This document provides a study guide for the BUS 415 final exam, including two sets of multiple choice questions and answers. It directs students to a website for additional study materials and classes. The questions cover topics like stare decisis, alternative dispute resolution, corporations as legal persons, the relationship between law and ethics, and other business law concepts.

1. BUS 415 Final Guide - 2 Sets
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BUS 415 Final Guide - 2 Sets
Set 1
1) The doctrine of stare decisis concerns
A. staring at the facts of a case for a long time to make
sure the correct decision is made.
B. making sure to do adequate research before making a
legal decision
C. following precedents so that legal principles
announced in a case are used to determine later cases
D. using constitutional law to render a decision

2. 2) The form of alternative dispute resolution wherein
the parties hire someone to review the evidence and
make a decision that is binding upon the parties is
called
A. arbitration
B. settlement conference
C. negotiation
D. conciliation
3) A corporation is considered a citizen of what state?
A. The state where the president of the corporation lives
B. It is not a citizen because it is a business
C. The state where the majority of the employees live
D. The state where it filed its Articles of Incorporation
4) Which of the following statements is true regarding
the relationship of law and ethics?
A. Depending on the circumstances, the law can require
a higher, lower, or the same standard of conduct as
ethics demands.
B. The legal requirements will almost always be the
same as the ethical requirement because the law is
based on ethical standards.
C. In some cases, ethics will require a higher standard of
conduct than the law, but never vice versa.
D. In some cases, the law will require a high standard of
conduct than ethics, but never vice versa.
5) Which of the following is correct with regard to the
relationship between law and ethics?

3. A. Although much of law is based on ethical standards,
not all ethical standards have been enacted as law.
B. The rule of law and the golden rule of ethics demand
the same response.
C. The law may not permit something that would be
ethically wrong.
D. Lawful conduct is always ethical conduct.
6) The Federal False Claims Act is also known as
A. The Statute of Limitations
B. The Sarbanes-Oxley Act
C. The Whistleblower Statute
D. The Statute of Frauds
7) Harry Hoosier, an Indiana resident, drives his family
to Florida for spring vacation. When he is at a red light,
Freddie Floridian, a Florida resident, is unable to stop in
time and his vehicle impacts Harry’s car from the rear.
No one is hurt and Harry’s vehicle suffers approximately
$10,000 in damages. Which is correct?
A. Harry can sue Freddie in State but not Federal Court
in Florida or Indiana.
B. Harry can sue Freddie in Federal Court in Florida but
not in Indiana.
C. Harry can sue Freddie in State Court in Florida or
Indiana.
D. Harry can sue Freddie in State but not Federal Court
in Florida but not in Indiana.
8) A defendant fails to answer a civil lawsuit, what is

4. likely to happen?
A. The court will order that the defendant go to jail until
he or she agrees to answer.
B. A court will contact the defendant and ask him to
answer the lawsuit.
C. The court will grant a default judgment against the
defendant.
D. The court will dismiss the case.
9) If a defendant files a motion for summary judgment in
a civil case, what is the defendant saying?
A. That even if what the plaintiff says is true, there is no
basis for judgment against the defendant
B. That the plaintiff’s claims are false
C. That the court has no jurisdiction to decide the case
D. That the case is ready to go to the jury
10) Monica owed Bob $500, which was more than a year
overdue. Bob got drunk at a party and told everyone
that Monica had owed him $500 for over a year. Can
Monica recover from Bob for defamation?
A. No, because Bob had been drinking
B. Yes, because Bob abused his conditional privilege
C. No, because Bob was telling the truth
D. Yes, because Bob communicated the statement to
third persons
11) Persons who sell abnormally dangerous products
such as poisons or power tools
A. are liable to persons they injure even if they are not
negligent

5. B. are generally not liable for the injuries they cause
because otherwise no one would undertake these
activities
C. are liable only if all elements of negligence are proven
against them
D. are liable only if they intended to cause a particular
injury
12) Carlos is an investment broker, operating as a sole
proprietor. William is his employee. Juanita, a new
client, gives William $1,000,000 in cash to invest for her,
and William gives her a receipt. Instead of investing the
money, William takes the $1,000,000 and leaves the
country. Carlos learns of the transaction for the first
time when Juanita appears at the office a month later to
discuss the allocation of her investments, and shows him
the receipt signed by William. Juanita is upset to learn
that Carlos does not have her money, and tells him she is
going to sue. What will be the outcome of Juanita’s suit
against Carlos?
A. Juanita will lose the case because she cannot find
William to serve him with a lawsuit.
B. Juanita will recover a judgment against Carlos for the
entire amount.
C. Juanita will lose the case because was not informed of
the transaction.
D. Juanita will recover a judgment against Carlos for half
the missing money.
13) Mary’s mother agrees to give her a new car if Mary
maintains an A average for her senior year of college.

6. Mary does in fact earn an A average, but when she asks
for the car, Mary’s mother tells Mary that she just told
Mary that to motivate her and she will not be getting a
car. Mary sued her mother alleging a breach of contract.
Who will win this suit?
A. Mary wins but only if she can prove that the fair
market value of the time she spent studying was equal to
the value of the car.
B. Mary wins because her actions in reliance upon her
mother’s promise constitute consideration.
C. Mary’s mother wins because there was no
consideration for her promise.
D. Mary’s mother wins because Mary had a preexisting
obligation to do her best.
14) Where a contract calls for action that violates a
statute, in a breach of contract case the court will
A. order payments so that the parties to the illegal
contract share any losses equally
B. order both parties to return any consideration
received
C. impose the appropriate criminal penalty
D. ignore the contract and leave the parties where they
are
15) Ray and Nikki are in fifth grade together. Ray gets a
new skateboard for his birthday and offers to sell Nikki
his old one for $15. Nikki pays the money, and Ray gives
her the old skateboard. Is this a valid contract?
A. This is an unenforceable contract because Ray and

7. Nikki can not file a lawsuit.
B. This is a voidable contract because the parties to the
contract were minors.
C. This is a valid contract. There was a fair consideration
paid for the skateboard, and both parties got what they
wanted.
D. This is a void contract because the parties to the
contract were minors.restraint of trade.
16) A retailer ordered some inventory by phone from a
manufacturer. The order was for 1,000 machines from
the manufacturer’s inventory at $300 each. The
manufacturer sent the retailer a fax a few moments later
detailing the order. The retailer looked at the fax and
was satisfied that it stated the terms of the contract, but
never responded in any way. When the goods were
delivered on time a month later, the retailer refused to
accept them, asserting that the contract was
unenforceable.
A. The contract is enforceable under the written
confirmation rule.
B. The contract is enforceable because it would be
unconscionable not to enforce it.
C. No writing is needed because of one of the exceptions
to the Statute of Frauds.
D. The contract is unenforceable because the retailer
has not signed it in writing.
17) Patty went to a used car lot and purchased a car.
Two weeks later, the transmission fell out as she was

8. driving to work. She contacted the dealer to complain,
but the dealer told her the car had been sold “As Is”. The
dealer advised her to check in the glove compartment of
the car, where Patty found a notice that stated, “This
vehicle is sold AS IS. The purchaser will bear the
expense of any repairs that are necessary to this
vehicle.” Does the notice mean that Patty has no rights
against the dealer with respect to the condition of the
vehicle?
A. No, the notice is there for subsequent purchasers of
the car.
B. No, the notice was not conspicuously displayed on the
vehicle.
C. Yes, the notice operates to void any warranty on the
vehicle.
D. Yes, Patty should have inquired about the warranty
when she bought the car.
18) Ted’s Gifts and Sweets enters into a written contract
with Bannon Candies to supply Ted’s with 60 dozen
boxes of coconut clusters each month for sale to the
public. The agreement contained an integration clause.
Before the first delivery under the contract, Ted and his
warehouse manager called Debbie, the Bannon’s
account representative, to request that the candies be
delivered in special Valentine boxes. Debbie told Ted,
“Don’t worry, I’ll tell the shipping department to take
care of that.” When the candies were delivered, they
were in standard cardboard boxes. Ted called Bannon
and threatened to sue for breach of contract. Will Ted

9. prevail in his suit?
A. No, Ted will not prevail because his attempt to modify
the agreement was not effective.
B. No, Ted should have written a letter to change the
type of boxes in the contract.
C. Yes, Ted will prevail because he has a witness to the
telephone call.
D. Yes, Ted made a valid modification to the parties’
original agreement.
19) Mary and George are a husband and wife who reside
in a community property state. For 30 years, George has
been the sole provider while Mary cared for the children
and home. George dies, leaving a will that leaves his
estate to their three children, now adults. How is the
ownership of the house affected?
A. Mary and the adult children each own a quarter
interest in the house.
B. Mary owns half interest in the house, and the adult
children own the other half.
C. Mary and the adult children become tenant in the
entirety.
D. Mary owns the entire house, as the community
survivor.
20) Jane and Bill are married. They purchase a house
and lot as tenants by the entirety. Then Jane is killed in a
car accident. Her will leaves everything to her sister,
Ruth. What will happen to Jane’s interest in the
property?

10. A. Bill will have to buy out Ruth’s interest in the
property.
B. Ruth will own the property with Bill as joint tenants.
C. Bill will be the sole owner of the property.
D. Ruth will own the property with Bill as tenants by the
entirety.
21) Melinda owns a rental property. She deeds the
property to her son Jack, by warranty deed. Ten years
later she sells the property to Brenda, her neighbor, and
signs a quitclaim deed to the property in favor of
Brenda. Who owns the property?
A. Melinda still owns the property, because neither deed
was effective.
B. Jack owns the property.
C. Brenda owns the property.
D. Jack and Brenda each own half the property.
22) Which is true of a limited partnership?
A. A partnership is limited to doing business in the state
of incorporation.
B. The liability of all owners is unlimited.
C. At least one of the partners must be a general partner
with unlimited personal liability.
D. The liability of all owners is limited to the amount of
their contribution to the business.
23) Which of the following is true when a general
partnership is converted to an LLC?
A. The members will retain unlimited personal liability
for obligations incurred while the business was a

11. partnership.
B. The property must be sold to a third party who then
immediately sells it to the LLC.
C. The profit and loss sharing terms must remain the
same as they were in the partnership.
D. The conversion can be made retroactive for up to two
years.
24) John and Jake are partners in a bowling alley.
Business has been bad lately, and they need more
operating capital, so they invite Lisa to become a
partner. What liability does Lisa have for partnership
debts?
A. Her liability is limited to the amount she invested.
B. She owes one third of all the partnership debts.
C. She owes an equal share of all partnership debts.
D. She owes an equal share in all debts incurred after
she became a partner.
25) The alter ego doctrine provides as follows:
A. That protection from personal liability can be
forfeited if corporate formalities are not observed
B. That a corporation becomes the alter ego of its owner
C. That the board of directors is the alter ego of a
corporation
D. That the president is the decision maker of a
corporation
26) Rita is the sole shareholder of an auto repair shop
that is incorporated. She is at work one day when her

12. sister comes in and tells her she needs $100 for
schoolbooks. Rita looks in her wallet, and seeing that it
contains no money, opens the cash register and takes
out $100, which she hands to her sister. The sister looks
worried, but Rita tells her, “Don’t worry; I take money
out of the cash register all the time for my personal
expenses. It’s my business, so I can take money out
whenever I want.” Her customer, who is waiting to pick
up his car, tells Rita that she is risking the piercing of the
corporate veil. Is the customer correct?
A. Yes, Rita is co-mingling personal assets with
corporate assets.
B. No, Rita is the only shareholder and can do what she
wants.
C. No, the customer is wrong.
D. Yes, Rita is not the board of directors.
27) Fred wants to start an adult daycare business, but is
worried about potential liability. He hires an attorney to
incorporate his business, but does not want to keep
paying the attorney, so he dismisses the attorney as
soon as the incorporation is accomplished. What else
must Fred do to make sure he holds on to his protection
from personal liability?
A. He must hire an independent contractor to take over
the care of the patients.
B. He must maintain the corporate formalities and
records.
C. He must post a disclaimer, advising persons who visit
the property that the management is not responsible for

13. injuries to guests.
D. He must buy malpractice insurance.
28) The uniform law, issued in 1984 by the Committee
on Corporate Laws of the American Bar Association, that
regulates the formation, operation, and termination of
corporations is
A. The Standard Incorporation Act
B. The Model Business Corporation Act
C. The Revised Model Business Commercial Code
D. The Uniform Commercial Code
29) The DEF Corporation is incorporated in Texas. It
wishes to do business in Oklahoma. Before DEF can
legally do businesses in Oklahoma, which of the
following must it do?
A. DEF must domicile itself in Oklahoma.
B. Nothing; DEF automatically has constitutional rights
to do business in Oklahoma.
C. DEF must qualify (register) to do business in
Oklahoma.
D. DEF must incorporate in Oklahoma.
30) A particular issue of stock carries a stated dividend
rate of 8 %; that if this dividend is not paid during a
particular year, it will be paid in a subsequent year
before common stock dividends are paid; and that upon
liquidation of the corporation, the owner will receive
$300 per share before the common stockholders get
anything. This stock is

14. A. cumulative preferred stock with a liquidation
preference
B. noncumulative preferred stock with a liquidation
preference
C. preferred stock
D. common stock
31) Marie works as a receptionist for a plumbing
company. She works from 9:00 a.m. to 6:00 p.m. on
Monday through Friday. She earns $12 per hour, and is
told how to do her job and what she should be working
on at any particular time. Her boss does not withhold
any taxes from her paycheck. Which of the following is
true?
A. Marie would be treated as an independent contractor
because she is paid hourly.
B. Marie would be treated as an independent contractor
because the employer doesn’t take any taxes out of her
check.
C. Marie would be treated as an employee because of the
control exercised by the plumbing company over her
work.
D. Marie would be treated as an employee because she is
paid for the work that she does.
32) Which of the following people is protected from
employment discrimination on the basis of age?
A. A 30-year-old person who wants a job as a waitress
B. A 10-year-old person who wants a job as a bartender
C. A 50-year-old person who wants a job as an
accountant

15. D. A 90-year-old person who wants a job as an airline
pilot
33) Which of the following rejected applicants may have
a valid claim for discriminatory hiring practices?
A. A trucking company did not hire a truck driver
because she was pregnant.
B. A university did not hire a 22-year-old woman to be a
director of faculty because she was too young.
C. A Catholic school did not hire a teacher because he
was not Catholic.
D. A public health service did not hire a registered nurse
because his shaking hands prevented him from
administering injections.
34) Under the employment at will doctrine, employment
relationship can be terminated
A. only by mutual agreement of the employer and
employee
B. by either the employer or the employee
C. by the employer only
D. by the employee only
35) Company employee handbooks have been found to
amount to a(n) ______________ exception to the employment
at will doctrine.
A. public policy
B. contract
C. tort
D. apparent

16. 36) Which of the following statements best describes the
workers’ compensation rules?
A. The employee will collect for all work-related
injuries, and will not need to prove negligence on the
part of the employer.
B. The employee has the choice to sue or proceed under
the workers’ compensation statute.
C. The employer is liable for employment related
injuries only if negligent.
D. The employer can avoid liability if the injured
employee was contributory negligent.
37) The law gives the consumer what protection from
aggressive tactics of door-to-door salespersons?
A. The customer may send the product back for a refund
within 30 days.
B. The customer may keep the product without paying
for it.
C. The customer may file a police report.
D. The customer may rescind the transaction within 3
days.
38) In general, trademark protection is granted based
on whether the trademark is
A. understandable to the general public
B. the original creation of the trademark registrant
C. distinctive
D. novel and useful

17. 39) Brian visits an office supply store after reading an
advertisement, which shows a computer for sale at an
incredibly low price. He asks to see the advertised
computer. The sales person tells him that, although the
ad just came out, the store has already run out of that
particular computer. The salesman gets a different
computer, and tries to interest Brian in this computer.
The salesman is guilty of the following deceptive trade
practice:
A. False description of the product
B. Deceptive advertising
C. Selling unsafe products
D. Product recall
40) Peter has a bus company, and hires drivers to drive
his buses. He does not take any taxes out of their
paychecks. The bus drivers have to drive the buses
according to a particular schedule, and must follow a
certain route, and follow the driving rules that are listed
in the Driver’s Manual that Peter has provided. What is
the employment status of the drivers?
A. They are principals.
B. They are employees.
C. They are partially disclosed agents.
D. They are independent contractors.
41) Barbara owns a dairy farm. One of her pastures
needs cutting, so she hires Jed to do the work for $150.
While oiling his riding mower, Jed hurts his arm, so he
hires Bill to cut the pasture for $130. Bill takes his own

18. mowing machine to Barbara’s pasture. During the
mowing, Bill damages the fence, and some of the dairy
cattle are later able to pass directly to a neighbor’s corn
field, where they eat some of the corn, and trample the
crop, causing the crop to be almost a total loss. Who is
responsible for the damages caused by the cattle?
A. Jed is responsible, because Bill is Jed’s employee.
B. Barbara is responsible, because Jed is an independent
contractor.
C. Bill is responsible, because he is an independent
contractor.
D. Barbara is responsible, because they are her cattle.
42) William owns his own business, performing
document delivery for various clients. He is driving in
his delivery van, taking some important documents to
the courthouse for an attorney’s office, when he makes a
wrong turn and causes an accident, damaging Ruth’s car.
May Ruth recover a judgment against the attorney’s
office?
A. Yes, because the attorney has more money than
William, so Ruth will be able to collect
B. No, because William was on a dual-purpose mission
C. No, because William is an independent contractor
D. Yes, because William was on an errand for the
attorney at the time he caused the accident
SET 2

19. 1) The doctrine of stare decisis concerns
A. staring at the facts of a case for a long time to make
sure the correct decision is made.
B. following precedents so that legal principles
announced in a case are used to determine later cases
C. making sure to do adequate research before making a
legal decision
D. using constitutional law to render a decision
2) Which clause in the U.S. Constitution is most used in
terms of regulating business activities?
A. The Bill of Rights
B. The Supremacy Clause
C. The First Amendment
D. The Commerce Clause
3) The Federal Trade Commission is an example of
A. a temporary commission created by executive order
that has become permanent
B. a federal agency created by the federal government
C. a corporation subsidized by the federal government
D. a branch of the U.S. Supreme Court
4) Which of the following is correct with regard to the
relationship between law and ethics?
A. Although much of law is based on ethical standards,
not all ethical standards have been enacted as law.
B. The rule of law and the golden rule of ethics demand
the same response.
C. The law may not permit something that would be

20. ethically wrong.
D. Lawful conduct is always ethical conduct.
5) Which of the following statements is true regarding
the relationship of law and ethics?
A. Depending on the circumstances, the law can require
a higher, lower, or the same standard of conduct as
ethics demands.
B. The legal requirements will almost alwaysbe the
same as the ethical requirement because the law is
based on ethical standards.
C. In some cases, ethics will require a higher standard of
conduct than the law, but never vice versa.
D. In some cases, the law will require a high standard of
conduct than ethics, but never vice versa.
6) The Federal False Claims Act is also known as
A. The Statute of Limitations
B. The Sarbanes-Oxley Act
C. The Whistleblower Statute
D. The Statute of Frauds
7) A defendant fails to answer a civil lawsuit, what is
likely to happen?
A. The court will order that the defendant go to jail until
he or she agrees to answer.
B. A court will contact the defendant and ask him to
answer the lawsuit.
C. The court will grant a default judgment against the
defendant.
D. The court will dismiss the case.

21. 8) The legal authority of a court to make orders that are
binding upon the parties is called
A. Enumerated jurisdiction
B. In Rem jurisdiction
C. Personal jurisdiction
D. Quasi-in-Rem jurisdiction
9) What facts justify a state court’s exercising personal
jurisdiction over an out-of-state defendant?
A. The state is most convenient for the plaintiff.
B. The plaintiff lives in that state.
C. The defendant has sufficient contacts with the state
such that the state’s exercise of personal jurisdiction of
him in not unfair.
D. The defendant lives within 100 miles of that state.
10) What is the definition of a tort?
A. Any civil wrong that allows the injured person to
recover damages
B. Any violation of an ethical duty
C. Any crime or misdemeanor
D. Any action done in violation of a prior agreement,
which allows the victim to recover damages
11) Damages intended to punish a defendant and deter
the defendant and others from engaging in the same
tortious conduct in the future are called
A. nominal damages
B. penalty damages
C. retribution damages
D. punitive damages

22. 12) Persons who sell abnormally dangerous products
such as poisons or power tools
A. are liable to persons they injure even if they are not
negligent
B. are liable only if they intended to cause a particular
injury
C. are generally not liable for the injuries they cause
because otherwise no one would undertake these
activities
D. are liable only if all elements of negligence are proven
against them
13) Ray and Nikki are in fifth grade together. Ray gets a
new skateboard for his birthday and offers to sell Nikki
his old one for $15. Nikki pays the money, and Ray gives
her the old skateboard. Is this a valid contract?
A. This is an unenforceable contract because Ray and
Nikki can not file a lawsuit.
B. This is a void contract because the parties to the
contract were minors.restraint of trade.
C. This is a voidable contract because the parties to the
contract were minors.
D. This is a valid contract. There was a fair consideration
paid for the skateboard, and both parties got what they
wanted.
14) Which of the following best describes how e-mail
contracts are viewed under the law?
A. E-mail contracts are generally treated similarly to
contracts negotiated by other means.
B. E-mail contract are valid only for contract less than

23. $500.
C. E-mail contracts are valid so long as both parties sign
a written copy printed out from the e-mail.
D. E-mail contracts for goods can be valid, but not email
contracts for services.
22) Which of the following is true when a general
partnership is converted to an LLC?
A. The members will retain unlimited personal liability
for obligations incurred while the business was a
partnership.
B. The profit and loss sharing terms must remain the
same as they were in the partnership.
C. The conversion can be made retroactive for up to two
years.
D. The property must be sold to a third party who then
immediately sells it to the LLC.
23) Which of the following is true of a limited liability
company?
A. Limited liability companies are automatically taxed
like corporations.
B. Documents do not have to be filed with the state to
create one.
C. Limited liability companies have limited duration.
D. Limited liability companies are managed by members
or managers.
24) Which is true of a limited partnership?
A. A partnership is limited to doing business in the state
of incorporation.

24. B. At least one of the partners must be a general partner
with unlimited personal liability.
C. The liability of all owners is unlimited.
D. The liability of all owners is limited to the amount of
their contribution to the business.
25) Rita is the sole shareholder of an auto repair shop
that is incorporated. She is at work one day when her
sister comes in and tells her she needs $100 for
schoolbooks. Rita looks in her wallet, and seeing that it
contains no money, opens the cash register and takes
out $100, which she hands to her sister. The sister looks
worried, but Rita tells her, “Don’t worry; I take money
out of the cash register all the time for my personal
expenses. It’s my business, so I can take money out
whenever I want.” Her customer, who is waiting to pick
up his car, tells Rita that she is risking the piercing of the
corporate veil. Is the customer correct?
A. Yes, Rita is co-mingling personal assets with
corporate assets.
B. No, the customer is wrong.
C. Yes, Rita is not the board of directors.
D. No, Rita is the only shareholder and can do what she
wants.
26) A corporation is required to maintain a separate
identity because
A. if they do not maintain the separate identity, they
become alien corporations
B. corporations are entities created by statute to limit
the personal liability of investors

25. C. corporations can act only through officers
D. corporations have perpetual existence
27) Fred wants to start an adult daycare business, but is
worried about potential liability. He hires an attorney to
incorporate his business, but does not want to keep
paying the attorney, so he dismisses the attorney as
soon as the incorporation is accomplished. What else
must Fred do to make sure he holds on to his protection
from personal liability?
A. He must hire an independent contractor to take over
the care of the patients.
B. He must maintain the corporate formalities and
records.
C. He must buy malpractice insurance.
D. He must post a disclaimer, advising persons who visit
the property that the management is not responsible for
injuries to guests.
28) If a corporation is properly incorporated in one
state and wants to do business in second state, the
corporation
A. may be required to obtain a certificate of authority
from the second state
B. must incorporate in the second state
C. must do nothing because being incorporated in one
state entitles the corporation to do business in all states
D. must register with the Interstate Commerce
Commission

26. 29) Rover Corporation is a regular corporation that has
not elected S corporation status. In 1992, Rover earned
$100,000; in 1993, Rover distributes $50,000 to its
shareholders. Which of the following best describes the
tax consequences to rover and its shareholders?
A. Rover is taxed on $100,000 in 1992; the shareholders
are taxed on $50,000 in 1993.
B. The shareholders are taxed on $100,000 in 1992;
Rover is not subject to tax.
C. Rover is taxed on $100,000 in 1992; the shareholders
are not subject to tax.
D. Rover is taxed on $100,000 in 1992; the shareholders
are taxed on $50,000 in 1992.
30) What types of business can be converted to an LLC?
A. Corporations, general partnerships, and limited
partnerships
B. General partnerships only
C. General partnerships and limited partnerships only
D. Corporations and limited partnerships only
31) What is the primary purpose of the Occupational
Safety and Health Act?
A. Its purpose is to promote the provision of healthcare
benefits by employers having more than 15 employees.
B. Its purpose is to protect the safety of workers and the
safety of those who purchase the employer’s products or
services.
C. Its purpose is to reduce the application of industry
standards to workplace conditions.
D. Its purpose is to compel employers to provide a work

27. environment that is free from recognized hazards that
could cause death or serious injury.
32) Which of the following best describes the status of
the employment at will doctrine in the United States
today?
A. It still applies today, but only to employees who are
expressly told that they are an at-will employee when
they are hired.
B. It applies in most states to most employment
relationships, but there are many exceptions that limit
its application.
C. It applies more today than in the last century, and the
quantity of corporate layoffs is evidence of this.
D. It today applies only to the employer, although in the
past it applied to both the employee and employer.
33) Which of the following rejected applicants may have
a valid claim for discriminatory hiring practices?
A. A university did not hire a 22-year-old woman to be a
director of faculty because she was too young.
B. A public health service did not hire a registered nurse
because his shaking hands prevented him from
administering injections.
C. A Catholic school did not hire a teacher because he
was not Catholic.
D. A trucking company did not hire a truck driver
because she was pregnant.
34) Which of the following statements best describes the
workers’ compensation rules?

28. A. The employee has the choice to sue or proceed under
the workers’ compensation statute.
B. The employer can avoid liability if the injured
employee was contributory negligent.
C. The employer is liable for employment related
injuries only if negligent.
D. The employee will collect for all work-related
injuries, and will not need to prove negligence on the
part of the employer.
35) Which of the following is a correct statement of the
requirements for a bona fide occupational
qualification?
A. Rationally based and evenly applied
B. Job related and cost effective
C. Job related and nondiscriminatory
D. Job related and a business necessity
36) What is generally the effect when an exception to the
employment at will doctrine applies?
A. Employees can be prohibited from quitting a job.
B. There is some sort of limitation on at least one party’s
ability to terminate the employment relationship.
C. The Fair Labor Standards Act will set the terms, such
as pay, for the employment relationship.
D. The employer is required to hire a certain employee.
37) In general, trademark protection is granted based
on whether the trademark is
A. distinctive
B. the original creation of the trademark registrant

29. C. understandable to the general public
D. novel and useful
38) What federal legal protection is there with respect
to trade secrets?
A. Trade secrets are protected under the Economic
Espionage Act of 1996.
B. Trade secrets are protected under the federal
copyright laws.
C. Trade secrets are protected under the Trade Secret
Protection Act of 1952.
D. Trade secrets are protected under the federal patent
laws.
39) The Biosafety Protocol provides as follows:
A. Employees must wash hands when preparing food.
B. Medical waste must be safely disposed.
C. Vaccinations must contain live virus.
D. Genetically engineered food must state that it may
contain modifications.
40) Patricia owns a Mexican restaurant, famous for
home-made tortillas. The tortillas are made by several
women, who make the tortillas in their homes and sell
them to the restaurant. Some of the women have been
making tortillas for Patricia for years, while others have
just started. Patricia pays for the tortillas by the dozen.
What is the nature of the employment relationship
between the women and Patricia?
A. The women are agents of the restaurant.
B. The women are part-time employees of the

30. restaurant.
C. The women are independent contractors.
D. The women are employees of the restaurant.
41) Rachel and Roy are married. Phillip is a private
investigator, who is following Rachel at Roy’s request, to
see if she is involved in another relationship. At one
point, Rachel enters a “women only” gym, where Phillip
cannot follow. Phillip calls his friend Sue and tells her
that if she will enter the gym and observe Rachel, Roy
will pay her $25 an hour for her services. Sue goes to the
gym and observes Rachel for 3 hours, after which she
bills Roy for $75. Must Roy pay Sue’s bill?
A. No, because Sue is not a licensed private investigator
B. Yes, because Sue is entitled to collect on a quasi-
contract basis
C. No, because Roy is not liable for contracts entered into
by Phillip
D. Yes, because Phillip was acting as Roy’s agent when he
hired Sue
42) Barbara owns a dairy farm. One of her pastures
needs cutting, so she hires Jed to do the work for $150.
While oiling his riding mower, Jed hurts his arm, so he
hires Bill to cut the pasture for $130. Bill takes his own
mowing machine to Barbara’s pasture. During the
mowing, Bill damages the fence, and some of the dairy
cattle are later able to pass directly to a neighbor’s corn
field, where they eat some of the corn, and trample the
crop, causing the crop to be almost a total loss. Who is
responsible for the damages caused by the cattle?

31. A. Bill is responsible, because he is an independent
contractor.
B. Jed is responsible, because Bill is Jed’s employee.
C. Barbara is responsible, because Jed is an independent
contractor.
D. Barbara is responsible, because they are her cattle.