Business Torts: Unfair Competition, Trade Secrets, False Advertising, and Business Interference

Question 1

When can a business be held legally responsible for false advertising?

Accepted Answer

When the business knew or should have known that the claims were false or misleading

Answer

When the claims are made in a specific type of media, such as a newspaper

Answer

When a competitor files a complaint with a regulatory agency, such as the FTC

Answer

Only when the false claims result in actual financial losses for consumers

Question 2

What makes a trade secret different from other confidential business information?

Accepted Answer

Trade secrets have economic value, while other confidential information doesn't.

Answer

Trade secrets aren't legally protected, but other confidential information is.

Answer

Trade secrets must be written down, while other confidential information can be spoken or written.

Answer

Trade secrets can be shared with anyone, but other confidential information can't.

Question 3

Which action among the following is considered fair competition?

Accepted Answer

Offering a lower price than the competitor

Answer

Passing off one's goods as another's

Answer

Enticing away an employee through unethical means

Answer

Industrial espionage

Question 4

When using social media for business marketing, which of the following is NOT a potential legal risk?

Accepted Answer

Misappropriation of trade secrets

Answer

Defamation

Answer

Copyright infringement

Question 5

Which of the following is NOT a type of business tort?

Accepted Answer

Breach of Contract

Answer

False Advertising

Answer

Unfair Competition

Answer

Theft of Trade Secrets

Question 6

Intentionally passing off one's own goods or services as those of another is an example of what business tort?

Accepted Answer

Unfair Competition

Answer

Slander

Answer

Breach of Contract

Answer

Libel

Question 7

Unauthorized use or disclosure of confidential information obtained through a business relationship constitutes what business tort?

Accepted Answer

Theft of Trade Secrets

Answer

Tortious Interference with Business Relations

Answer

Unfair Competition

Answer

Breach of Fiduciary Duty

Question 8

False or misleading statements about a competitor's products or services is a hallmark of which business tort?

Accepted Answer

False Advertising

Answer

Tortious Interference with Business Relations

Answer

Slander

Answer

Libel

Question 9

Intentional interference with existing or prospective business relationships can lead to what business tort?

Accepted Answer

Tortious Interference with Business Relations

Answer

Breach of Contract

Answer

Unfair Competition

Answer

Theft of Trade Secrets

Question 10

Which of the following is a potential defense to an action for false advertising?

Accepted Answer

Truth of the Statement

Answer

Lack of Intent

Answer

Contributory Negligence

Answer

Statute of Limitations

Question 11

Unauthorized use of a competitor's trademark may infringe upon what type of intellectual property right?

Accepted Answer

Trademark Infringement

Answer

False Advertising

Answer

Theft of Trade Secrets

Question 12

In an action for breach of a non-competition agreement, which remedy may the court impose to prevent future breaches?

Accepted Answer

Injunction

Answer

Damages

Answer

Specific Performance

Answer

Rescission

Question 13

Intentionally persuading a third party to breach a valid contract with another party can give rise to what business tort?

Accepted Answer

Tortious Interference with Contractual Relations

Answer

Unfair Competition

Answer

False Advertising

Answer

Theft of Trade Secrets

Question 14

Using another's name or likeness for commercial purposes without their consent may violate what type of business tort?

Accepted Answer

Invasion of Privacy

Answer

Tortious Interference with Business Relations

Answer

Libel

Answer

Slander

Question 15

Which of the following is NOT considered an element of unfair competition?

Accepted Answer

Proving actual damages

Answer

Passing off one's goods or services as those of another

Answer

Engaging in false advertising or disparaging a competitor's products or services

Answer

Causing confusion among consumers about the origin or affiliation of products or services

Question 16

A trade secret consists of information that:

Accepted Answer

Is not generally known or readily ascertainable by the public

Answer

Is protected by a patent or copyright

Answer

Is freely available through public sources

Question 17

Which form of false advertising involves making exaggerated or unsubstantiated claims about a product's features or capabilities?

Accepted Answer

Puffery

Answer

Comparative advertising

Answer

Bait-and-switch

Question 18

The primary purpose of the Lanham Act is to:

Accepted Answer

Protect trademarks, service marks, and unfair competition

Answer

Govern bankruptcy and insolvency proceedings

Answer

Define the rights and responsibilities of corporations

Answer

Regulate patents and copyrights

Question 19

Which defense to a business tort claim involves arguing that the defendant's actions were taken to protect their own legitimate business interests?

Accepted Answer

Justification

Answer

Lack of intent

Answer

Mistake of law

Question 20

A non-compete clause in an employment contract typically:

Accepted Answer

Prohibits an employee from working for a competitor within a specified geographic area and time period after leaving their employment

Answer

Requires an employee to pay back training costs if they leave their employment within a certain period

Question 21

Conversion, in the context of business torts, refers to:

Accepted Answer

The unauthorized and intentional exercise of control over personal property belonging to another

Answer

The intentional infliction of emotional distress

Answer

The negligent misrepresentation of a fact

Question 22

Which legal duty requires corporate directors to act in the best interests of the corporation and its shareholders?

Accepted Answer

Fiduciary duty

Answer

Due diligence

Answer

Negligence

Answer

Strict liability

Question 23

Which of the following is **not** considered a business tort?

Accepted Answer

Breach of Contract

Answer

Unfair Competition

Answer

Trade Secret Misappropriation

Answer

Interference with Business Relationships

Question 24

What is the legal term for the unauthorized use of another company's distinctive mark, such as a brand name or logo?

Accepted Answer

Trademark Infringement

Answer

False Advertising

Answer

Unfair Competition

Answer

Passing Off

Question 25

What is the primary purpose of business tort law?

Accepted Answer

To compensate victims for losses caused by unfair or deceptive business practices and deter future misconduct

Answer

To regulate the competitive landscape of the market

Answer

To punish businesses for unethical behavior

Question 26

Which of the following is **not** a type of unfair competition?

Accepted Answer

Patent Infringement

Answer

Trademark Infringement

Answer

False Advertising

Question 27

What is the ethical responsibility of businesses in relation to business torts?

Accepted Answer

To act fairly and honestly in their dealings with others

Answer

To maximize profits at all costs

Answer

To comply with the letter of the law only

Question 28

Which of the following is NOT an element of unfair competition under the Lanham Act?

Accepted Answer

Copyright infringement

Answer

Passing off

Answer

False advertising

Answer

Misappropriation of trade secrets

Question 29

What is the primary purpose of a trade secret law?

Accepted Answer

To safeguard confidential business information that provides a competitive edge.

Answer

To promote innovation and research and development.

Answer

To prevent businesses from stealing ideas from each other.

Question 30

Which of the following is a deceptive practice considered false advertising?

Accepted Answer

Bait-and-switch advertising

Answer

Puffery

Answer

Informative advertising

Answer

Comparative advertising

Question 31

What is the main objective of the tort of interference with business relationships?

Accepted Answer

To protect businesses from intentional actions that harm their customer or supplier relationships.

Answer

To prevent businesses from engaging in fair competition.

Question 32

What is the primary goal of awarding punitive damages?

Accepted Answer

To deter similar wrongful conduct and punish the responsible party.

Answer

To cover legal expenses

Answer

To compensate victims for their losses

Question 33

In most jurisdictions, what factor determines the time limit for filing a breach of contract lawsuit?

Accepted Answer

Statute of limitations specified by each state's laws

Answer

One year

Answer

Ten years

Answer

Five years

Question 34

Which of the following is NOT considered an element of the tort of unfair competition?

Accepted Answer

Breach of contract

Answer

Passing off

Answer

Trade libel

Answer

Misappropriation of trade secrets

Question 35

What type of legal protection is specifically designed to safeguard confidential information that is not publicly known or readily available?

Accepted Answer

Trade secret

Answer

Trademark

Answer

Copyright

Answer

Patent

Question 36

Which of the following is a clear example of false advertising?

Accepted Answer

Making false or misleading claims about a product or service.

Answer

Breaching a warranty

Answer

Trespassing on another's property

Question 37

What is the tort that arises when someone intentionally interferes with an existing or potential business relationship?

Accepted Answer

Tortious interference with a business relationship

Answer

Defamation

Answer

Libel

Question 38

Which of the following is NOT considered a form of false advertising?

Accepted Answer

Puffery (exaggerated claims)

Answer

Omission of material facts

Answer

Misrepresentation of facts

Question 39

What is the primary purpose of the Lanham Act?

Accepted Answer

To protect trademarks, service marks, and trade dress

Answer

To regulate unfair competition

Answer

To protect trade secrets

Question 40

Which of the following is an essential element of the tort of tortious interference with a contract?

Accepted Answer

Intentional interference with an existing contract

Answer

Negligence

Answer

Defamation

Answer

Breach of a fiduciary duty

Question 41

What is the key difference between a trademark and a trade name?

Accepted Answer

A trademark identifies goods, while a trade name identifies a business

Answer

A trademark can be used forever, while a trade name cannot

Answer

A trademark is registered with the government, while a trade name is not

Question 42

Which of the following scenarios best illustrates tortious interference with a prospective economic advantage?

Accepted Answer

A rival company makes false statements about a competitor's product to potential investors, causing them to withdraw their financial support.

Answer

A company uses a competitor's trademarked logo on its own products without authorization.

Question 43

A former employee exploits confidential customer data from their previous workplace to solicit business for their own venture. This action may constitute:

Accepted Answer

Misappropriation of trade secrets

Answer

Fair use

Answer

Copyright infringement

Answer

Patent infringement

Question 44

When determining whether information qualifies as a trade secret, which of the following factors is irrelevant?

Accepted Answer

Whether the information has been patented

Answer

The extent to which the information is known outside the company

Answer

The value of the information to the company

Answer

The measures taken by the company to protect the information's secrecy

Question 45

A beverage company claims in its advertising that its new energy drink has been scientifically proven to enhance athletic performance by 20%. However, there is no actual scientific evidence to support this claim. This practice is considered:

Accepted Answer

False advertising

Answer

Comparative advertising

Answer

Bait and switch

Answer

Puffery

Question 46

Which of the following is NOT a potential remedy for a successful claim of false advertising under the Lanham Act?

Accepted Answer

Criminal penalties

Answer

Monetary damages

Answer

Corrective advertising

Answer

Injunctive relief

Question 47

A restaurant owner intentionally spreads false rumors about a competing eatery, claiming it has unsanitary kitchen conditions. This action results in a decline in business for the neighboring restaurant. This scenario is an example of:

Accepted Answer

Trade libel

Answer

Interference with a contractual relationship

Answer

Breach of contract

Answer

Negligence

Question 48

To establish a claim of tortious interference with a contract, the plaintiff must prove that the defendant:

Accepted Answer

Intentionally interfered with the existing contract while being aware of its existence.

Answer

Benefited financially from the breach of contract.

Answer

Acted negligently in causing a breach of contract.

Question 49

Which of the following is an example of puffery rather than false advertising?

Accepted Answer

A car dealership advertises its vehicles as having 'the most comfortable ride in town.'

Answer

A clothing company claims its products are made from 100% organic cotton when they contain synthetic materials.

Answer

A furniture store advertises a 'going out of business sale' but continues operating for months after the sale.

Question 50

Which of the following is NOT a type of business tort?

Accepted Answer

Theft

Answer

False advertising

Answer

Unfair competition

Question 51

A company uses a competitor's secret formula to produce a similar product. This action could be considered a violation of:

Accepted Answer

Trade secret misappropriation

Answer

False advertising

Answer

Unfair competition

Question 52

Which of the following statements about false advertising is true?

Accepted Answer

It can include both express and implied representations

Answer

It only applies to advertising that is directed at consumers

Answer

It must result in actual damages to be actionable

Question 53

An individual induces a customer to breach a contract with a business. This action could be a form of:

Accepted Answer

Tortious interference with contract

Answer

Trespass to chattels

Answer

Unfair competition

Question 54

Which of the following is a common remedy for business torts?

Accepted Answer

Injunction

Answer

Community service

Answer

Imprisonment

Answer

Probation

Question 55

The elements of a tort of unfair competition include:

Accepted Answer

Passing off, confusion, and damages

Answer

Malice, intent, and damages

Answer

Fraud, misrepresentation, and damages

Answer

Negligence, causation, and damages

Question 56

Which of the following is a defense to a claim of trade secret misappropriation?

Accepted Answer

Independent development

Answer

Unclean hands

Answer

Statute of limitations

Answer

Laches