Question 1

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

Accepted Answer

In general partnerships, the partners share unlimited personal liability for the debts and obligations of the business, much like sole proprietors. Therefore, the total liability issue in general partnerships is similar to that of sole proprietorships.

Question 2

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

Accepted Answer

Contingency fees are not a fixed amount, but rather a percentage of the amount recovered or obtained from a lawsuit or settlement.

Question 3

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

Accepted Answer

In a professional corporation, the shareholders are generally not personally responsible for the debts and obligations of the corporation, except in certain situations such as if they have personally guaranteed a loan or if they have engaged in fraudulent activities.

Question 4

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

Accepted Answer

Torts are civil wrongs that result in personal or property damage and can occur when a person's legal rights are violated in ways not related to a contract, such as through negligence or intentional harm.

Question 5

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

Accepted Answer

This is true. A doing business as (dba) name is a legal name used by a company or individual to conduct business under a name other than their legal name.

Question 6

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

Accepted Answer

Copyright protects the expression of ideas, not 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.

Accepted Answer

This is true for both C corporations and S corporations as the IRS expects the owner to pay himself or herself a reasonable salary for the services provided to the company, which is typically determined based on market rates for similar positions. This is important to ensure proper taxation of income and avoid potential tax evasion issues.

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.

Accepted Answer

This technique is known as proportional value sharing, and it involves scaling returns according to the size of each party's contribution to the overall success of the negotiation. This allows for a fair and balanced outcome where both parties feel that they have received value from the deal.

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.

Accepted Answer

Patents do provide inventors with exclusive rights to their inventions for a limited period of time, making them a form of monopoly.

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.

Accepted Answer

Small-claims courts are designed to help individuals and businesses resolve disputes involving relatively small amounts of money, typically less than $10,000. Before taking a case to small-claims court, the plaintiff must have tried other methods of resolving the dispute, such as contacting the customer directly, sending demand letters, or attempting mediation. The plaintiff must also be able to provide evidence of the debt owed, such as contracts, invoices, or receipts. Therefore, small-claims courts are only appropriate when a person or firm has a clear, provable, and relatively small debt that they have attempted to collect in other ways before turning to the court system.

Question 11

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

Accepted Answer

While it is recommended to have business contracts in writing to minimize any misunderstandings or disputes, oral contracts can also be enforceable under certain circumstances. However, it is best to have legal counsel evaluate the situation to determine the enforceability of an oral contract.

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.

Accepted Answer

This is true. As a separate legal entity, a corporation or LLC can only be held liable for its own debts and obligations. The personal assets of the owner(s) are protected, except in cases where they have signed a personal guarantee for a business loan or engaged in fraudulent activities.

Question 13

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

Accepted Answer

In the case of mediation, the neutral third party is not a judge and does not have the power to make a binding decision. The mediator's role is to facilitate communication and negotiation between the parties to reach a mutually acceptable solution.

Question 14

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

Accepted Answer

The B2C contract is an agreement between a business and an individual consumer that is facilitated online, making it 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.

Accepted Answer

The ideal goal in a business negotiation is for both sides to come to a mutually beneficial agreement or outcome. The win-win approach to negotiation ensures that both parties leave satisfied with the outcome and allows for continued positive business relationships. The goal should be to find a solution that meets the needs and interests of all parties involved.

Question 16

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

Accepted Answer

The Sarbanes-Oxley Act (SOX) applies to all publicly traded companies, regardless of their size. Small businesses that are not publicly traded are not subject to SOX regulations.

Question 17

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

Accepted Answer

Clients want to pay as little as possible for legal services, while attorneys want to charge as much as they can to make a profit. This inherent conflict can create tension in the attorney-client relationship.

Question 18

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

Accepted Answer

A sole proprietorship does not have a separate legal entity from its owner, meaning that the owner is personally responsible for all debts, liabilities, and obligations of the business.

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.

Accepted Answer

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Question 20

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

Accepted Answer

Proposing solutions that provide value and balance for all parties involved can be a challenging step in the negotiation process as it requires understanding the needs, interests, and priorities of all parties and finding creative solutions that satisfy everyone.

Quiz 17: Legal Issues: Recognizing Your Small Business Needs