Exam 1

1. Which of the following is NOT an element of "mutual mistake" with respect to a contract
   1. Mistake must relate to facts in existence when contract was made
   2. One of the parties did not have legal capacity to sign the contract
   3. Mistake must relate to a basic assumption of both parties
   4. Mistake has a materiaI effect on the contract, making it severely unfair and enforcement unjust
2. The warranty of quiet enjoyment in an office refers to?
   1. A tenant can terminate a lease if the landlord makes so much noise that renders the space unusable
   2. The landlord cannot interfere with the tenants right to use the property
   3. The landlord must repair any damage to the property within a reasonable time
   4. A tenant can terminate a lease if the other tenants make so much noise the it renders the space unusable.
3. "Kickstarter" is an example of:
   1. equity crowdfunding
   2. non-equity crowdfunding
   3. phantom equity
   4. stock options
4. In the context of raising capital for businesses, Regulation D provides:
   1. all of these
   2. an exemption from double-taxation
   3. an exemption from registration requirements for securities offerings
   4. immunity from fraud allegations by unhappy investors
6. Federal preemption refers to _
   1. the power of state law to supersede conflicting federal law
   2. the ability of one branches of federal government to overrule the action of another branch
   3. items the federal government is prohibited from legislating
   4. the power of the federal law to supersede conflicting state law
7. The five elements of a contract are:
   1. price, quantity, effective date and delivery date
   2. statute of frauds, mutual mistake, duress, undue influence, and unilateral mistake
   3. obligation, termination, defense, breach, and justice
   4. offer, acceptance, consideration, capacity, and legality
8. Which of the following are considered "securities"
   1. stock options
   2. secured loans
   3. unsecured loans
   4. agreements to pay royalties
9. Which branch of the federal government is charged with interpreting the laws?
   1. executive
   2. interpretive
   3. judicial
   4. legislative
10. Pursuant to the doctrine of stare decisis:
    1. a court must follow only statutory laws
    2. a lower court must follow the precedent of courts on its same level in a case involving the same issue
    3. a lower court must uphold decisions reached by higher courts of appeal or the Supreme Court
    4. Common laws must be codified
11. What is the document that must be filed with a the secretary of state of a US state in order to form a limited liability company (LLC)
    1. Articles of incorporation or Certificate of Formation
    2. company Agreement
    3. Statement of intent
    4. Declaration of limited liability
12. A private placement memorandum is an offering document presented to potential investors describing the company, the risk factors, and other aspects of the business
    1. True
    2. False
13. "Manguson-Moss" refers to a law that regulates:
    1. ecommerce
    2. sale of securities
    3. advertising
    4. warranties
14. What is the purpose of a law firm's pre-engagement conflicts check?
    1. It requires clients to agree to remain civil and negotiate in good faith in dealing with opposing parties
    2. The firm requires an upfront payment of a retainer deposit by check to ensure the client will pay firm bills.
    3. It requires the law firm not to represent anyone the client doesn't like
    4. To ensure that the law firm's representation of one client will not conflict with its representation of any others
15. Which type of security allows the owner to purchase stock at a discount
    1. bitcoin
    2. convertible notes
    3. options
    4. all of these
16. When working with legal counsel, it is OK to withhold important information if it would hurt your case, since the lawyer would have to disclose such information to the other side.
    1. True
    2. False
17. The Consumer Product Safety Commission has the legal authority to recall consumer products it deems unsafe.
    1. True
    2. False
18. Which types) of entity provides limited liability for its owners
    1. all of these
    2. corporations
    3. sole proprietorships
    4. general partnerships
19. An accredited investor:
    1. must be a lawyer or CPA
    2. all of these
    3. includes individuals with annual income of at least $200,000 for the most recent three years
    4. A must have a college degree in finance
20. If someone publicly endorses a product, the have to actually use the product as long as the endorsement ads are still being run
    1. True
    2. False
21. Steve offer to give Christie piano lessons for $20 per lesson. Christie responded that she would agree to that arrangement of Steve would include and additional three guitar lessons at no additional cost. Christie's response is a/an:
    1. Counter offer
    2. Option agreement
    3. Mutual mistake
    4. Acceptance
22. A sole proprietorship ends if the owner die
    1. True
    2. False
23. All contracts must be in writing to be enforceable by law
    1. True
    2. False
24. What is a sole proprietorship?
    1. An unincorporated business with only one owner
    2. A corporation or LLC with no employees other than the owners
    3. A corporation with only one shareholder
    4. A partnership that has dissolved
25. The vast majority of the world's population live under a "common law" legal system
    1. True
    2. False
26. Which type of entity allows - but does not require- management to consider social purposes in addition to the pursuit of profits in their decisions
    1. S corp
    2. LLC
    3. Nonprofit
    4. Public benefit Corp
27. In the context of contracts, legal capacity refers to:
    1. having the contract reviewed by legal counsel
    2. the legal ability to make a contract
    3. the maximum damages that can be awarded for breach of contract
    4. the sufficiency of consideration
28. GGDP and CCPA are examples of
    1. federal US statutes governing the internet
    2. data privacy laws
    3. federal agencies
    4. cybersecurity agencies
29. Which of the following entities is subject to "double taxation'?
    1. S Corporations
    2. Sole Proprietorships
    3. C Corporations
    4. Limited Liability Partnerships
30. Who is at the center of the "Entrepreneur's Inner Circle"?
    1. Family, Investors and employees
    2. Investors, Advisory Board and Mentor
    3. Money, Ideas and Dreams
    4. Lawyer, Banker and CPA
31. These are elected by the owners and manage the overall operations of a corporation, including the appointment of officers
    1. Officers
    2. Board of Advisors
    3. Board of Directors
    4. Shareholders
32. GWhat is the best way to find suitable legal counsel for your start-up enterprise?
    1. Only hire lawyers from Big Law (i.e., firms with 500 or more attorneys and lots of offices and practice areas)
    2. Online or local bar association lawyer referral sources
    3. Online reviews and ads
    4. Leverage referrals from trusted advisors
33. A company may be subject to "piercing the veil" if the owners:
    1. fail to follow formalities such as keeping records and holding meetings
    2. are continuously undercapitalized
    3. all of these
    4. commingle company and personal funds
34. When working with legal counsel. what does "B.D.D" stand for?
    1. Budget, Deadline & Deliverable
    2. Buy, Donate & Decide
    3. Build, Describe and Deliver
    4. Better Delete Documents
35. Members of a corporation's Board of Advisors have a fiduciary duty of loyalty to the corporation and are empowered with management and voting authority
    1. True
    2. False
36. What is the main reason "general partnership" is the entity choice that involves the greatest liability risk to the owners?
    1. personal liability for company debts
    2. geographic limitations
    3. joint and several liability
    4. the inability to obtain a tax ID
37. GThe Fair Packaging and Labeling Act authorize which agency or agencies to regulate product packaging and labeling
    1. Both FDA and FTC
    2. FDA
    3. FTC
    4. US Customs
38. The owners of an LLC are called
    1. Stockholders
    2. Managers
    3. Shareholders
    4. Members
39. Supreme Court Justices are nominated by the president and must be approved by:
    1. a majority of the senate
    2. a majority of the current Supreme Court
    3. the Vice President
    4. the electoral college
40. Which law created the SEC to regulate the sale of stock on the secondary market?
    1. The 1934 Securities Act
    2. Reg D
    3. The JOBS Act
    4. The Securities Act of 1933