A+ Answers

For which of the following warranties must the seller be a merchant?

Express warranties.

Implied warranty of merchantability.

Implied warranty of fitness for a particular purpose.

Implied warranty of title.

Which of the following is TRUE about real property?

In a joint tenancy with a right of survivorship, when one joint tenant dies his or her interest in the property passes automatically to the surviving joint tenant, who is typically the surviving spouse.

The real estate contract is the legal instrument that transfers title to real property.

“Quitclaim deeds” are illegal since no warranties of title are made by the grantor.

Real property cannot be owned concurrently in the U.S. since the government will not know exactly who is going to pay the taxes on the property.

Under the UCC, firm offers can be made:

Orally or in writing by merchants.

Orally or in writing by merchants, but only in writing by non-merchants.

In writing by either merchants or non-merchants.

In writing by merchants.

Which form of real property ownership includes the greatest degree of ownership?

Fee simple subject to condition subsequent.

Fee simple determinable.

Fee simple absolute.

Absolute life estate.

An agent negotiates a contract with a third party for which the agent did not have actual express authority. Which of the following is true?

The principal can never be held liable on the contract because the agent exceeded his authority.

The principal can be liable on the contract only if the agent had implied authority to enter into the contract.

The principal can be liable on the contract only if apparent authority was present.

Either implied or apparent authority might cause the principal to be liable on the contract.

Which of the following is not an essential element of a partnership relationship?

An association of two or more persons who are capable of entering into a binding contract

The carrying on of a business for profit

Co-ownership of the business

A mutual intention to be partners

Ron contracts with Gail under what Ron later learns to have been misrepresented facts. Ron has not yet suffered an injury. He can

only obtain compensatory damages from Gail.

rescind the contract and receive restitution

either obtain damages or rescind the contract.

none of the above.

Which of the following is a false statement?

The law in the United States has been mainly influenced by the French Napoleonic Code.

One major purpose of the law is to protect persons and their property from unwanted interference from others.

Those precepts that must be obeyed and followed by citizens subject to sanctions or legal consequences can be thought of as law.

Law serves both to maintain the status quo and to facilitate orderly change.

Which of the following is FALSE about U.S. securities laws?

The definition of a “security” is broadly construed by the courts.

Insider trading by an insider and by a tipee in conspiracy with an insider is illegal.

” Trading on inside information by the “lucky” or the smart” is always illegal since it is not fair to the other party who does not have the inside information.

Silence, that is, the failure to disclose material facts regarding the purchase or sale of a security is illegal.

Corporations typically are required to hold shareholders’ meetings at least:


Every six months.

Twice a year, but they are not required to be held every six months.


The following are required to be proven in a negligence case except:

The defendant owed a duty or care to the plaintiff.

The defendant was fully aware of the consequences of his actions when they were done.

The defendant breached the duty of care.

The defendant’s conduct was an actual cause, in fact, of the injury to the plaintiff.

The tort of assault and the tort of battery:

Are two names for the same tort.

Are strict liability torts.

Can occur independently or together.

Require proof of each of the separate elements of negligence.

Which of the following is not one of the functions of the SEC?

Adopting rules to further the functions or purposes of the securities laws.

Providing government-backed insurance to purchasers of all securities.

Investigating securities violations.

Bringing enforcement actions against suspected violators of securities laws.

Consequential damages are:

Awarded to give the non-breaching party the “benefit of the bargain.”

Are fixed in an amount prior to an actual breach.

Arise from foreseeable consequences related to the contract and its breach.

Are not awarded in the case of personal services contracts.

Agents can bind principals:

If they have actual authority.

If they have implied authority.

If they have apparent authority.

All of the above.

In which of the following are the partnership events listed in the correct order of occurrence?

Winding up, dissolution, termination.

Dissolution, termination, winding up.

Dissolution, winding up, termination.

Termination, dissolution, winding up.

The doctrine which is applied when a defendant violates an existing statute intended to prevent the injury in question to persons of a class which includes the plaintiff is:

Negligence per se.

Res ipsa loquitur.

Proximate cause statute.

Concurrent statutory violation.

The Statute of Frauds

Is the tort of deceit

Is concerned with perjury and misrepresentation

Is a common law doctrine

Is a federal standard

An example of valid consideration is

Past gifts

Moral obligations

The performance of duties one is already obligated to perform

None of the above

If an important contract term is ambiguous,  the contract under the common law is

Probably illegal as against public policy

Probably enforceable

Probably unconscionable

Probably unenforceable

Which of the following statements is or are true regarding sales contract terms left open under the UCC?

Leaving open price terms makes the contract unenforceable.

The price is a “reasonable” price at the time of delivery if the price term is left open.

The price may be fixed by a market, a third person, or another standard, if so provided in the contract.

B and C only. 

If a corporation commits an ultra vires act, which of the following is not an available remedy?

The shareholders may sue for an injunction prohibiting the act.

The shareholders may sue the officers and/or directors for damages.

The state Attorney General may automatically bring criminal charges against the officers and/or directors.

The state Attorney General may sue to dissolve the corporation.

An example of an illegal contract typically is

A contract to commit a tort

A contract that is usurious

A contract for gambling

All of the above

Which is a FALSE statement about U.S. civil rights laws?

The Age Discrimination in Employment Act protects against age discrimination in the workplace.

Language discrimination in the form of “English-only” policies can be a form of national origin discrimination.

Even an employee at-will can sue for wrongful discharge if she was terminated because of her gender.

An employer is allowed to have an Affirmative Action plan that has rigid and fixed quotas for hiring based solely on race due to the history of discrimination in the United States.

 Digital Company plans to consolidate with Software Corporation to form DS, Inc. This requires the approval of

neither their boards of directors nor their shareholders.

their boards and their shareholders.

their boards only.

their shareholders only.

Of the three branches of the federal government provided by the Constitution, the branch that makes the laws is

the administrative branch.

the executive branch.

the judicial branch.

the legislative branch.

A contract terminating because of the destruction of the subject matter is an example of

A Rule of Construction

A voidable interest

The impossibly by operation of law doctrine

A supervening illegality

In a given case, most courts today may grant

equitable remedies only.

legal remedies only.

equitable or legal remedies, but not both.

equitable remedies, legal remedies, or both.

minor good faith deviation or omission in an otherwise complete performance A of a contractual obligation in a construction contract is known as:

Substantial performance.

Nonmaterial performance.

Nonessential performance.

Material performance. 

X accuses Y of fraud. Normally, the reliance element that gives rise to fraud is based on a statement of





Under freedom of speech in the United States:

All speech receives the same degree of Constitutional protection.

Some speech is not protected.

Commercial speech receives no protection because it has a profit motive.

Most speech critical of the government can be restricted because it can be destabilizing.

The Commerce Clause in the Constitution gives the federal government the power to regulate commerce which:

Actually crosses state lines only.

Affects interstate commerce or is conducted with foreign nations or Indian tribes.

All commerce.

The states have chosen not to regulate.

Under Rule l0b-5, which is true about insiders?

Officers and directors are insiders, but employees who are not officers are not insiders.

Officers and directors are insiders, but lawyers and accountants which are hired only on a temporary basis are not insiders.

Employees at all levels in a company are insiders, as well as lawyers, accountants, and consultants even when hired only on a temporary basis.

Agents hired on a temporary nonemployee basis to provide services to the company are not insiders.

Which of the following in not true?

A minor can still disaffirm a contract for a reasonable time after reaching majority.

An adult cannot disaffirm a contract made with a minor.

A minor must pay the agreed price on contract for necessaries.

What constitutes a necessary varies over time and can differ from state to state.

Which of the following is a false statement?

A voidable contract is a valid contract that can still be avoided by at least one of the parties to it.

A quasi-contract has no legal efficacy since it is a “pretend” contract.

Pursuant to the common law “mirror-image” rule, an offer must be accepted in its entirety without modification or conditions or else no contract can be formed.

An advertisement is generally not treated as an offer to enter into a contract pursuant to U.S. law.

Which of the following is FALSE about agency relationships?

The agent owes a duty of obedience to the principal.

The agent owes a duty of due care to the principal.

The agent owes a duty of an accounting to the principal.

The agent does not own a fiduciary duty to the principal since the agent is really only a “glorified” employee.

Which of the following is not an equitable remedy?

Specific Performance.

Money damages.



Larry is a member of Macro Services, a limited liability company. Larry is liable for the firm’s debts

in proportion to the total number of members.

to the extent of his capital contribution.

to the extent that the other members do not pay the debts.

to the full extent of the debts.

Article 2 of the UCC covers which types of transactions:

Sales of goods and sales of real property.

Sales of goods and leases of goods or real property.

Sales of goods and contracts for the providing of services.

Sales of goods and leases of goods.

In order to have an investment contract which is regulated by the SEC, which of the following is required?

An investment of money.

A common enterprise.

The expectation that profit from the enterprise will result from the efforts of others.

A, B and C.

Chapter 3 

Which of the following is a correct statement?
Kant maintained that since Fate ruled all one’s actions, one could not be held morally accountable for a bad action.
An intelligent person resolves moral issues by appealing to what most people believe.
Self-control is a necessary trait of the moral person.
Ethics is scientific because it provides absolute proof of general ethical principles as well as indisputable certification of specific moral judgments.

Which of the following is not an accurate statement?
The fact that there are differences among societies in moral positions means logically that there are no, and can never be, any moral standards or rules.
The doctrine of legal positivism would maintain that a business person rely on the law as a basis for decision-making when confronted with a moral question.
According to the Hobbesian view of legal positivism, there can be no such thing as a bad, immoral, or unjust law.
According to Bentham, Utilitarianism is an objective, scientific, mathematical, and empirical ethical theory.

Which of the following is NOT a correct statement?
For Machiavelli, virtue, ethics, and morality are instrumental values.

If all else fails in the pursuit of power, Machiavelli would counsel that one must be prepared to use the “good” acts and “virtuous” means of manipulation, deception, coercion, and even murder.

Machiavelli draws no distinction between morality in the public arena and the private sphere.

If absolutely necessary to secure one’s business promotion, Machiavelli would advise sabotaging the career of one’s competitor by making false and anonymous accusations of immorality on the company’s ethics “hot line.”

Socrates’ famous statement: “Goodness is real, and reality is good” is best

manifested in what ethical theory?
Machiavellian ethics

Kantian ethics

Hobbs’ legal positivism

Sophist teachings.

Pursuant to traditional philosophical analysis which of the following statements is/are true?
Morals and morality are different from ethics.

Intrinsic values are different from instrumental values.

Cultural relativism is different from ethical relativism.

All of the above.

One criticism of ethical relativism is that:
It requires people to be culturally competent.

Some persons would take actions that they believe to be moral, but which most people in society might believe to be immoral.

Decisions require the measurement of quantities and qualities that are not subject to precise measurements.

It really requires one to take several courses in philosophy and ethics to figure out what is moral based on this ethical doctrine.

Which statement is NOT part of Kant’s Categorical Imperative?
When in Germany, do as the Germans would do.

Treat people always with dignity and respect.

Act only under those maxims that you would be willing to have as universal “laws.”

Act only if you would be willing to be the agent/giver or the receiver of the action.

. Which of the following is a correct statement?
When people’s desires conflict, the doctrine of ethical egoism provides a mechanism to arbitrate and settle differences in a fair and balanced manner.

The Sophists believed that ethical principles and moral rules are universal, objective, impersonal, and eternal.

Machiavelli had a positive and laudatory view of people and human nature.

Machiavelli’s political philosophy stems logically from the teachings of the Sophists.

Which of the following is NOT a correct statement?
One advantage to a Natural Rights theory of ethics is that it can provide very specific and precise moral rules to guide conduct.
One problem with Rousseau’s Social Contract theory of ethics is that it is very difficult to determine with any exactitude what constitutes the General Will of the people.
According to Machiavelli, Fate or Fortune rules a good part of a person’s actions, and thus a shrewd and smart person should be prepared to adapt one’s actions to circumstances imposed by Fate.
“Soft” Determinism implies that one can make a true choice between good and bad moral alternatives.

Instrumental values can be best described as:
Useless since they have on intrinsic worth.

Useful because they can be used as a means to produce or achieve other values or things of worth.

Useful only when they are legislated into law.

None of the above.

Chapter 2 

Big Nuclear Energy Corporation commences a pro-nuclear advertising campaign to extol the benefits of safe nuclear energy. Vermont, the Green Mountain state, passes a law prohibiting the company from advertising in Vermont. The likely result of such a lawsuit would be:
The Vermont law would be struck down as a violation of the company’s free speech rights under the First Amendment.

The law would be upheld since nuclear energy is known to be dangerous and Vermonters do not want to encourage the nuclear industry.

The law would be upheld since corporations do not have any First Amendment rights.

The law would be struck down since only the federal government and the Federal Trade Commission can regulate advertising in the United States.

Tasty Treat Company advertises that its cereal, “Fiber Rich,” reduces cholesterol. After an investigation and a hearing, the FTC finds no evidence to support the claim. To correct the public’s impression of Fiber Rich, the most appropriate action would be
a cease-and desist order.

a civil fine.

a criminal fine.

counter advertising or corrective advertising.

Perfume Company executives insist that their sales personnel be “thin, cute, and sexy.” They thus discriminate against people who are not thin, cute, and sexy based on this appearance standard. This employment standard pursuant to civil rights laws is:
Illegal since it is illegal discrimination based on appearance.

Legal as long as the standard is applied equally to men and women on the sales force.

Illegal if the appearance discrimination is used as a subterfuge for race or color discrimination.

B and C.

Dave and Earl decide to open a restaurant and operate the business as a corporation. At the directors’ initial meeting, the directors may
adopt articles of incorporation only.

adopt bylaws only.

choose a corporate name only.

adopt articles of incorporation and bylaws and choose a corporate name.

Carol is a salesperson who works for Delta Products, Inc. In determining whether Carol is Delta’s employee or an independent contractor, the most important factor is
the degree of control that Delta exercises over Carol.

the distinction between Delta’s business and Carol’s occupation.

the length of the working relationship between Delta and Carol.

the method of payment.

John, Jr., a college freshman, 17 years old, and thus a minor, lies about his age, stipulating in writing that he is 19, and buys a big, flat-screen TV from Good Buy. The TV is badly damaged when John, Jr. and his friends are tossing around a football in his dorm room. He returns the TV to Good Buy and demands his money back, saying he is just 17 years old. The likely legal result of this situation would be:
Since he is a minor he can disaffirm the contract and get all his money back and is protected due to his youth and immaturity.

Since he is a minor he can disaffirm the contract and get some money back but because he lied, he is liable for the damage and depreciation to the TV.

He cannot disaffirm even though he is a minor since he misrepresented his age and the misrepresentation is in writing..

He cannot disaffirm the contract since a big, flat-screen TV would probably be regarded as a “necessity” for a college student today.

A-One Products Corporation and Best Manufacturing, Inc., enter into a contract for a sale of goods that does not include a price term. In a suit between A-One and Best over this contract and the price, a court will
determine a reasonable price.

impose the lowest market price for the goods.

refuse to enforce the agreement.

return the parties to the positions they held before the contract.

General Construction contracts to build a store for Home Stores for $1 million. In mid-project, Home repudiates the contract, and General stops working. General incurred costs of $600,000 and would have made a profit of $100,000. General’s measure of damages likely is
$1 million.




Fast Eddie, a minor, who looks older, buys a used car on credit when he is 16 for “cruisin'” and “girl pick-up” purposes. He pays a small down payment and agrees to pay a monthly payment. When he turns 18 he continues to use the car and to make payments to the used car dealership. He does this for several months after turning 18 years of age. However, he then attempts to “drag race” with a friend to impress a girl, but crashes the car. He is not badly injured, but the car is seriously damaged. Fast Eddie then has the car towed back to the used car dealership, and says: “Yo, I was only 16 when I bought this car. I was a minor and I want all my money back. You can have what’s left of the car. Yo!” What is the likely legal result of this situation?
Fast Eddie can disaffirm the contract with the car dealership since he was a minor when he purchased it.

Fast Eddie cannot disaffirm the contract since the car was a “necessity.”

Fast Eddie cannot disaffirm since he impliedly ratified the contract he made when he was a minor.

Fast Eddie can disaffirm since the used car dealer should have asked Fast Eddie his age regardless of his appearance.

Lee, a salesperson for Midsize Corporation, causes a car accident while on business. Lee and Midsize are liable to
all those who were injured.

only those who were uninsured.

only those whose injuries could have been reasonably foreseen.

only those with whom Lee was doing business.

Best Toy Company begins marketing a new toy that is highly flammable. The Consumer Product Safety Commission may
ban the toy’s future manufacture and sale, and order that the toy be removed from the market.

ban the toy’s future manufacture and sale only.

do nothing until there is an injury or damage on which to base an action.

order that the toy be removed from the market only.

Rajiv, the owner of a very nice and successful Indian restaurant, House of India, in western Broward County, is going to retire. He plans to sell the business, together with good will and recipes, and with the current staff remaining, to the Patel family, who are new to the restaurant business. Although Rajiv says he is going back to India, the Patel family members are not so sure that Rajiv will return to Florida and open up a competing restaurant business in the near vicinity, thereby drawing back his old customers to the detriment of the Patel family. Accordingly, as part of the contract for the sale of the business, a covenant-not-to-compete clause is included wherein Rajiv promises not to compete directly or indirectly in the Indian restaurant business for two years and in a radius of 10 miles of the House of India. The likely legal effect of this covenant is:
The covenant is illegal and void since it is a restraint of trade in violation of the Sherman Anti-trust Act.

The covenant is illegal and void since it is against public policy, which favors competition.

The covenant is legal since it appears reasonable in time and place.

The covenant is illegal since it seems unreasonable in time and place.

Eagle Skis, Inc., makes and sells skis. In deciding whether the skis are merchantable, a court would consider whether
Eagle violated any government regulations.

the skis are a quality product.

the skis are fit for the ordinary purpose for which such goods are used.

the skis are made in an efficient manner.

Big Oil Company requires that all employees when working on an oil rig in its Gulf of Mexico holdings must speak English to enhance communication, for safety reasons, and so rig foreman-woman can do their supervisory jobs. Big Oil Company has notified the employees of the policy, given them time to adapt, and will provide English language training to those employees whose English language skills are poor. Also, while the employee are on the rig but not working, that is, in the cafeteria, dormitory, and “break” rooms, they can speak any language they want, though the company has advised them to be inclusive of their fellow employees. Big Oil Company is likely acting how?
Illegally since language discrimination in the form of English-only policies is always a Title VII violation since people have the civil right to speak their primary language at all times and places.

Illegally since language discrimination is illegal discrimination in all cases under Title VII of the Civil Rights Act.

Legally since there was a legitimate reason for the policy and it was gradually adopted.

Legally but only if the primary non-English language spoken by the majority of the non-English-speaking employees which was prohibited was Spanish, whereas other “foreign” languages not as frequently heard were permitted.

Jacques is the CEO if a public company traded on the New York Stock Exchange, called XYZ Corp., which is regulated by the SEC. Jacques buys 100 shares of stock of XYZ Corp. (using NO insider trading whatsoever) on March 1, 2009. Then on March 30, 2009 Jacques is in need of money due to his spouse being laid-off, so he sells his stock (using no insider trading whatsoever), and makes $10,000 in profits. Jacques:
Must forfeit the profit back to XYX Corp. due to the “short swing profits” rule.

Legally can keep the profits since there was no insider trading whatsoever.

Is in breach of his fiduciary duties to XYZ Corp. and can be sued for fraud.

Can never trade stock in the XYZ Corporation under any circumstances.

Jill is a shareholder of Kappa Company. As a shareholder, Jill does not have a right to


inspect corporate books and records.

transfer shares.

The Institute of Progressive Studies, a well-known San Francisco research foundation, promises Teofilo, a college professor, that it will pay him a grant of $55,000 in order that Teofilo pursue his studies of the lives of “third-world revolutionaries.” Teofilo is not required to produce any specific work product in exchange for this grant. He makes it clear to the Institute that he intends to obtain leave without pay from the university where he teaches and to move 1000 miles to San Francisco to complete the work. Accordingly, Teofilo secures the leave and makes the move. However, soon thereafter he is informed by the Institute that regrettably the grant will have to be revoked due to the Institute’s unexpected loss of some government funding in the latest government budget “cut-backs.” Teofilo then sues the Institute to recover his various losses. What is the best answer regarding the resolution of this lawsuit?
Teofilo prevails due to the promissory estoppel exception to the consideration requirement of contract law.

Teofilo prevails since the Civil Rights Act protects against national origin discrimination.

The Institute prevails since there was never an explicit written contract with Teofilo.

The Institute prevails due to the Impossibility of Performance doctrine of contract law.

Fran buys a franchise from Global Services, Inc. In their agreement, Global may specify
requirements for the business form of the organization only.

standards of operation only.

requirements for the form of business and standards ofoperation.

none of the above.

Paul hires Janice, a college student, as a cash register employee at his sporting goods store. A vendor, Vinnie, comes in to sell Paul some office supplies. Yet Paul is very busy dealing with a unhappy customer. The vendor is insistent, however. So Paul turns to the vendor, and, pointing to Janice, says: “See my agent. She will take care of the order.” Whereupon, Janice deals with Vinnie, and then Janice in a writing commits to buy a large amount of office supplies from Vinnie Vendor for Paul. Paul claims that he is not liable for the order because Janice was not his agent and “just a college kid.” The likely result of any lawsuit between Paul and Vinnie will be:
Paul will prevail since Janice was merely an employee who had no express authority to act as an agent.

Vinnie will prevail if he can convince a jury that Paul granted apparent agency authority to Janice by his words and conduct toward Vinnie and that Vinnie reasonably believed that Janice was Paul’s agent.

Paul will prevail if Janice was a minor.

Paul will prevail if he can convince a jury that Vinnie’s grandfather was once a member of the Gambino Organized Crime Family of NYC.

William was admitted to General Hospital, suffering from the effects of a severe gastric hemorrhage. On the day William was admitted, his son informed an agent of the hospital, a patient representative, that his father had no financial means, but that he as his son would pay his father’s medical expenses. The son stated to the hospital’s agent: “I want you to do everything you can to save my father’s life. The family does not want you to spare any expense. Whatever my father needs, you go ahead and get it, and if my father cannot pay, I will pay it.” After William was discharged from the hospital, his son refused to pay his father’s medical bills, declaring that they were too expensive. The hospital now seeks to enforce the son’s verbal promise to its agent. What is the best answer regarding the resolution of the lawsuit?
Son prevails since a secondary guarantee promise must be in writing pursuant to the Statute of Frauds to be enforceable.

General Hospital prevails since a son or daughter is morally responsible to pay for a parent’s medical expenses.

General Hospital prevails due to. the “benefit-to-promisor” exception to the guaranty  promise rule

Son prevails since he only made the statement to an agent of the hospital.

Chapter 4 

Laredo believes that all ethical standards and principles are set forth in a book called Ethics for All that was written by a prominent ethics philosopher. Laredo refers to this book for guidance and rules by which to lead his life. Which of the following ethical theories most accurately describes Laredo’s approach and conduct?
Kantian ethics


Ethical Relativism

Social Darwinism

Engel Tool Company’s decision-makers view a particular risk in the use of the company’s product as “open and obvious.” Continuing to market the product without telling consumers of the risk could be best justified from a perspective of
Aristotle’s Virtue Ethics

Kantian ethics

Natural Law theory

Utilitarian ethics.

Abraham Lincoln’s famous condemnation of slavery, “So I would not be a slave, therefore I shall not be a master,” best reflects what type of ethical thinking:
Ethical relativism


Rousseau’s General Will theory

Kant’s Categorical Imperative

In order to be considered a profession what attributes of a profession does management have to work on and develop?
Autonomy and self-governance.

Codes of ethics that apply to management as whole and are “policed” and enforceable.

An oath with an appropriate ceremony when entering the management profession.

All of the above.

The Chinese government publicly executes convicted criminals of serious crimes, and then “harvests” and sells their organs to wealthy Westerners and people from the Middle East, presumably with the “consent” of the prisoners facing execution. This practice is:
Immoral pursuant to Ethical Emotism if one initially feels emotionally sick when reading or hearing about the practice.

Moral under Ethical Egoism if one desperately needs an organ and has the money.

Moral pursuant to Ethical Relativism if one is in China and the Chinese have no problems with and thus accept this practice of executions and organ sales.

All of the above.

Which of the following are reasons for changing moral standards in the workplace over the past several decades?
The communications “revolution”

Growing environmental problems and an awareness thereof

A proliferation of women and minorities in the workplace

All of the above.

When one’s company is considering using nudity in an advertising campaign to sell a product in Italy, any moral issue could be best resolved for the company by using what ethical theory?
Ethical relativism

Kantian ethics

Utilitarian ethics

Natural Law ethics.

Mega Corporation engages in ethical behavior solely for the purpose of getting good publicity and thereby increasing profits. Mega is
Acting immorally in pursuit of profits

Acting unethically in the pursuit of good publicity

Acting unethically in setting its priorities

Not acting unethically if one is an ethical egoist.

The ethical theory of ethical relativism can best be characterized by:
The determination as to what a particular society believes to be moral

The belief that a person must decide what course of action is proper based on that person’s own set of beliefs and feelings.

Determining which course of action produces the greatest amount of good for society.

A set of universal rules based on reasoning that must be applied in all situations and characterized by consistency and rationality.

Fran, an executive with Global Sales Corporation, has to decide whether to market a useful product that nonetheless might have undesirable side-effects for a small number of users. What ethical theory would the Sophists advise her to use so that her firm can morally market the product?
Kantian ethics

Corporate Social Responsibility


Last Resort theory.

Chapter 5 

What is a TRUE statement about state social benefit of B-corporations?

They must consider the values and interests of other stakeholders beyond the shareholders of the corporation.

They are not allowed to make any profits or pay any dividends to shareholders.

They cannot have a public purpose since corporations are incorporated to do business and make money and not engage in socially responsible activities.

They are now governed by detailed rules promulgated by federal regulatory agencies.

Which of the following is a TRUE statement?

A “moderate” degree of social responsibility is requirement for publicly traded corporation pursuant to federal corporation law.

International law, enforced by the United Nations, requires some degree of social responsibility for large multi-national corporations.

Generally, a prudent amount of “strategic” social responsibility should be in the long-term self-interest of a company.

The Board of Directors of a corporation are prohibited from engaging in social responsibility efforts on behalf of the corporation by most state corporation laws since the sole focus of the Board is maximizing the short-term profits of the shareholders.

Which is a FALSE statement about social responsibility?

Social responsibility is a “real-world” concern for modern business managers; it is not merely an “academic” issue.

Social responsibility and ethical egoism are mutually exclusive and contradictory values.

A challenge for business today is to ascertain the exact nature and proper degree of social responsibility.

Social responsibility activities and contributions are mandated legally for large multinational global corporations by the World Bank and the United Nations.

The best approach to social responsibility for business today would be to emulate:

Robin Hood of “Merry Olde England” days (who stole from the rich to give to the poor, and who became a big hero)

Marie Antoinette, Queen of France during the Revolution (who said, when told the poor had no bread to eat, said “Let them eat cake,” and who, alas, was beheaded)

Francis of Assisi, the son of a rich Italian merchant, who gave away everything to the poor, including the clothes he was wearing, and thus walked around Assisi naked (but who later became a Saint)

Home Depot for focusing prudently and primarily on Habitat for Humanity in their charitable giving and community help efforts.

Which of the following statements is incorrect?

Basing one’s behavior on the adage, “Do unto others as you would have them do unto you,” is part of Kantian ethics.

An ethical theory that says each person is presumed to have entered into an agreement with all others in society to obey moral rules that are necessary for people to live in peace and harmony is called Social Contract ethics.

A doctrine that says that a corporation should consider its presence in the community and society and the effects its actions have on persons or groups other than the shareholders is called Corporate Social Responsibility.

A theory of social responsibility that says that business must solve global problems such as poverty and disease is called Legal Nonfeasance.

What is TRUE about state corporate constituency statutes?

They allow the board of directors to take into consideration the values of other stakeholders in addition to the shareholders in making business decisions.

They forbid the board of directors to take into consideration the values of other stakeholders since the shareholders, as the owners of the corporation, must be the board’s sole and exclusive focus.

They mandate that the boards of directors must consider the values of other stakeholders in making corporate decisions.

They require that companies incorporated in the state must donate 3-5% of their pre-tax profits for socially responsible activities.

Chapter 6 

The giant multi-national pharmaceutical companies could be held accountable on what grounds if they do not give AIDS drugs or sell them at cost to very poor African countries:

Legal pursuant to the principle of Nonfeasance

Moral pursuant to the Principle of Last Resort

Social Responsibility based on current notions of CSR

B and C.

Regarding the degree of social responsibility that one’s firm should engage in, Aristotle would advise to:

Take a Ben and Jerry’s “people and planet over profits” and “save the world” approach.

Take a socially non-responsive approach since there are no adverse legal ramifications for not helping out in the community.

Take a prudent “middle road” approach.

Take a “Chainsaw Al” Dunlop scornfully dismissive approach and be socially irresponsible, and be proud of it.

Which of the following is the most accurate statement regarding the merger of two big tobacco companies in the United States.

Evidence of social responsibility anti-smoking efforts is a requirement for the government to approve tobacco mergers pursuant to the Clayton Act.

It may be in the long-term self-interest of the merged company to promote its new brand of e-cigarettes (electronic cigarettes) as a socially responsible “wellness” alternative to traditional tobacco products.

The merged company should avoid all socially responsible activities since they can be costly, and mergers are very expensive due to all the professional legal, accounting, and financial fees involved.

If the merged company is regarded as a “dominant” one in the market, the head of the Department of Health and Human Services cabinet department can require that the merged company engage in a lot of social responsibility activities.

Which of the following is NOT among the assertions typically made by “socially responsible” critics of the modern corporation’s activities?

Many large corporations have not been sufficiently focused on maximizing profits for shareholders and granting bonuses to executives.

Corporations should not merely obey the law but rather should seek and observe social responsibility standards higher than the law since at times the law is “silent” or is not enforced.

Corporate profit-seeking at times involves unacceptable social costs.

Forces in a free market are at times inadequate to prevent many of the social costs stemming from corporate profit-seeking.

Chapter 7 

First Financial Corporation provides other firms with capital to expand operations. Questions of what is moral behavior involve the extent to which First Financial has

A legal duty beyond those duties mandated by ethics

An ethical duty beyond those mandated by the law

A social responsibility duty beyond those mandated by both the law and ethics

Any duty when it is uncertain whether a legal duty exists.

Happy Feet manufactures shoes in Country Y for sale in the United States. Happy Feet’s president discovers that the Country Y workers’ average age is sixteen and that they work on average of 13.2 hours per day in a 90 degree warehouse with insufficient safety precautions, all of which practices are legal in Country Y. The president of Happy Feet decides to improve the working hours and conditions of the company’s workforce, even though these actions will be more expensive for the company. The president’s decision is best described as

Lawful profit maximization

Moral profit-making

Illegal since the shareholders of Happy Feet might be harmed

Social Darwinism.

Whistleblowing in the private employment sector in the United States typically is

Not protected by a uniform federal law

Protected under some state whistleblower protection statutes

Usually protected by the law if the disclosure is made to the media since the disclosure will be widespread and thus do the most good

Never required morally pursuant to Kantian ethics since the consequences for the whistleblowing employees usually are harsh, for example, loss of employment.

Which of the following statements is or are accurate?

There is no such thing as an unjust law if one is a Legal Positivist

All bad actions are immoral if one is a Machiavellian

Both a and b

None of the above.

Which of the following will the executives of Mink, Inc., a fur sale company, likely take into account in carrying out their business?

Adverse publicity and threat of boycotts

Legal restrictions on the production and sale of animal fur products

Societal norms as to the morality of selling fur products

All of the above

Danielle, the CEO of a large corporation treats the employees very well, as they have very good wages and benefits, open lines of communications, self-managed, and an organizational culture of inclusion and diversity. They are treated with dignity and respect. Danielle’s primary motivation for such good treatment is to have a happy and contented workforce, a more loyal and productive workforce, less turnover problems, and no union, since as the company does well, so will Danielle, as she will gain an enhanced reputation as a corporate executive and a greatly increased salary, compensation, and bonus “package.” Danielle can best be described as acting ethically how?

Morally pursuant to Ethical Egoism.

Morally pursuant to Corporate Social Responsibility.

Immorally since she has a selfish attitude.

Immorally since she probably has an anti-union animus in violation of the National Labor Relations Act.

Which of the following cause problems in determining whether an action is legal?

A large number of ethical theories

Too general definitions of “corporate social responsibility”

A lack of lawyers

None of the above

Stephanie is a successful entrepreneur but her company is not involved in any civic affairs or charitable activities in the local community. Stephanie likely is:

Liable to be sued civilly based on the principle of Legal Nonfeasance.

Immoral pursuant to the Last Resort principle for not “helping out” in the community.

Immoral pursuant to Legal Positivism.

Socially irresponsible.

Some consumers misuse the products of Midwest Manufacturing, Inc., but in a foreseeable manner, and are injured. In terms of responsibility for consequences, Midwest may have

An ethical duty only

A legal duty only

An ethical and legal duty

Neither an ethical nor a legal duty.

Which is an accurate statement about the modern business corporation|

The corporation, once approved by the state and given a corporate charter, is a legal actor and artificial “person” endowed with legal and certain constitutional rights.

According to the traditional, conservative, Milton Friedman, organizational view of the corporation, it is only a legal actor and has no moral or social responsibility and just must obey the law and pay taxes.

A true corporate code of ethics today must have some provisions that go “above and beyond” the law; that is, an ethics code cannot be a mere “restatement” of the law.

All of the above.