Business Administration 391: Business Law I
Midterm Examination
1. Barb sues John for negligence. The jury decides that John is a jerk but he wasn’t
negligent so they award Barb $0 in compensatory damages and $1,000,000 in punitive
damages. Will Barb be able to collect?
A.
B.
C.
D. 2. John carelessly bumps into Sally, knocking her to the ground. John has committed the
tort of negligence
A.
B.
C.
D. 3. Yes, a court will never overrule a jury verdict.
Yes, punitive damages are designed to punish bad behavior like John’s.
No, Barb cannot collect.
Yes, juries are allowed to award up to $5,000,000 before a judge reviews their
decision. only if Sally is injured
only if Sally is not injured
whether or not Sally is injured
under no circumstances Martha owes Verizon $2,500 in past due cell phone charges. Verizon may do which of
the following to collect the balance due
A. Call Martha at 7am to make sure they catch her before work and ask her to pay her
debt
B. Search her Facebook page to find her friends and reach out to them and ask them to
help collect the debt by encouraging Martha to call Verizon and make a payment
C. Call Martha at home and nterrupt Martha’s dinner at 7:30pm and ask for a payment
D. Pose as an attorney and threaten to sue Martha if she doesn’t pay 4. Susie sues ABC Corporation, DEF Corporation and GHI Corporation. She wins a
judgment of $1,000,000. The jury finds that while the defendants were liable, Susie was
also at fault and assigns her 70% of the liability and each defendant 10%. If Susie lived
in state with “pure” comparative negligence she could recover:
A.
B.
C.
D. 5. $700,000
$300,000
$900,000
$0 she may not recover anything Referring to Question 4, if Susie lived in a state with modified comparative negligence
she could recover:
A. $700,000
B. $300,000
C. $900,000 D. $0 she may not recover anything
6. Kidtoys, Inc. sells a toy truck with a dangerous defect. Phil buys the truck for his son but
discovers the defect before the child is injured. Phil files a suit against Kidtoys. Kidtoys
could ask for dismissal of the suit on the basis that Phil does not have
A.
B.
C.
D. 7. Sid files a suit against Tina. Before going to trial, the parties meet, with their attorneys to
represent them, to try to resolve their dispute. A third party helps them to reach an
agreement. This is
A.
B.
C.
D. 8. arbitration
litigation
mediation
negotiation Alan writes Beth a private letter falsely accusing her of stealing office supplies from their
employer, Consolidated Industries, Inc. Alan is liable for
A.
B.
C.
D. 9. jurisdiction
standing
sufficient minimum contacts
venue assault
libel
slander
none of the above Frank sells Bob a car. Frank knows that Bob has a lot of kids and that one of the biggest
features is Satellite radio because he can entertain his kids easily and always have music
playing. Frank knows that there is a fee for Satellite radio but tells Bob that the car is
fully equipped with that feature and never suggests that it isn’t part of the car. Bob is
beyond excited that he can finally have peace when he is driving and says great, so long
as the car has satellite radio included we have a deal. A few days later Bob discovers it
will cost him $40/month for satellite radio so he sues Frank for fraudulent
misrepresentation. Can Bob win?
A. Yes, because Frank knowingly made a false statement about a material fact that Bob
relied on to his damage
B. No, because Frank didn’t know Bob would use the radio right away.
C. No, it was Bob’s responsibility to call the radio company before he bought the car to
find out how much it would cost
D. No, but he could sue him for libel Business Administration 391: Business Law I
Midterm Examination
Page 2 of 8 10. Tom owns ABC Enterprises, a sole proprietorship. In a sole proprietorship, the liability
of the owner is
A. unlimited
B. limited to the amount of his or her original investment
C. limited to the amount of his or her original investment plus any subsequent capital
expenditures
D. limited by state statute and varies from state to state
11. Owen and Paula agree to operate an espresso stand. They purchase their supplies and
split the costs equally. They agree to share profits equally and decide that each of them
will have an equal say in how the stand will operate. Nothing is put in writing. Owen
and Paula have formed
a.
b.
c.
d. a partnership
a sole proprietorship
a corporation
nothing because their agreement was not reduced to writing 12. Ben is admitted to an existing partnership. Several debts and obligations incurred prior to
the date of his admission become due. Ben is
a. personally liable for those debts and obligations
b. liable for those debts and obligations only up to the amount of his capital
contributions
c. not required to contribute any money to the satisfaction of these debts and
obligations
d. liable for no more than $10,000 under the prior debt theory
13. American Goods, Inc., is a corporation. Responsibility for the day to day management of
American Goods is entrusted to
a.
b.
c.
d. the board of directors
the corporate officers and managers
the owners of the corporation
the shareholders Business Administration 391: Business Law I
Midterm Examination
Page 3 of 8 14. Nora is a shareholder of Property Investments, Inc (PI). A court might disregard PI’s
corporate entity and hold Nora personally liable for PI’s debts or obligations if
a. Nora refuses to accept personal responsibility for PI’s debts
b. Nora’s personal interests are commingled with PI’s interests to the extent that PI
has no separate identity and her personal and business activities are intertwined
c. PI calls more than the required number of shareholder meetings
d. PI is overcapitalized
15. Bob and Jenny both live in Wisconsin. Bob sues Jenny for copyright infringement. Can
Bob sue in Federal Court?
a. No because both are from the same state
b. Yes because both are from the same state
c. Yes because federal courts have exclusive jurisdiction over patent and copyright
cases
d. No because federal courts cannot handle copyright cases
16. Roland is a director of HMI, Inc. Which of the following actions by Roland would
constitute a breach of his duty of loyalty to the corporation?
a. On the advice of the HMI’s attorney and accountant, Roland votes for the
purchase of a controlling interest in Omcon Company. The purchase causes HMI
to suffer significant losses.
b. Roland knows that the board of directors is going to meet to decide on the
purchase of a controlling interest in Omcon Company. Roland does not approve
the purchase but fails to attend the meeting – although he does register his dissent
to the action with the secretary of the board.
c. Roland becomes a director of a noncompeting corporation
d. Roland purchases stock in a competing corporation and his business becomes
affiliated with the competing corporation Business Administration 391: Business Law I
Midterm Examination
Page 4 of 8 17. Whistle Company and Bells Corporation combine so that all that remains after the papers
have been signed is the Whistle Company. This is
a.
b.
c.
d. a merger
a consolidation
a purchase of assets
a limited partnership 18. Computer Networks, LLC is a limited liability company. Unless indicated otherwise on
Computer Networks’ federal tax form, the firm will be taxed as
a.
b.
c.
d. a corporation
a partnership
a sole proprietorship
none because only individuals pay taxes 19. Jerry works as a forklift operator for Wholesalers Warehouse Company. The maximum
number of hours that Jerry can work per week without overtime pay is
a.
b.
c.
d. fifteen
forty
fifty
sixty 20. Joe, who works as an employee for Interstate Trucking Corporation, suffers an injury in
an accident. Joe will be compensated under state workers’ compensation laws
a.
b.
c.
d. only if the injury occurred off the job
only if the injury occurred on the job
whether the injury occurred on or off the job
only if his injury causes him to miss work for more than 12 weeks 21. Northwest Fisheries, Inc., employs fifty-five workers in at seven locations in two states.
Under the Family and Medical Leave Act of 1993, Northwest must provide its
employees, during any twelve-month period, family or medical leave of up to
a.
b.
c.
d. twelve days
twelve weeks
twelve months
eighteen months Business Administration 391: Business Law I
Midterm Examination
Page 5 of 8 22. Eve believes that her employer, Southwest Software, Inc. (SSI), has discriminated against
her on the basis of gender. Eve files a suit against SSI under Title VII. To establish a
prima facie case of employment discrimination, Eve must show that
a.
b.
c.
d. discriminatory intent motivated SSI’s action
Eve is a member of a protected class
SSI has no legal defenses against her claim
All of the above 23. Abby is a salesperson for Regional Sales, Inc. Ben is also a salesperson. Carl is Abby
and Ben’s supervisor. Dave is a Regional Sales customer. If Abby is the victim of sexual
harassment, Regional Sales may be liable for such harassment by
a.
b.
c.
d. Ben or Carol only
Ben or Dave only
Dave only
Ben, Carl, or Dave 24. Mercy Hospital does not take any action to prevent sexual harassment of its employees.
Mercy may be liable for such harassment by
a.
b.
c.
d. a supervisor or employee only
a customer only
a supervisor, an employee, or a customer
none of the above 25. Joan, a forty-five year old, is replaced in her job at Omega Company by Terry. Joan files
a suit against Omega under the Age Discrimination in Employment Act. To establish a
prima facie case of discrimination, Joan must show that Terry
a.
b.
c.
d. is not qualified for the position and is paid less than Joan was
is younger than Joan
both a and b
none of the above 26. Paul believes that American Equipment Corporation, his employer, subjected him to
discrimination on the basis of his age. For the Age Discrimination in Employment Act to
apply
a.
b.
c.
d. the age discrimination must have been intentional
American must have had at least 1,000 employees
Paul must be 40 years of age or older
Paul must be 30 years of age or older
Business Administration 391: Business Law I
Midterm Examination
Page 6 of 8 27. Kay, a person with a disability, is an employee of Midstate Transport Company. When
the firm’s elevator is taken out of service, Kay cannot get to her office. Midstate
discharges Kay, who then sues the firm on the ground of disability-based discrimination.
To prevail under the Americans with Disabilities Act, Kay must show that
a.
b.
c.
d. it would be “significantly expensive” to put the elevator back in service
Kay can compete effectively against others with disabilities
Midstate refused to make a reasonable accommodation for Kay
All of the above 28. Ann’s Retail, a women’s clothing store, hires female attendants to assist clients in the
store’s dressing rooms. Larry, a male, applies for, and is refused, a job as an attendant.
Larry then sues Ann’s Retail for employment discrimination under Title VII. Against the
suit, the store has
a.
b.
c.
d. an affirmative action defense
an after-acquired evidence defense
a bona fide occupational qualification defense
a business necessity defense 29. Jill, an accountant for U.S. Molecular, Inc. (USM), learns of undisclosed company plans
to market a revolutionary new computer that uses atoms and molecules instead of chips
and wires. Jill buys 1,000 shares of USM stock. She reveals the company plans to Ken,
who buys 500 USM shares. Ken tells Laura, who buys 100 shares. Laura knows that
Ken got his information from Jill. When USM publicly announces its new computer,
they all sell their stock for a large profits. Who is subject to liability, under the Securities
and Exchange Act of 1934, for insider trading?
a.
b.
c.
d. Jill only
Ken only
Jill and Ken
Jill, Ken and Laura 30. Doug and Patty work in the same job on the lie at Assembly Products Company. Their
pay is based on the quality and quantity of production. Most of the time, Doug produces
more and is paid more than Patty. Under the Equal Pay of Act of 1963,
a. Doug’s pay must be reduced to match Patty’s pay
b. Patty’s pay must be increased to match Doug’s pay
c. Either A or B
d. None of the above Business Administration 391: Business Law I
Midterm Examination
Page 7 of 8 Short Answer Questions:
Please answer the following questions in a few sentences. You do NOT need to write multiple
paragraphs. Feel free to type your answers or submit written answers on additional sheets of paper.
1. Describe an example, other than one from the book, of proximate cause and how it would be
used in a negligence case.
2. Explain the difference between mediation and arbitration.
3. What is a bona fide occupational qualification?
4. Give an example of a chain-style business operation and explain why there are laws
designed to product these types of businesses.
Essay Questions:
Please answer the following questions fully. It does not need to be pages upon pages, but you must
cover all the elements for each topic. Feel free to type or submit written answers on additional
sheets of paper.
1. 2. Holly owns Holly’s Health Studio a gym that offers many types of fitness classes. One
class that is offered is group weightlifting. One day the 9am class consists of 20 people and
is very crowded. Immediately after the 9am class leaves the 10am class comes in. Between
the number of people in the 9am and the fact that it is 102 degrees outside the floor in the
studio is full of water puddles of sweat. During the 10am class Billy slips on a puddle of
sweat and falls into Susan who is his workout partner for that exercise. Billy twisted his
ankle and Susan broke her arm when she tried to catch herself during the fall. Who can
Billy sue and why? Who can Susan sue and why? What defenses exist for anyone you said
could be sued?
Molly worked as a warehouse employee for a pharmaceutical company. As a condition of
her employment, the pharmaceutical company required her to get a mumps vaccine. Molly,
believed that the vaccination would violate her religious beliefs and declined to be
vaccinated. As a result, the company withdrew its offer of employment. Molly claimed
that the warehouse discriminated against her on the basis of religion. Do you agree? If so,
why? If not, why not? Business Administration 391: Business Law I
Midterm Examination
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