
D)Actions are within the scope of agency/employment argument

Question 46

A partnership where all partners are equally and fully responsible for the business's obligations is called a(n)

A)LLC.
B)limited partnership.
C)general partnership.
D)S corporation.

Question 47

Which of these is an advantage of partnerships?

A)Each partner is responsible for the acts of every other partner.
B)Can use ideas and plans of more than one person.
C)Being relatively permanent.
D)Owner's liability for the firm's debt is limited to their investment in it.

Question 48

Which among the following is considered to be the hardest part of the negotiation process?

A)Prepare
B)Position
C)Propose
D)Pounce

Question 49

Of the newer business forms,the easiest to form and the most user-friendly is the

A)LLC.
B)C corporation.
C)sole proprietorship.
D)partnership.

Question 50

Scaling returns or considerations according to the size of the contribution of the party to your success relates to which of the following?

A)Seeking to create value.
B)Seeking mutual safety.
C)Seeking outcomes commensurate with investment.
D)Seeking balance.

Question 51

Which of the following negotiation techniques involves understanding what drives the other side's needs and seeking alternative ways to solve a problem?

A)Seeking long-term solutions
B)Seeking balance
C)Seeking to create value
D)Seeking mutual safety

Question 52

Which among the following forms of business does NOT enjoy pass through taxation or have the option of pass through?

A)LLC
B)Professional corporation
C)S corporation
D)Corporation

Question 53

Which form of business faces double taxation?

A)Sole proprietorship
B)Partnership
C)Corporation
D)LLC

Question 54

Torts are ______ wrongs.

A)no-liability
B)homicide
C)criminal
D)civil

Question 55

_____ refers to the situation where earnings of the business are distributed to the business owners and those owners pay individual tax on the earnings.

A)Check the box taxation
B)Double taxation
C)Single taxation
D)Pass through taxation

Question 56

Vicarious liability is also called as

A)indirect liability.
B)contractual liability.
C)direct liability.
D)personal injury liability.

Question 57

Which of the following is a document that sets forth information about a limited company that is filed with the state to establish an LLC?

A)Articles of incorporation
B)Articles of organization
C)Articles of partnership
D)Articles of presentation

Question 58

Responsibility for the actions of another is called

A)direct liability.
B)independent contractor liability.
C)vicarious liability.
D)exculpatory clause.

Question 59

Persons working to achieve a certain goal without being subjected to substantial controls by another are called

A)independent contractors.
B)partners.
C)corporate owners.
D)lawyers.

Question 60

The dissolution of a corporate form,making it back into a sole proprietorship or general partnership,if the court finds that the owner carelessly mixed up personal and business assets or finances is(are)called

A)piercing the veil.
B)pass through taxation.
C)torts.
D)exculpatory clause.

Question 61

When the dispute is put to a neutral third party who is not a judge it is called as

A)arbitration.
B)mediation.
C)litigation.
D)piercing the veil.

Question 62

Which among the following dispute resolution methods is generally much faster to complete and the least expensive?

A)Litigation
B)Arbitration
C)Mediation
D)Piercing the veil

Question 63

In which of the following dispute resolution methods is the decision nonbinding on the parties involved?

A)Arbitration
B)Litigation (regular courts)
C)Litigation (small-claims court)
D)Mediation

Question 64

In business to business,contracts are often transactions involving _____ which link suppliers of raw materials and components with wholesalers and retailers,often using dedicated lines or satellites.

A)encryptions
B)third-party certificates
C)trading partner agreements
D)electronic data interchange

Question 65

A(n)_____ is a contract by which a new party agrees to perform a duty that one of the original parties to a contract was already legally obligated to perform.

A)exculpatory clause
B)subcontract
C)specialty contract
D)waiver

Question 66

Which of the following dispute resolution methods favors those with more money for legal help?

A)Arbitration
B)Litigation (regular courts)
C)Litigation (small-claims court)
D)Mediation

Question 67

Exclusive rights given to the creator of a literary or artistic work to make use of that work is called a

A)trade secret.
B)copyright.
C)trademark.
D)patent.

Question 68

Which of these refer to a part of a contract in which a party to the contract states that he or she will not be responsible for certain actions?

A)Noncompete clause
B)Exculpatory clause
C)Hold harmless clause
D)Waiver

Question 69

Among which of the following dispute resolution methods do both parties represent themselves?

A)Litigation (small-claims court)and arbitration
B)Arbitration and litigation (regular courts)
C)Litigation (regular courts)and mediation
D)Litigation (small-claims court and regular courts)

Question 70

Identify this federal law that describes the steps publicly traded businesses must take to protect and provide their key financial information.

A)The Service Contract Act
B)Sarbanes-Oxley Act
C)Walsh-Healy Public Contracts Act
D)Davis-Bacon Act

Question 71

Hold harmless agreements is otherwise known as

A)waivers.
B)intellectual property.
C)noncompete clause.
D)exculpatory clause.

Question 72

According to the IRS,to be an independent contractor

A)the person must decide how the work must be done in consultation with the employer.
B)the person's expenses must be paid by the employer.
C)the person must perform a service that is central to the operation of the business.
D)the person must be employed for a distinct term.

Question 73

Distinctive words,slogans,or images,that identify a product and its origin is called a

A)trade secret.
B)copyright.
C)trademark.
D)patent.

Question 74

A formal dispute resolution method that operates using the court system,typically with a lawyer representing each party is called which of these?

A)Litigation
B)Arbitration
C)Mediation
D)Piercing the veil

Question 75

Which of these refers to a dispute resolution process held instead of court cases in which both sides present their case to a legal professional?

A)Litigation
B)Arbitration
C)Mediation
D)Piercing the veil

Question 76

Differences among state laws necessitates the need for

A)specialty contracts.
B)interstate contracts.
C)hold harmless agreements.
D)field contracts.

Question 77

Which of these refer to a part of a contract in which a person agrees not to open a certain type of business or seek employment doing certain things in a particular area for a period of time?

A)Noncompete clause
B)Exculpatory clause
C)Hold harmless clause
D)Waiver

Question 78

A grant by the U.S.government to an inventor for an idea that is new,useful,and nonobvious,giving the inventor the exclusive right to make,use,or sell his or her idea is called a

A)trade secret.
B)copyright.
C)trademark.
D)patent.

Question 79

Property coming from some sort of original thought such as trademarks and copyrights are called

A)property,plant,and equipment.
B)land and buildings.
C)tangible property.
D)intellectual property.

Question 80

Identify the patent that covers the look of a product and those parts that are essential or a part of the design.

A)Plant patents
B)Utility patents
C)Design patents
D)Nonprovisional patents