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
Which doctrine prevents a party from asserting a contractual right when their own conduct has led the other party to reasonably believe that right would not be enforced?
Answer: Waiver by estoppel
Waiver by estoppel prevents a party from enforcing a contractual right when their prior conduct reasonably induced the other party to believe the right had been abandoned.
The Sherman Antitrust Act primarily prohibits which of the following business practices?
Answer: Price-fixing agreements among competitors
The Sherman Act Section 1 prohibits contracts, combinations, or conspiracies in restraint of trade, with horizontal price-fixing among competitors being a per se violation.
In bankruptcy law, a Chapter 7 liquidation differs from Chapter 11 reorganization primarily because Chapter 7:
Answer: Results in the liquidation of assets and discharge of remaining debts
Chapter 7 involves a trustee liquidating non-exempt assets to pay creditors, with most remaining debts discharged, while Chapter 11 restructures debts to allow continued operations.
When an accountant knowingly misrepresents financial information to a third party who relies on it and suffers harm, the accountant may face liability under which tort?
Answer: Intentional misrepresentation (fraud)
Intentional misrepresentation (fraud) occurs when a party knowingly makes a false statement of material fact intending to induce reliance, causing damages to the relying party.
A contract clause that prohibits an employee from working for competitors within a defined geography and time period after leaving employment is called a:
Answer: Non-compete clause (restrictive covenant)
A non-compete clause restricts a former employee from working for competitors or starting a competing business within a specified geographic area and time period.
Under securities law, insider trading occurs when a person trades on the basis of:
Answer: Material, non-public information in breach of a fiduciary duty
Insider trading involves buying or selling securities based on material non-public information obtained in breach of a duty of trust or confidence.
In the context of professional ethics for accountants, 'objectivity' requires the accountant to:
Answer: Remain free from conflicts of interest and bias in professional judgments
Objectivity requires accountants to make professional judgments that are unbiased, free from conflicts of interest, and based on facts rather than personal relationships or preferences.