(Test Bank) Business Law, Principles and Cases in the Legal Environment

Davidson, 3

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1 CHAPTER 1 Introduction to Law 1. Legal terms can have only one meaning. a. True *b. False 2. All torts are crimes. a. True *b. False 3. The facts in actions in equity are decided by judges rather than by juries. *a. True b. False 4. A constitution is the fundamental law of a nation. *a. True b. False 5. U.S. society relies on the Constitution to satisfy many of its needs and desires. a. True *b. False 6. Criminal law deals with public wrongs. *a. True b. False 7. The doctrine stare decisis is also called precedents. *a. True b. False 8. The burden of proof in criminal law cases is by the preponderance of the evidence. *a. True b. False 9. Courts try to administer justice in conformity with the laws. *a. True b. False 10. When a business takes direct action, it is called being proactive. *a. True b. False 11. Although the law is supposed to be definite rather than vague, there are situations in which the law requires “reasonable” conduct rather than setting precise boundaries. *a. True 2 b. False 12. The U.S. Constitution places “the power of the purse” with the executive branch and “the power of the sword” with the Congress. a. True *b. False 13. Pro persona and pro se opposite theories regarding the role of an attorney. a. True *b. False 14. Equity is a body of rules applied to legal controversies when no adequate remedy at law exists. *a. True b. False 15. Jurisprudence is the study of the philosophy underlying the law. *a. True b. False 16. Dictum allows the judiciary to excuse individuals that did not know about a certain law. *a. True b. False 17. Agatha slipped and fell at You Scream Ice Cream. Agatha sued You Scream. Agatha lost her case. Unhappy with the result, Agatha wants to bring another lawsuit against You Scream. Res judicata will prevent Agatha from suing You Scream again. a. True *b. False 18. Ignorance of the law is no excuse. *a. True b. False 19. U.S. courts will often rule on hypothetical cases because a legal system needs to be practical. a. True *b. False 20. There is only one type of legal rule that exists. a. True *b. False 21. In your text, we shall define law as ‘‘rules that must be considered.’’ a. True *b. False 3 22. All laws are rules, and all rules are laws. a. True *b. False 23. One reason to study the law of business is that it will help you develop valuable decision-making skills. *a. True b. False 24. Legal terms may appear to be synonyms with everyday words, but often they are not. *a. True b. False 25. Common law comparable to the list of rules at a public pool. *a. True b. False 26. The judiciary has neither the power of the purse nor the power of the sword. *a. True b. False 27. The U.S. Constitution is the supreme legal document in the United States. *a. True b. False 28. “Private” wrongs are those that a judge deems as confidential. a. True *b. False 29. “Private” wrongs are called torts, and public wrongs are called crimes. *a. True b. False 30. Substantive law deals with rights and duties given or imposed by the legal system, whereas procedural law is devoted to how those rights and duties are enforced. *a. True b. False 31. Justice refers to both the process followed and the results obtained. *a. True b. False 32. Tort law is only found in France and Canada. a. True *b. False 4 33. Some Muslims believe in Islamic law or Shari’a. *a. True b. False 34. A number of other religions also have legal systems, including Catholicism and Judaism. These religions generally provide their own tribunals for resolving disputes. *a. True b. False 35. The legal positivist approach believes that the law is the result of lawmaking by an illegitimate government. a. True *b. False 36. One trait of a legal system is the concept of “order.” *a. True b. False 37. Old laws cannot be applied to activities on Twitter because of the need to be definite. a. True *b. False 38. Case law comes from the reported court cases and is part of the common law. *a. True b. False 39. The focus of our study is on how to recognize and avoid legal problems, if possible. *a. True b. False 40. Maintaining the status quo means to keep things the way they are. *a. True b. False 1. Given that the law is an artificial language system, which of the following statements is correct? a. Legal terms may appear to be synonyms for everyday words, but they are not. b. Legal terms often have more than one legal meaning. c. Some legal terms have no relation to everyday language. *d. All of the above statements are correct. 2. A legal system needs to be: a. reasonable, critical, flexible, and final. b. unreasonable, unchanging, and final. 5 c. immemorial, practical, published, ethical, and final. *d. reasonable, practical, flexible, published, and final. 3. _____________ law is that part of law that creates and defines legal rights. *a. Substantive b. Procedural c. Administrative d. Pro se 4. What is the difference between historical legal theory and sociological theory? a. Historical theory relies upon community standards and current customs, whereas sociological theory relies on customs and social traditions that have developed over time. b. Historical theory focuses on contemporary issues, whereas sociological focuses more on economic theory to explain legal doctrines. *c. Historical theory holds that the law is primarily a system of customs and social traditions that have developed over time, whereas sociological theory focuses on contemporary opinion and customs. d. Historical theory focuses on historical religious texts, whereas sociological theory relates to the sociological studies conducted in the 19th century. 5. Camalla believes that the law does not treat women equally. She feels that women are often victimized and that the law should consider the female perspective. Camalla subscribes to which of the following theories of jurisprudence? a. Sociological. *b. Feminist. c. Critical legal studies. d. Legal positivism. 6. Even though there is a general rule of stare decisis, in some situations a court may decide to change or modify a precedent. What would be an acceptable reason for doing so? a. The prior rule is out-of-date and not appropriate to present-day society. b. The prior case is distinguishable because the facts are different in one or more significant details. c. Sometimes (if rarely) the court who made the prior ruling was incorrect or wrong. *d. All of the above. 7. Title VII of the Civil Rights Act forbids discrimination in employment on the basis of sex, race, religion, national origin, and color. The law provides that a person claiming a violation of Title VII has 180 days to file a complaint with the Equal Employment Opportunity Commission. The 180-day requirement is an example of: a. substantive law. b. preventative law. c. common law. *d. procedural law. 6 8. People are assumed to know the law, as in the classic case of __________ a. United States v. Lowbar. b. United States v. Phella. *c. Barlow v. United States. d. McGraw v. United States. 9. The North American Free Trade Agreement (NAFTA) is an agreement between Canada, Mexico, and the United States concerning the elimination of tariffs. This is: *a. a treaty. b. a statute. c. a constitution. d. an ordinance. 10. An administrative regulation promulgated by the Occupational Safety and Health Administration (OSHA) requires protective eye and face equipment when there is a reasonable probability of injury. This law is an example of: *a. substantive law. b. the law of precedents. c. common law. d. procedural law. 11. The following are examples of legal rules except: a. specific ways to create legal documents. b. prohibitions of conduct. c. compensation remedies for injured persons. *d. how animals must behave in the wild 12. What is the purpose of a legal system? a. Achieve justice. b. Provide police power. c. Maintain peace and the status quo. *d. All of the above. 13. Why does the law need to be reasonable? *a. The laws under which people live must be based upon assumptions that are provable. b. Unreasonable laws would be treaties. c. Only reasonable people make laws. d. All of the above. 14. This theory is used to predict judicial decisions: a. Sociological Theory *b. Law and Economics Theory c. Psychological Theory d. Historical Theory 7 15. Elsie violently attacks Paulo in a city park. The district attorney files a criminal case against Elsie for assault; Elsie is found guilty and sentenced to a year in prison. Now Paulo wants to file his own civil suit against Elsie to obtain money damages. Will he be allowed to do so? a. No, because of double jeopardy. b. No, because the two lawsuits are identical. *c. Yes, because the two lawsuits would be based on two different theories of action. d. Yes, because the two lawsuits are identical. 16. The city of San Francisco passed a law requiring city contractors to provide unmarried domestic partners the same benefits as legally married spouses. This law is: *a. an ordinance. b. an administrative regulation. c. case law. d. feminist law. 17. The statement, “the law properly presumes that all persons know the law” is an example of which need of a legal system? a. The need to be definite. b. The need to be flexible. c. The need to be final. *d. The need to be published. 18. Which of the following are common law countries? a. The United States *b. Both A and C c. Great Britain d. None of the above 19. Why is precedent not significant in civil law systems? a. Because it relies upon American law. *b. Because each case is treated as unique and the court tries to apply the law in a logical and fair manner to the facts presented in the case. c. Because precedents deal with European Union statutes that are not at issue d. Civil law systems use precedent. 20. What does stare decisis mean? a. ”The question has yet to be decided.” b. “The thing speaks for itself.” c. A civil wrong has been committed. *d. ”The question has been decided.” 21. The natural law theory is composed of all but which of the following concepts? a. There are certain legal values or value judgments. *b. Legal values are constantly changing. 8 c. Legal values can be determined by human reason. d. Once legal values are determined, they supersede any form of human law. 22. Those who violate an established body of rules may be forced to *a. perform or pay. b. create and enforce the legal obligation. c. participate in an administrative regulation. d. all of the above. 23. The purpose of ___________ allows people who violate the guidelines of society a second chance. a. providing protection b. providing police power *c. providing rehabilitation d. providing justice 24. One of a legal system’s purposes is to protect: a. personal property. b. civil rights. c. the individual. *d. All of the above. 25. One of the law’s purposes is to facilitate commercial transactions. In the United States, this means, among other things: a. that the law will foster free and open competition and trade. b. that the law will facilitate extension of credit. c. that the law will always do what business demands. *d. Both (a) and (b). 26. Under the natural law theory, what is not one of the four concepts held to be true by that law? a. There are certain legal values or value judgments. b. These values are unchanging because their source is absolute. Natural law theorists disagree about the sources. Theorists believe that they are Nature, God, or Reason. *c. These values cannot be determined by human reason. d. Once they are determined, these values supersede any form of human law. Once the natural law is discovered, it nullifies any contradictory law created by humans. 27. What is not a Purpose of a Legal System: a. Facilitating commercial transactions b. Achieving justice to meet the needs of the members of society *c. Protect the dealings of risky investments d. To provide some method for permitting private agreements and for ensuring that these agreements are honored or enforced. 9 Type: F 1. ____________________of the law is no excuse a. Ignorance Type: F 2. _________________ is all property with the exception of real property. a. Personal property Type: F 3. A case of _________ is when there are no prior court decisions on a point of law. a. First Impression Type: F 4. The ____________________ theory holds that the law should be based on what is correct and moral. a. Natural law Type: F 5. ________________________theory applies classical economic theory and empirical methods to explain legal doctrines and to predict judicial decisions. a. Law and economics Type: F 6. _______________ holds that the law does not treat women equally. a. Feminist legal theory Type: F 7. The U.S. legal system is based on the Constitution, treaties, statutes, ordinances, administrative regulations, common law, case law, and _________. a. Equity Type: F 8. ________________fills the gaps where other sources of law do not. a. Common law Type: F 9. __________________ are the supreme law of the land for international issues. a. Treaties Type: F 10. _______________means to abide by, or adhere to, decided cases. a. Stare decisis Type: E 1. Why might a court change precedent and ignore the doctrine of stare decisis? 10 a. A court may choose to change its precedent because: (1) The prior rule is out of date; it is not appropriate to present-day society; (2) The prior case is distinguishable because the facts are different in one or more significant details; (3) The judge or justice who made the prior ruling was incorrect or wrong. Type: E 2. What is the difference between common law and statutory law? a. Common law is developed over time according to custom, usage, and court decisions while statutory law is created by the legislature. It fills in the gaps where there isn’t a specific law. Type: E 3. Rose was admitted to the hospital after falling down the stairs. It was quite a funny story as she was trying to carry a spoon, some sugar and all of her medicine. The hospital staff loved the story and began joking around and telling their stories of falling. Duncan, one of the nurses, gave Rose way too much morphine to ease the pain. He didn’t realize he had doubled the prescribed dosage. Although Rose did not suffer severely, her recovery was extended and she missed a lot of work hours and income. Rose brought an action against the hospital for damages. She alleged that the confusion was the result of the hospital’s negligence. While not denying the allegation of negligence, the hospital filed a motion to dismiss, citing as its authority existing case law in the jurisdiction that protects charitable institutions from liability for the torts of its employees on the basis of charitable immunity. What result should occur in this case? Why?) a. Actually one of two results would control the ultimate outcome. First, under the doctrine of stare decisis the court could rule for the defendant hospital, denying any liability due to the doctrine of charitable immunity as defined in the earlier opinions. In that case, the court would merely stand by its previous decisions. On the other hand, the court could choose to overrule the precedents established in earlier cases, rejecting the doctrine of charitable immunity and finding the hospital liable for the torts of its employees. If all precedents were followed and never overruled, the law would be inflexible. Since the law is flexible, there are certain conditions under which a court will overrule a precedent. If the underlying reason for the creation of the rule no longer exists, there is no reason to continue to use the rule. The rule of charitable immunity was created when nonprofit hospitals did not charge for their services and when the services were performed as pure acts of charity. Today, in contrast, virtually all hospitals charge fees and therefore should be on equal footing before the law, be they profit or nonprofit. Accordingly, all hospitals should be held liable for the negligence of their employees. For these reasons, Broken Bow’s motion to dismiss should probably be denied. Type: E 4. Describe the division of our legal system under federal and state law. a. Our legal system is divided into two branches: federal and state. U.S. lawyers must learn not only the law of their states but also federal law. In addition, lawyers should know the majority rule. The majority rule is simply the rule that most states have 11 adopted. Often there is also a minority rule, which a smaller number of states follow. Rarely do the various states agree on all aspects of a law. Type: E 5. Your state legislature is considering adopting a statute to control water pollution. One of the provisions limits the level of a certain chemical often present in water discharged by industrial plants. Specifically, the provision sets a number of parts per million (ppm) of the chemical: Any discharges at or below that level are legal, while any discharges over that level are illegal. Discuss the merits of the provision. a. Law needs to be definite rather than vague, and further it needs to be published and widely known. The advantage of a fixed numerical level of acceptable discharge is that all potential polluters would know precisely what the rules are. The law would be clear and easily understood, and it would be easy for citizens to check their compliance. On the other hand, law needs to be flexible, reasonable, and practical. A fixed numerical level may be impracticable for a particular manufacturer. Further, in certain situations it may be environmentally harmless to have levels slightly above the set number, while in others it may be quite harmful to have levels even slightly below the set number. For that reason, it might be more appropriate to have regulators set acceptable levels of contaminants on a case-by-case basis (or at least a region-by-region basis) rather than one fixed level for the entire state. 1 CHAPTER 2 Business Ethics 1. Ethics are the accepted standards of conduct within a given society. *a. True b. False 2. According to the “Social Contract Theory,” business only exists because society allows it to exist, and will cease to exist if society so decides. *a. True b. False 3. The “Social Contract Theory” asserts that a business must satisfy social desires and social demands in order to be allowed to operate. *a. True b. False 4. Conduct that violates a law or a regulation of a society is generally deemed unethical by that society. *a. True b. False 5. Historically, businesses were viewed by many as amoral institutions. *a. True b. False 6. The “game theory” of ethics states that rules of the game can be broken with no consequences to the company or its management. a. True *b. False 7. Nonconsequential ethics tend to focus on concepts of duty, with adherence to one’s duty being viewed as ethical conduct by definition. *a. True b. False 8. Any business that that seeks to act in an ethical manner can acquire a fixed formal ethical code to follow. a. True *b. False 9. Consequential ethics attempts to measure “rightness” and “wrongness” by the greatest good it does to the most people. a. True *b. False 2 10. An at-will employee is one who makes all ethical decisions independent of the business. a. True *b. False 11. The U.S. legal system contains few ethical components. a. True *b. False 12. The consumer movement of the 1960s led to a number of protective statutes by both the federal and state governments. *a. True b. False 13. According to “game theory,” if lying is unethical, then “bluffing” is also unethical. a. True *b. False 14. The Federal Trade Commission was established to stop unfair and deceptive trade practices. *a. True b. False 15. Nonconsequential theories are more readily understood and more easily accepted by the public than the more esoteric consequential approaches. a. True *b. False 16. Different societies may have different ethics, but the morals of any given individual should remain relatively constant no matter which society that person should happen to be in at any point in time. *a. True b. False 17. Moral conduct is conduct that society deems as “not wrong.” a. True *b. False 18. Egoism, from an organizational perspective, involves those actions that best promote the long-term interests of the organization. *a. True b. False 19. A utilitarian focuses on the interest of the individual; whereas the egoist focuses on the interests of society. *a. True b. False 3 20. Dr. Martin Luther King, Jr. acted in a moral manner, effecting changes that, in turn, made his conduct ethical in hindsight. *a. True b. False 21. There is no single “best” ethical theory everyone should follow. *a. True b. False 22. Utilitarianism is an example of a non-consequential ethical system. a. True *b. False 23. Ethics refers to a guiding philosophy—the principles of conduct governing an individual or a group. By contrast, morals relate to principles of right and wrong behavior. *a. True b. False 24. Ethics refers to principles of right and wrong behavior as sanctioned by or operative on one’s conscience. a. True *b. False 25. Morals are guiding principles of conduct governing an individual or a group. a. True *b. False 26. The Civil Rights movement ultimately changed the laws regarding equal rights and racial discrimination, thereby changing the social values reflected by the laws governing human rights in this country. *a. True b. False 27. The key difference between act and rule utilitarianism is that act utilitarians apply the utilitarian principle directly to the evaluation of individual actions while rule utilitarians apply the utilitarian principle directly to the evaluation of rules and then evaluate individual actions by seeing if the act obeys or disobeys those rules whose acceptance will produce the most utility. *a. True b. False 28. The Categorical Imperative focuses on the concept of duty. *a. True b. False 4 29. The Ethics of Caring (Feminism) ethical theory determine the ‘‘rightness’’ or the ‘‘wrongness’’ of any action by determining whether the actor was compassionate and loyal. a. True *b. False 31. The ‘‘categorical imperative’’ advanced by John Rawls and the ‘‘veil of ignorance’’ advocated by Immanuel Kant are two of the best-known theories in support of the nonconsequential principles of ethics. a. True *b. False 32. An egoist may be willing to make a personal sacrifice today to receive some benefit in the future, and doing so is perfectly consistent with the doctrine of egoism. *a. True b. False 33. A rule utilitarian believes that strict adherence to the rules of the society will generally produce the greatest good for the greatest number. *a. True b. False 34. Vincent Ruggerio suggests there are three concerns in ethical decision- making: obligations, ideals, and effects. *a. True b. False 35. The International Standards Organization (ISO) works with the United Nations to create laws that govern how nations can cooperate in trade. a. True *b. False 1. Two people or two societies may hold ethical views that are opposed to one another, and yet both may be correct is the theory of: a. feminism b. egoism *c. relativism d. ethics of caring 2. The veil of ignorance is based on societal rules being created without knowledge of a. feminism. *b. personal characteristics. c. true justice. d. the contract.