NEW YORK STATE FBLA

BUSINESS LAW

2014
PLEASE DO NOT OPEN THIS TEST UNTIL DIRECTED TO DO SO

Test Directions

1. Complete the information requested on the answer sheet.

PRINT YOUR NAME on the “Name” line.

PRINT the name of the event, BUSINESS LAW on the “Subject” line.
PRINT the name of your CHAPTER on the “DATE” line.

2. All answers will be recorded on the answer sheet.

Please do not write on the test booklet.
Scrap paper will be provided.

3. Read each question completely before answering. With a NO. 2 pencil,

blacken in your choices completely on the answer sheet. Do not make any
other marks on the answer sheet, or the scoring machine will reject it.

4. You will be given 60 minutes for the test. You will be given a starting signal
and a signal after 50 minutes have elapsed.

Tie will be broken using the last 10 questions of the test.

 2014 NYS FBLA SLC 2
BUSINESS LAW
1. A set of laws made by the courts based on the customs and traditions of the people is called
a. the Roman Code. c. common law.
b. administrative law. d. moral law.

2. Young people who appear before a juvenile court have

a. the right to an open trial in front of the jury.
b. the right to request to be tried as an adult.
c. no right to a trial and no right to be released on bail.
d. a right to a trial and a right to be released on bail.

3. Article IV of the U.S. Constitution is very important to American businesses because

a. many companies do business in more than one state.
b. it creates the opportunity for businesses to have freedom of speech.
c. it creates the system of checks and balances that companies must follow.
d. many companies plan on adjudicating civil cases across state lines.

4. An appeal in a civil case can

a. be based only on the arguments made during arraignment.
b. be based only on a legal mistake by the judge.
c. lead to a retrial at the appellate level.
d. lead to fines or imprisonment.

5. The unlawful killing of one human being by another, without malice aforethought, is
a. justifiable homicide. c. second-degree murder.
b. first-degree murder. d. manslaughter.

6. In a criminal proceeding, the government is referred to as the

a. defendant. c. plaintiff.
b. offender. d. protagonist.

7. Threatening a person at gunpoint is called

a. kidnapping. c. torture.
b. aggravated assault. d. larceny by false pretenses.

8. If someone is found not guilty by reason of insanity, he or she

a. will go free.
b. must receive psychiatric treatment.
c. has probably tricked the court.
d. will be convicted of a misdemeanor instead.

9. Crimes are categorized into crimes against people, property, motor vehicles, and
a. murder, manslaughter, and rape.
b. assault, battery, and arson.
c. business, government, and society.
d. kidnapping, domestic violence, and vandalism.

10. When you lie under oath during a court process, you are committing
a. disorderly conduct. c. bribery.
b. perjury. d. treason.
 2014 NYS FBLA SLC 3
BUSINESS LAW
11. The difference between a crime and a tort is that a crime is committed against the public good, while a tort
a. is committed against a particular person or property.
b. is caused when someone is being threatened.
c. is considered a wrong against all of society.
d. hurts all members of the community.

12. The remedies available in tort law usually include

a. a public apology by the tortfeasor printed in the local newspaper.
b. prison time for the tortfeasor.
c. financial compensation to the victim for injuries caused by the tortfeasor.
d. financial compensation for the victim and prison time for the tortfeasor.

13. The taking back of an offer by the offeror is

a. revocation. c. cancellation.
b. rejection. d. consideration.

14. In order for the acceptance to be legally binding, it must be

a. made in person and in writing by the offeree.
b. unconditional and in writing by the offeror and offeree.
c. made in person and follow the rules regarding the method of acceptance.
d. unconditional and follow the rules regarding the method of acceptance.

15. If you wait too long to bring a lawsuit, the court may not uphold it because it could be
a. unenforceable. c. voidable.
b. limited. d. fraudulent.

16. Your friend has lost her bracelet and offers you a reward of $50 if you find it. This is an example of a(n)
a. bilateral contract. c. acceptance contract.
b. unilateral contract. d. revocation of a contract.

17. Invitations to deal, trade, or make an offer by the seller are considered invitations
a. of legality. c. to make a counteroffer.
b. to negotiate. d. for consideration.

18. The best evidence rule requires that

a. the original written agreement be used as evidence in court.
b. evidence of oral contracts cannot be presented in court.
c. all parties understand real-world rules.
d. all contracts over $500 be in writing.

19. A promissory estoppel is an example of an exception to the requirement of

a. legality. c. the statute of limitations.
b. consideration. d. capacity.

20. The legal transfer of a right under contract is called a(n)

a. alteration. c. novation.
b. assignment. d. delegation.
 2014 NYS FBLA SLC 4
BUSINESS LAW
21. Threats of a business nature that cause a person to enter into a contract without real consent would qualify as
a. undue influence. c. economic duress.
b. duress. d. fraud.

22. Which of the following is NOT a remedy for a breach of contract?

a. You may request the contract be continued.
b. You may accept the breach.
c. You may sue for damages.
d. You may ask the court for a remedy.

23. If what seems to be a valid contract turns out not to be, the contract is
a. fraudulent. c. defective.
b. deceptive. d. mistaken.

24. The Better Business Bureau is a private agency created to

a. recall unsafe products.
b. sue companies with questionable business practices.
c. develop warranties for products made locally.
d. hear consumer complaints at the local and state levels.

25. As interstate commerce developed, a need for consistent laws regarding the sale and lease of goods arose.
These laws are called the
a. Federal Trade Commission. c. Uniform Contract Laws.
b. Federal Sales Act. d. Uniform Commercial Code.

26. The law that protects you from unreasonable risk when using shampoos and other hair supplies is called the
a. Consumer Product Safety Act. c. Federal Consumer Protection Act.
b. Consumer Leasing Act. d. State Trade Commission Act.

27. If you find abandoned property, you

a. have the legal duty to try and find the owner.
b. must advertise in the local paper for the owner.
c. may keep it.
d. must leave it where you found it.

28. Patents, copyrights, and trademarks refer to

a. tangible personal property. c. bailments.
b. intangible personal property. d. intellectual property.

29. A freehold estate is one in which the holder owns the land for
a. life or forever. c. 10 years.
b. 100 years. d. 50 years.

30. A deed that transfers a seller's interest in property but does not warrant that the seller owns any interest is a
a. general warranty deed. c. quitclaim deed.
b. mortgage deed. d. special warranty deed.
 2014 NYS FBLA SLC 5
BUSINESS LAW
31. Which one of the following is NOT a type of deed?
a. general warranty deed c. bargain and sale deed
b. special warranty deed d. limitation and reform deed

32. In 2005, the U.S. Supreme Court ruled that the government can take someone’s property to
a. build low-income housing.
b. promote economic development.
c. create a wildlife sanctuary.
d. prevent new developments from being built.

33. A note issued by a bank that earns interest over time is called a
a. certificate of deposit. c. time draft.
b. secured interest. d. security agreement.

34. Negotiability allows for the transferee to become a holder, while assignability allows for the
a. transferee to avoid liability for errors made as the instrument is transferred.
b. instrument to be transferred to someone else without the transferee becoming a holder.
c. transferee to obtain legal indorsements in a timely fashion.
d. instrument to be void of dates and controlling words.

35. Which of the following is not authorized under the Electronic Fund Transfer Act (EFTA)?
a. paying your bills electronically
b. making purchases with your debit card
c. direct deposits into your checking account
d. overdraft protection on all purchases over $500

36. Charge card accounts are examples of

a. usury. c. secured loans.
b. open-end credit. d. closed-end credit.

37. There are two types of parties who can guarantee a loan:
a. the debtors and the secured parties.
b. guarantors and sureties.
c. guarantors and security agreements.
d. sureties and security agreements.

38. In a transaction for the sale of goods, the security interest

a. is not legally enforceable by the secured party.
b. is not available to be sold at auction if a default occurs.
c. attaches to the actual individual goods.
d. attaches to after-acquired property.

39. Credit that can be increased by the debtor by continuing to purchase goods or services on credit is called
a. installment credit. c. closed-end credit.
b. open-end credit. d. credit with collateral.
 2014 NYS FBLA SLC 6
BUSINESS LAW
40. When you buy a car on credit, it is important to know the APR, which is the
a. cost of the loan in dollars and cents.
b. collateral your lender will require.
c. true interest rate of the loan.
d. total amount you will borrow.

41. If you dispute a purchase you made using your credit card, you
a. have no recourse.
b. must pay the bill and then negotiate a refund from the merchant.
c. should cancel your credit card.
d. do not have to pay the bill for the item.

42. To assist consumers who receive bills for charges they dispute, Congress passed the
a. Fair Credit Billing Act. c. Fair Credit Reporting Act.
b. Fair Debt Collection Practices Act. d. Disputed Charges Reform Act.

43. The moment a petition for bankruptcy is filed in the court,

a. all debts are cleared.
b. your credit cards no longer work.
c. lawsuits involving divorce and child custody are suspended.
d. an automatic stay goes into effect.

44. Which of the following is NOT one of the national credit reporting agencies in the United States?
a. Equifax c. Experian
b. Trans Union d. Trans Credit

45. An agency by circumstance, created by law, is called

a. negligent hiring. c. independent contracting.
b. agency by estoppel. d. ratification.

46. The manager of a grocery store, who has been given authority to perform any act within the scope of that
store is known as a
a. special agent. c. statutory agent.
b. general agent. d. would-be agent.

47. When a principal approves an agent’s unauthorized act after the fact, it is said to be an agency by
a. statute. c. ratification.
b. operation of law. d. estoppel.

48. Coagents are subject to the authority of the

a. special agent. c. principal.
b. agent’s agent. d. third party.

49. Lawyers, stockbrokers, insurance agents, and real estate brokers are all examples of
a. special agents. c. general agents.
b. licensed agents. d. estoppel agents.
 2014 NYS FBLA SLC 7
BUSINESS LAW
50. A principal who makes his or her agent's job difficult or impossible has breached the duty of
a. reimbursement. c. cooperation.
b. authority. d. obedience.

51. If an agent is authorized to sell a car for a person, but the car is totaled in an accident, then
a. the agency relationship is terminated.
b. the agent is held liable for the car.
c. the principal is held liable for the car.
d. the agency is terminated by mutual consent.

52. The agent becomes liable for an injury to a third party if

a. the principal has made an agreement or performed tasks beyond his or her authority to do
so.
b. the agent is a minor and does not have capacity to sign a contract but the principal has not
disclosed this fact.
c. the principal is undisclosed and the third party can not identify the principal.
d. the agent has decided to hire independent contractors to complete the task.

53. Under Title VII of the Civil Rights Act of 1964, interviewers MAY ask applicants questions about
a. race. c. marital status.
b. religion. d. work experience.

54. Indirect discrimination occurs when an employer makes a hiring decision based on
a. a qualification that is related to job performance.
b. the race or sex of the applicant.
c. a qualification that is not related to job performance.
d. the age of the applicant.

55. Work-related accidents and death on the job became a serious problem
a. when machines were introduced into industry.
b. as workers began to increase the number of hours worked per day.
c. before unions began to protect the workers.
d. when employees were required to bring their own tools to the worksite.

56. A partnership that is formed simply by the way two or more people conduct their business together is called
a. partnership by estoppel. c. apparent partnership.
b. partnership by proof of existence. d. limited partnership.

57. Co-ownership of all real and personal property included in the partnership is referred to as
a. joint tenancy. c. tenancy by estoppel.
b. uniform tenancy. d. tenancy in partnership.

58. An example of a public corporation is

a. the local school district. c. Habitat for Humanity.
b. Microsoft. d. McDonald’s.
 2014 NYS FBLA SLC 8
BUSINESS LAW
59. Which of the following is NOT a right of a shareholder?
a. to receive a stock certificate
b. to receive dividends
c. to exercise a vote for each share owned
d. to run for one of the corporate officer positions

60. The dissolution of a corporation can come about

a. by a unanimous vote of the shareholders.
b. by stock acquisition.
c. when a corporate officer dies.
d. when the profits exceed a certain threshold.

61. Corporations raise money

a. by selling stock. c. through asset acquisition.
b. by buying bonds. d. through stock acquisition.

62. Tender offers, or takeover bids, are offers to

a. buy a specific number of bonds at a specific price.
b. buy a specific number of shares at a specific price.
c. sell a specific number of shares at a specific price.
d. sell a specific number of bonds at a specific price.

63. Which of the following organizations does NOT regulate business between countries?
a. The International Law Commission
b. The U.N. Commission on International Trade Law
c. The World Trade Organization
d. The Federal Trade Commission

64. Automobiles were identified as a major source of air pollution in the

a. Clean Air Act of 1977. c. Environmental Protection Act of 1966.
b. Clean Air Act of 1955. d. Clean Air Act of 1963.

65. One way the SEC ensures that investors know what they are buying when purchasing stock is by requiring all
companies to provide a(n)
a. prospectus to the SEC. c. online resource for consumers.
b. letter to each potential stockholder. d. list of the corporate board of directors.

66. Which act controls takeover bids?

a. the Sarbanes-Oxley Act c. the FTC Act
b. the Williams Act d. the Clayton Antitrust Act

67. Cyberspoofing is a crime in which a person

a. creates a virus to disrupt someone else’s computer network.
b. commits cyberextortion or blackmail.
c. falsely adopts the identity of someone else in order to commit fraud.
d. uses a computer to steal data stored in digital format.
 2014 NYS FBLA SLC 9
BUSINESS LAW
68. A distinctive name, word, symbol, image, or slogan used by a business for identity purposes is called a
a. domain name. c. trademark.
b. patent. d. copyright.

69. If someone creates a phony Web site that simulates a real bank and sends false e-mails, it is called
a. cyberblackmail. c. cyberspoofing.
b. cyberphishing. d. cyberpiracy.

70. After marriage, the parties may use any name

a. after a six-month waiting period.
b. provided they get permission from a judge
c. provided they do not commit fraud.
d. except the wife’s surname.

71. A no-fault divorce is a divorce granted without either party having

a. a legal separation.
b. to prove the other party was guilty of misconduct.
c. to reveal the dollar amount of the assets.
d. to announce who requested the divorce first.

72. Which of the following is NOT a requirement of a legal marriage in most states?
a. age requirement c. waiting period
b. marriage license d. prenuptial agreement

73. All parents, whether married or not, have the duty to

a. provide a car for their children.
b. provide a college education for their children.
c. support their children.
d. raise their children.

74. A spendthrift trust is designed to protect the assets from being spent recklessly by the
a. executrix. c. beneficiary.
b. court. d. trustee.

75. Burning, tearing, or canceling a will on purpose will cause it to be

a. in executrix. c. revoked.
b. probated. d. in codicil.

76. For property insurance, insurable interest must exist at the time of the loss. For life insurance, insurable
interest must exist
a. at the time you buy the insurance.
b. at the time you use the insurance.
c. one month prior to buying the insurance.
d. within 48 hours after buying the insurance.
 2014 NYS FBLA SLC 10
BUSINESS LAW
77. To be valid, a will must
a. contain a codicil and an executor, and be signed.
b. be published, attested, and signed.
c. be published, attested, and filed in court.
d. be published and signed.

78. A living will is also considered a

a. trust to protect marital assets.
b. way to avoid probate.
c. special power of attorney.
d. will created to distribute assets while still alive.

79. An agent becomes liable for an injury to a third party if

a. the principal has made an agreement or performed tasks beyond his or her authority to do
so.
b. the agent is a minor and does not have capacity to sign a contract but the principal has not
disclosed this fact.
c. the principal is undisclosed and the third party cannot identify the principal.
d. the agent has decided to hire independent contractors to complete the task.

80. Which of the following is NOT a responsibility of OSHA?

a. inspecting workplaces at random
b. investigating written employee complaints
c. investigating workplace disasters
d. regulating wages, hours, and benefits

81. Work-related accidents and death on the job became a serious problem
a. when machines were introduced into industry.
b. as workers began to increase the number of hours worked per day.
c. before unions began to protect the workers.
d. when employees were required to bring their own tools to the worksite.

82. Co-ownership of all treal and personal property included in the partnership is referred to as
a. joint tenancy. c. tenancy by estoppel.
b. uniform tenancy. d. tenancy in partnership.

83. The break up of a partnership, or any legal entity, is called a

a. dissociation. c. winding up.
b. dissolution. d. bankruptcy.

84. The right to vote on behalf of other shareholders is called a

a. permission vote. c. parliamentary vote.
b. proxy vote. d. preliminary vote.

85. One way the SEC ensures that investors know what they are buying when purchasing stock is by requiring all
companies to provide a(n)
a. prospectus to the SEC. c. online resource for consumers.
b. letter to each potential stockholder. d. list of the corporate board of directors.
 2014 NYS FBLA SLC 11
BUSINESS LAW
86. A contract couples make before getting married that deals with property and support issues is a(n)
a. engagement proposal. c. proxy marriage.
b. marriage license. d. prenuptial agreement.

87. If someone dies intestate, his or her personal property will be distributed according to the
a. federal guidelines.
b. wishes of the surviving spouse or children.
c. wishes of the court.
d. laws of the deceased’s home state.

88. If your neighbor keeps a wild animal as a pet and it escapes and bites you, your neighbor will be liable under
the doctrine of
a. assumption of risk. c. unintentional liability.
b. strict liability. d. dangerous liability.

89. The difference between a tort and a crime is that a tort is a wrong committed against a particular person or
property while a crime is
a. a wrong committed against the public good.
b. a civil matter.
c. a private wrong.
d. remedied through compensation.

90. When a minor disaffirms a contract, the merchandise received upon entering the contract should be
a. undamaged. c. paid for.
b. returned. d. ratified.

91. When a guardian is appointed by the court for a mentally impaired person, that person’s contracts are then
declared
a. voidable. c. void.
b. binding. d. disaffirmed.

92. The legal transfer of a duty under contract is called a(n)

a. alteration. c. novation.
b. assignment. d. delegation.

93. If a friend gives you a watch to hold while he or she goes jogging and the watch gets scratched, you are not
liable because it was a
a. bailment by necessity. c. mutual benefit bailment.
b. gratuitous bailment. d. pledge.

94. If unauthorized charges are made on a credit card before the issuing company is notified, the cardholder is
liable for up to
a. $25. c. $75.
b. $50. d. $100.

95. The form of bankruptcy that lets family farmers develop a plan for debt repayment and keep their business
running is called
a. Chapter 7. c. Chapter 12.
b. Chapter 11. d. Chapter 13.
 2014 NYS FBLA SLC 12
BUSINESS LAW
96. The agency relationship involves three parties:
a. a genuine agent, a special agent, and a contractor.
b. a principal, a master, and a servant.
c. a principal, an agent, and a third party.
d. an independent contractor, a master, and a servant.

97. The legal doctrine that holds a master responsible for the torts of his or her servants is called
a. strict liability. c. respondeat superior.
b. contractual liability. d. compensation.

98. Requiring unions to give a 60-day notice before calling a strike is part of the
a. Wagner Act. c. Landrum-Griffin Act.
b. Taft-Hartley Act. d. Fair Labor Standards Act.

99. When an employer has said, written, or done something that leads an employee to reasonably believe he or
she is not an employee-at-will, it is called a(n)
a. public policy tort. c. implied covenant.
b. implied contract. d. promissory estoppel.

100. Tender offers are often referred to as

a. mergers. c. takeover bids.
b. consolidations. d. conglomerates.
 2014 NYS FBLA SLC 13
BUSINESS LAW
ANSWER KEY

1. C 26. A 51. A 76. A

2. C 27. C 52. C 77. B
3. A 28. D 53. D 78. C
4. B 29. A 54. C 79. C
5. D 30. C 55. A 80. D
6. C 31. D 56. B 81. A
7. B 32. B 57. D 82. D
8. B 33. A 58. A 83. B
9. C 34. B 59. D 84. B
10. B 35. D 60. A 85. A
11. A 36. B 61. A 86. D
12. C 37. B 62. B 87. D
13. A 38. C 63. D 88. B
14. D 39. B 64. D 89. A
15. A 40. C 65. A 90. B
16. B 41. D 66. B 91. C
17. B 42. A 67. C 92. D
18. A 43. D 68. C 93. B
19. B 44. D 69. C 94. B
20. B 45. B 70. C 95. C
21. C 46. B 71. B 96. C
22. A 47. C 72. D 97. C
23. C 48. C 73. C 98. B
24. D 49. B 74. C 99. B
25. D 50. C 75. C 100. C