Deck 17: Legal Issues: Recognizing Your Small Business Needs

Question 1

The total liability issue in general partnerships is similar to that of sole proprietorships.

Answer 1

True

Question 2

Contingency fees are a fixed amount paid for a certain task.

Answer 2

False

Question 3

In a professional corporation,the shareholders are responsible for debts of the corporation.

Answer 3

False

Question 4

Torts can arise when a person's legal rights are violated in ways other than from a breach of contract.

Question 5

The name of a business can be called its doing business as (dba)name.

Question 6

Copyright involves the expression of ideas as well as the ideas themselves.

Question 7

In a C corporation and S corporation,the IRS expects the owner to pay himself or herself a salary that is roughly at market rates.

Question 8

In negotiation,when proposing solutions that provide value and balance for both you and the other party,one technique is to scale returns according to the size of the contribution of the party to your success.

Question 9

Patents are essentially monopolies granted to inventors by the U.S.government giving patent owners the exclusive rights to make,use,or sell that invention for a certain period of time.

Question 10

Small-claims courts work only when a person or firms are owed money that can be proved and have exhausted other procedures like calls and letters to the customer.

Question 11

All business contracts have to be in writing to be enforceable.

Question 12

If the business is a corporation or an LLC,the owner can only lose what he or she has invested in the business.

Question 13

In the case of mediation,the dispute is put to a neutral third party who has the powers of a judge.

Question 14

The business-to-consumer (B2C)contract is an example of an Internet contract.

Question 15

The ideal goal in a business negotiation is for one side to win and the other side to lose.

Question 16

The Sarbanes-Oxley Act only covers small businesses that are not publicly traded.

Question 17

Clients and attorneys start with a natural conflict of interest related to money.

Question 18

A sole proprietorship is not considered as a separate legal entity from its owner.

Question 19

By agreeing to an exculpatory clause in a contract,one party is agreeing not to hold the other responsible for his or her actions.

Question 20

In a negotiation process,proposing solutions that provide value and balance for all parties involved is considered the easiest step.

Question 21

Which of the following types of legal fee does the attorney take a percentage of recovery as his or her fee?

A) Statutory fee
B) Contingency fee
C) Flat fee
D) Hourly fee

Question 22

_____ refers to the filing made with a state(s)in which the business operates disclosing the trade name or assumed name of the business along with the owners of the business.

A) Fictitious name filing
B) Evidential name filing
C) Incorporation
D) Adverse possession

Question 23

_______ compile legal information including laws particularly applicable to certain types of businesses in various jurisdictions and proposals for changing the laws that affect your industry.

A) Academic journals
B) Magazines
C) News channels
D) Trade associations

Question 24

Brendon wants to sue Fitness Ace,a leading provider of fitness equipments,for negligence.He approaches Arthur Bailey Group,a law firm,which has good experience in handling product liability claims for victims of exercise equipment failure.Which of the following would be true if the attorney charges Brendon using a retainer?

A) The attorney would charge Brendon on an hourly basis.
B) The attorney would charge separately for consultation and paperwork.
C) The attorney would take a percentage of Brendon's recovery as his or her fee.
D) The attorney would take monthly fee and additional fees if circumstances change.

Question 25

Which of the following statements concerning small business and law is not true?

A) Not all laws apply to your business on the day you open.
B) Understanding the legal system will help you be less intimidated by attorneys and the law.
C) State laws applicable to small business are standard in all fifty states.
D) Business and law are inseparable.

Question 26

Which of the following is true with regard to pricing of legal services?

A) Pricing of legal services is based on supply and demand.
B) Being diplomatic with the attorney is not at all recommended in negotiations on the issue of pricing.
C) The attorney's fee schedule in all four types of pricing of services is non-negotiable.
D) Pricing of legal services is mainly constant and fixed.

Question 27

Which of the following is true about trade name?

A) There can be only one business using the same name within a state.
B) Assumed name is completely different from trade name.
C) Most states allow several firms to use the same trade name,as long as the firms are in different lines of business.
D) Most states allow several firms to use the same trade name even if they are in the same town and have received a service mark.

Question 28

_______ are typical in accident (especially personal injury)situations,but are not usually used in everyday contract and business-related matters.

A) Flat fees
B) Hourly fees
C) Contingency fees
D) Retainers

Question 29

An attorney who is advertising on a local television channel that they will handle all paperwork to establish your corporation for $250 is using the _______ type of billing.

A) hourly fee
B) flat fee
C) retainer fee
D) contingency fee

Question 30

Brendon wants to sue Fitness Ace,a leading provider of fitness equipments,for negligence.He approaches Arthur Bailey Group,a law firm,which has good experience in handling product liability claims for victims of exercise equipment failure.Which of the following would be true if the attorney charges Brendon in the form of contingency fees?

A) The attorney would charge Brendon on an hourly basis.
B) The attorney would charge separately for consultation and paperwork.
C) The attorney would take a percentage of Brendon's recovery as his or her fee.
D) The attorney would take monthly fee and additional fees if circumstances change.

Question 31

There are three elements to most aspects of business law - finding the right information,negotiating the specific outcome you want,and:

A) choosing the right attorney.
B) taking care of the paperwork associated with it.
C) checking the law.
D) come to an agreement about a particular outcome.

Question 32

When using a(n)_____,the attorney will be paid a specified amount every month regardless of the workload for that month.

A) hourly fee
B) flat fee
C) retainer
D) contingency fee

Question 33

Brendon wants to sue Fitness Ace,a leading provider of fitness equipments,for negligence.He approaches Arthur Bailey Group,a law firm,which has good experience in handling product liability claims for victims of exercise equipment failure.Which of the following would be true if the attorney charges Brendon in the form of flat fees?

A) The attorney would charge Brendon on an hourly basis.
B) The attorney would charge separately for consultation and paperwork.
C) The attorney would take a percentage of Brendon's recovery as his or her fee.
D) The attorney would take monthly fee and additional fees if circumstances change.

Question 34

Which of the following is true regarding a small-claims court?

A) These courts will only accept cases where the stakes are as large as $50,000 or above.
B) Most of these courts are designed so that ordinary citizens can bring their cases in.
C) This legal option is only available to entrepreneurs who can afford an attorney.
D) These courts are the only recourse for small business owners for litigation.

Question 35

Anderson and Anderson is a law firm that has been handed a job to take care of patent issues for Gantar Labs.Anderson and Anderson charges a fixed amount for patent-related cases.Which of the following types of fees will Gantar be paying Anderson and Anderson?

A) Hourly fees
B) Flat fees
C) Retainers
D) Contingency fees

Question 36

Joshua suffered a serious knee injury at work after a machine he was using malfunctioned.Joshua plans to sue for compensation from Milch Enterprises,the company that built that machine.Joshua's attorney wants a percentage of the compensation if it is proven that Milch Enterprises' negligence caused the accident.Which of the following types of legal fee would Joshua be paying to his attorney?

A) Retainers
B) Hourly fees
C) Flat fees
D) Contingency fees

Question 37

The name under which a business is operated is known as its _____.

A) trademark
B) inclusive name
C) trade name
D) copyright

Question 38

Which of the following countries is one of the most litigious societies in the world?

A) France
B) Japan
C) Switzerland
D) United States

Question 39

Martha got billed by her lawyer for 40 minutes of consultation.Which of the following ways did the lawyer charge Martha?

A) Hourly fee
B) Flat fee
C) Contingency fee
D) Retainer

Question 40

A(n)_____ is the name under which a business is operated.

A) patent
B) assumed name
C) trademark
D) copyright

Question 41

In a(n)_____,all partners are equally and fully responsible for the business's obligations.

A) C corporation
B) limited partnership
C) general partnership
D) S corporation

Question 42

General partnerships are similar to limited partnerships in that:

A) both don't require government permission to be set up.
B) both dissolve when their respective partnership mix changes.
C) both impose double taxation of income and business to individual partners.
D) both must have at least one general partner and one limited partner.

Question 43

Except for _____,business forms are types of separate,legal entities.

A) limited partnerships
B) sole proprietorships
C) limited liabilities companies
D) C corporations

Question 44

Which of the following is true of a limited liability company (LLC)?

A) It is not always subject to double taxation.
B) It is relatively difficult to set up and tough to maintain once started.
C) It does not have the option of single taxation.
D) It cannot have more than one owner.

Question 45

Agreement between the associates of a firm on matters pertaining to the formation and operation of the partnership is known as _____.

A) articles of organization
B) contracts of partnership
C) articles of association
D) articles of partnership

Question 46

Which of the following types of business form is the most popular for start-ups?

A) Limited partnerships
B) S corporations
C) Professional corporations
D) Sole proprietorship

Question 47

A person or entity being sued is referred to as _____.

A) plaintiff
B) defendant
C) bailee
D) petitioner

Question 48

The ________ is a way to publicly inform potential investors that a for-profit firm is pursuing a social benefit role.

A) articles of organization
B) operating agreement
C) B-Corp certification
D) B2C

Question 49

_______ are the only form of legal corporation that can seek 501(c)(3)from the IRS which permits donations to the organization and considered as tax deductible to the donor.

A) C corporations
B) Corporations
C) An S corporation
D) Nonprofit corporations

Question 50

Which of the following is an advantage of corporations?

A) They tend to be personal in nature.
B) They incur the lowest incorporation fees and taxes.
C) They require the owner's liability to exceed the owner's investment.
D) They are better equipped in raising large amounts of money.

Question 51

A _____ is a unit recognized as having rights and duties apart from the owners of the company.

A) retainer
B) utility patent
C) legal entity
D) sole proprietorship

Question 52

Which among the following is a disadvantage of sole proprietorships?

A) Its owner gets no specific tax advantages.
B) Its owner has to share control with others.
C) Its owner has to share profits.
D) Its owner has unlimited liability for the firm's debt.

Question 53

Which of these is an advantage of sole proprietorship?

A) Unique tax advantages
B) Longer life because the business and owner are legally the same
C) Owner's liability for the firm's debt limited to his or her investment in it
D) Ease of raising large amounts of capital

Question 54

Document setting forth information about a limited liability company that is filed with the state to establish an LLC is referred to as _____.

A) articles of organization
B) subcontract
C) charter
D) operating agreement

Question 55

Which of the following is true of partnerships?

A) It does not get terminated upon the death of one or more partners.
B) It does not allow one partner to obtain bonding protection against the acts of the other partner(s).
C) It cannot obtain financial resources from more than one person.
D) It does not incur unlimited liability on its partners for the firm's debt.

Question 56

Which of the following forms of business requires no government permission to set up?

A) Limited partnerships
B) C Corporation
C) Professional corporation
D) Sole proprietorship

Question 57

Which of the following explains the difference between limited partnership and general partnership?

A) In limited partnerships,all partners are equally liable to the firm's debt unlike general partnerships.
B) In limited partnerships,partners incur single taxation on earnings unlike general partnerships.
C) In general partnerships,whenever the mix of partners is changed,that partnership is dissolved unlike limited partnerships.
D) In general partnerships,no government permission is required for the setup and maintenance of business unlike limited partnerships.

Question 58

Which of the following is true about sole proprietorship?

A) It is the most difficult kind of business form to set up.
B) It is not considered as a legal entity separate from its owner.
C) It does not incur unlimited liability on its owner.
D) It is not supported by any unique tax advantages.

Question 59

A person or other entity filing a lawsuit is known as _____.

A) plaintiff
B) defendant
C) sole proprietor
D) retainer

Question 60

Which of these is a disadvantage of a corporation?

A) It incurs relatively high incorporation fees and high taxes.
B) It requires its owners to have unlimited liability to the firm's debt.
C) It is considered a separate,legal entity from its owner.
D) It is automatically terminated upon the death of its owner.

Question 61

Which of the following methods is the only formal way of dealing with problems of contract or tort law?

A) Arbitration
B) Litigation in small claims court
C) Mediation
D) Litigation in the regular courts

Question 62

Arbitration differs from mediation in that arbitration:

A) works outside the court system.
B) is less costly than mediation.
C) requires that both parties represent themselves.
D) has limited appeal possibilities.

Question 63

Which of the following is a formal dispute resolution method that operates using the court system,typically with a lawyer representing each party?

A) Litigation
B) Arbitration
C) Mediation
D) Possession

Question 64

_____ is a dispute resolution process held instead of court cases in which both sides present their case to a legal professional.

A) Litigation
B) Arbitration
C) Mediation
D) Piercing the veil

Question 65

Responsibility for the actions of another is referred to as:

A) direct liability.
B) limited liability.
C) exculpatory clause.
D) vicarious liability.

Question 66

Walter Bradham,the owner of Bradham Corporation muddled his personal finances with his business accounts.Following a suit into the financial irregularities at Bradham Corporation,a court subjected the Corporation to the decision of piercing the veil.Which of the following course is the court most likely to take in this case?

A) It will convert Bradham Corporation into a separate legal entity.
B) It will dissolve the corporation into a sole partnership under Bradham.
C) It will change Bradham's liability in the business to one that of a limited partner.
D) It will hold that Bradham has no personal liability for Bradham Corporation's debt.

Question 67

_____ is a choice LLCs can make on their tax returns to be taxed as a corporation or a partnership.

A) Check the box taxation
B) Double taxation
C) Pass through taxation
D) Single taxation

Question 68

What makes all negotiations work is honesty.The optimal strategy is called _________.

A) tit-tit-tat
B) tit-for-tat
C) tit-tat-tat
D) tat-for-tit

Question 69

Which federal law describes the steps publicly traded businesses must take to protect and provide their key financial information?

A) Service Contract Act
B) Sarbanes-Oxley Act
C) Walsh-Healey Public Contracts Act
D) Davis-Bacon Act

Question 70

In _____,the earnings of the business are distributed to the business owners and those owners pay individual tax on the earnings.

A) check the box taxation
B) double taxation
C) single taxation
D) pass through taxation

Question 71

The dissolution of a corporate form,making it back into a sole proprietorship or general partnership,if the court finds that the owner carelessly mixed up personal and business assets or finances is known as:

A) piercing the veil.
B) adverse possession.
C) nonfeasance.
D) easement.

Question 72

A(n)_____ refers to a part of a contract in which a party to the contract states that he or she will not be responsible for certain actions.

A) noncompete clause
B) exculpatory clause
C) hold harmless clause
D) power of sale clause

Question 73

According to the IRS,to be an independent contractor the person must:

A) decide how the work must be done in consultation with an employer.
B) have all his expenses paid for by an employer.
C) perform a service that is not central to the operation of the business.
D) not be employed for a distinct term or project.

Question 74

The best negotiation strategy is to use four steps to structure a negotiation to achieve a winning solution for you and the other party.Which of the following is not one of those four negotiation steps?

A) Principles
B) Pounce
C) Position
D) Propose

Question 75

Which among the following steps in a negotiation process is considered to be the most difficult?

A) Prepare
B) Position
C) Propose
D) Pounce

Question 76

A(n)_____ refers to a contract among LLC members outlining how the LLC will conduct itself.

A) operating agreement
B) mission statement
C) charter
D) articles of incorporation

Question 77

Which of the following refers to a part of a contract in which a person agrees not to open a certain type of business or seek employment doing certain things in a particular area for a period of time?

A) Noncompete clause
B) Exculpatory clause
C) Hold harmless clause
D) Interstate clause

Question 78

Considering all the ways a firm can face legal threats,which of the following is not one of the ways to think about your business and avoid being sued?

A) Check with a lawyer early on.
B) Plan to do good.
C) React to make a profit.
D) Manage risks.

Question 79

Which of the following dispute resolution methods is the least expensive and much faster to complete?

A) Litigation
B) Arbitration
C) Mediation
D) Piercing the veil

Question 80

Which of these arguments would be helpful in deflecting vicarious liability?

A) Ignorance
B) Independent contractor argument
C) Financial inability argument
D) Actions are within the scope of agency/employment argument