Biz Law Final Exam Review

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Topic:

Explain the major components of the legal system.

Question: Which of the following is a distinguishing feature of a common law legal system?

Answer Rationale: Although in the U.S. legal system guilt must be proven beyond a reasonable doubt in criminal matters and there is an appeal process, neither of these qualities is integral to a common law legal system. The opposite of a common law legal system is a legal system where the sole source of law is a comprehensive civil code. Civil code is not the sole source of law.

Topic:

Differentiate between the legal forms of business.

Question: If an LLC fails to follow formalities such as keeping minutes of meetings, which of the following is true?

Answer Rationale: Limited Liability Companies are not required to maintain the formalities of corporation.

Topic:

Differentiate among nonjudicial methods of alternative dispute resolution.

Question: Which of the following is a form of alternative dispute resolution allows both parties to see the strengths and weaknesses of both sides of the case through the presentation of evidence?

Answer Rationale: Conciliation, mediation, and negotiated settlement do not involve the presentation of evidence.

Topic:

Differentiate among nonjudicial methods of alternative dispute resolution.

Question: A ___________ is a court-appointed party who conducts a private trial and renders a judgment.

Answer Rationale: Arbitrators, negotiators, and fact-finders may or may not be court-appointed. Negotiators and fact finders do not render judgments.

Topic:

Identify potential tort risks that arise in the business context.

Question: There are no accountants on the board of the Oriole Corporation, a privately held corporation. The board routinely relies on a Certified Public Accountant (CPA) to explain the financial situation of the corporation. The board does not do an independent analysis of the CPA¿s report. In these circumstances, the board is

Answer Rationale: The answer should indicate an understanding of the responsibilities of the board regarding proper oversight of accounting professionals and the company's financial posture.

Topic:

Identify potential tort risks that arise in the business context.

Question: Self-dealing by a director of a corporation can best be described as:

Answer Rationale: Directors do have duties to the corporation. The good business judgment rule deals primarily with third parties outside the corporation. The duty of notification is not an issue of self-dealing.

Topic:

Apply the risk management process to mitigate business risk.

Question: In what ways may officers and directors be protected by the corporation from liability for actions taken as an officer or director?

Answer Rationale: Personal insurance policies will generally not cover actions taken as an officer or director. Officers and directors are not automatically protected from liability by virtue of the corporate shield. The corporation can provide methods of protection for their officers and directors.

Topic:

Identify the major components of the formation of contracts.

Question: If a judge rules that a party lost its case because of the Statute of Frauds, the judge has essentially stated which of the following?

Answer Rationale: Only contracts complying with the applicable Statute of Frauds are legally enforceable.

Topic:

Determine appropriate methods for contract dispute resolution.

Question: What does the parol evidence rule do?

Answer Rationale: As a general matter, written terms of a contract may not be varied by oral evidence.

Topic:

Differentiate between types of employment relationships and the associated legal considerations.

Question: Under the Employee...
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