Business Law & Ethics Flashcards
7 cards from real ABA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Business Law & Ethics flashcards as text
The 'business judgment rule' protects corporate directors from liability for business decisions made in good faith, provided they acted:
Answer: On an informed basis, without self-interest
The business judgment rule shields directors who act in good faith, on an informed basis, and without personal financial interest in the transaction from liability for poor outcomes.
Under the Foreign Corrupt Practices Act (FCPA), U.S. companies are prohibited from:
Answer: Paying bribes to foreign government officials to obtain business
The FCPA prohibits U.S. companies and their agents from paying or offering anything of value to foreign government officials to obtain or retain business.
When both parties to a contract are mistaken about a material fact existing at the time of contracting, this is known as:
Answer: Bilateral (mutual) mistake
A bilateral or mutual mistake occurs when both parties share the same erroneous assumption about a material fact, which may allow rescission of the contract.
Which ethical framework used in professional accounting emphasizes duties and rules that apply universally regardless of outcomes?
Answer: Deontological ethics
Deontological ethics, associated with Kant, holds that certain actions are inherently right or wrong based on duties and rules, independent of consequences.
Under a general partnership, each partner's personal liability for partnership debts is:
Answer: Joint and several for all partnership obligations
In a general partnership, each partner has joint and several liability, meaning creditors can pursue any individual partner for the full amount of partnership debts.
A company's code of ethics serves which primary function in business operations?
Answer: Establishing standards of conduct and guiding employee decision-making
A code of ethics establishes the organization's values, standards of conduct, and expectations for employee behavior to guide ethical decision-making.
In employment law, an 'at-will' employment relationship means:
Answer: Either party may terminate the relationship at any time for any lawful reason
At-will employment allows either the employer or employee to end the employment relationship at any time, for any reason that is not illegal.