(Test Bank) Managing the Law The Legal Aspects of Doing Business

Mcinnes, 5

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5th Edition

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1 © 2020 Pearson Canada Inc. Managing the Law, 5e (McInnes) Chapter 1 Risk Management and Sources of Law 1.1 True/False Questions 1) The law can affect a business both positively and negatively. It often prohibits actions that otherwise would be possible. However, it sometimes permits parties to do something that they could not otherwise do. Answer: TRUE Diff: 2 Type: TF Page Ref: 2 Topic: Why Study Law? Skill: Recall 2) Beta Inc has recently discovered that a defect in one of its products poses a risk of injury to consumers. Its only option, from a legal risk management perspective, is to eliminate the risk of liability by removing the product from the market. Answer: FALSE Diff: 2 Type: TF Page Ref: 4 Topic: Risk Management Skill: Applied 3) As described in the text, the four forms of risk management are risk avoidance, risk elimination, risk transfer, and risk acceptance. Answer: FALSE Diff: 1 Type: TF Page Ref: 4 Topic: Risk Management Skill: Recall 4) Sabeka Inc has discovered that one of its products may cause consumers to suffer a certain form of property damage. In response to that risk, the company has written an exclusion clause into its sales contracts. In doing so, it has adopted a form of risk management known as risk shifting. Answer: TRUE Diff: 2 Type: TF Page Ref: 5 Topic: Risk Management Skill: Applied 5) Jahume Ltd operates as an Internet service provider. It has retained Alison to work as in-house counsel. Following an increasingly common trend, this means that she will work for the company from her own home, rather than from a traditional law firm office. Answer: FALSE Diff: 2 Type: TF Page Ref: 6 Topic: Risk Management Skill: Applied 2 © 2020 Pearson Canada Inc. 6) Quebec is said to be a "civil law system" because it is derived from the legal system that governed the citizens of ancient Greece. Answer: FALSE Diff: 3 Type: TF Page Ref: 8 Topic: Map of the Law Skill: Recall 7) "Administrative law" derives its name from the fact that it is concerned with the administration of the trial courts and appellate courts. Answer: FALSE Diff: 1 Type: TF Page Ref: 9 Topic: Map of the Law Skill: Recall 8) Bianca punched Mick. She now finds herself in court. The person who has brought the claim for damages against her is Mick himself. It is safe to assume that the court is concerned with a private law issue, rather than a criminal law issue. Answer: TRUE Diff: 1 Type: TF Page Ref: 11 Topic: Map of the Law Skill: Applied 9) Glimmer Co recently received a tax assessment with which it disagrees. It does not believe that it should be required to pay the full amount of the demand. If it challenges the assessment, the case will fall into the category of "public law" even though the company is a private corporation. Answer: TRUE Diff: 3 Type: TF Page Ref: 11 Topic: Map of the Law Skill: Applied 10) Bastarache & Michel is a law firm in your province. Although it occasionally has clients from other jurisdictions, the vast majority of its work comes from within your province. Your legislature recently enacted a statute that imposes a 5% tax on the "sale of professional services, including … legal services." As that wording suggests, the statute treats Bastarache & Michel as the taxpayer, even if the firm adds the cost of the tax onto the fees that it charges to its clients. The new tax is probably intra vires and valid because most professionals provide services in only one province. Answer: FALSE Diff: 3 Type: TF Page Ref: 15 Topic: Map of the Law Skill: Applied 3 © 2020 Pearson Canada Inc. 11) Because of the need to ensure that the fundamental rules for governing the country are kept up to date, the Constitution (unlike most statutes) is quite easily amended. Answer: FALSE Diff: 2 Type: TF Page Ref: 13 Topic: Sources of Law Skill: Recall 12) Athlone Inc wants to start a new television channel. To do so, it requires a government licence. It should apply to the federal government, rather than the provincial government, because the issue of telecommunications is not mentioned in the Constitution. It therefore falls under federal jurisdiction because of the residual clause. Answer: TRUE Diff: 3 Type: TF Page Ref: 13 Topic: Sources of Law Skill: Applied 13) Kane Media Inc wants to start a new radio station. The government has refused to grant a licence. Kane Media Inc believes that the government's position is blatantly discriminatory. Nevertheless, it cannot rely on the Charter of Rights and Freedoms, which was intended to protect the fundamental rights and freedoms of people, and which does not apply in favour of companies. Answer: FALSE Diff: 2 Type: TF Page Ref: 19 Topic: Sources of Law Skill: Applied 14) A bill to amend a business corporations statute was introduced in the House of Commons. The statute in question must be a piece of federal legislation, as opposed to provincial legislation. Answer: TRUE Diff: 3 Type: TF Page Ref: 22 Topic: Sources of Law Skill: Applied 15) Quiet Corner Bookstore is something of a landmark. It was opened in 1908 and it has long served the needs of the community. The store's popularity is based not only on its reputation for excellent service, but also on the fact that it has always been run by members of the same family: the Meyers clan. In an age of increasingly anonymous chain stores, customers appreciate the personal touch that they receive at the Quiet Corner. Recently, however, the government has announced that it intends to expropriate the land upon which the store is located in order to build a highway through the neighbourhood. The Meyers family may, however, be able to defeat that plan, and save their store, by relying on a provision of the Charter that protects cherished property. Answer: FALSE Diff: 3 Type: TF Page Ref: 18 Topic: Sources of Law Skill: Applied 4 © 2020 Pearson Canada Inc. 1.2 Multiple Choice Questions 1) The three steps in risk management are A) realization, response, and reaction. B) recognition, evaluation, and insurance. C) identification, evaluation, and response. D) evaluation, qualification, and litigation. E) assessment, formulation, and implementation. Answer: C Diff: 2 Type: MC Page Ref: 3 Topic: Risk Management Skill: Recall 2) Alpha Corp has discovered that one of its products is potentially dangerous. It therefore has purchased liability insurance. It has employed a form of risk management known as A) risk capitalization. B) risk elimination. C) risk shifting. D) risk acceptance. E) risk avoidance. Answer: C Diff: 1 Type: MC Page Ref: 5 Topic: Risk Management Skill: Applied 3) Beta Inc has discovered that one of its products is potentially dangerous. It therefore pulled that product from the store shelves before any were sold. It has employed a form of risk management known as A) risk destruction. B) risk avoidance. C) risk reduction. D) risk acceptance. E) risk denial. Answer: B Diff: 1 Type: MC Page Ref: 4 Topic: Risk Management Skill: Applied 5 © 2020 Pearson Canada Inc. 4) Gamma Co has discovered that one of its products is potentially dangerous. That danger, however, is not great. There is only a small chance that someone will be hurt, and even if someone is hurt, the injury will not be life threatening. Gamma Co therefore has decided to do nothing about the danger. It has employed a form of risk management known as A) risk ignorance. B) risk aversion. C) risk displacement. D) risk harmonization. E) risk acceptance. Answer: E Diff: 1 Type: MC Page Ref: 4 Topic: Risk Management Skill: Applied 5) In an effort to increase sales, Delta Ltd hired Chandra, a marketing expert. Because Delta was concerned about being held responsible for any torts that Chandra might commit, it arranged to hire her as an independent contractor, rather than an employee. It has employed a form of risk management known as A) vicarious liability. B) independent responsibility. C) risk allowance. D) risk shifting. E) incorporation. Answer: D Diff: 2 Type: MC Page Ref: 4 Topic: Risk Management Skill: Applied 6) Epsilon Inc has recently retained the services of Noriko as in-house counsel. Which of the following statements is most likely TRUE? A) Although Noriko is not an employee of Epsilon Inc, she can be called in from her law firm whenever the company has a legal problem. B) Noriko can both help to resolve legal problems and help to prevent legal problems from arising in the first place. C) Epsilon Inc has probably made a mistake because, like most in-house counsel, Noriko is probably available because she cannot find work in a law firm. D) Epsilon Inc has hired Noriko for the purpose of resolving a single legal problem that it expects will drag on for several years. E) Noriko may provide advice to Epsilon, but she cannot represent the company in court. Answer: B Diff: 2 Type: MC Page Ref: 6 Topic: Risk Management Skill: Applied 6 © 2020 Pearson Canada Inc. 7) Which of the following statements is TRUE with respect to risk management and incorporation? A) Incorporation is irrelevant to risk management because corporations cannot be held liable. B) Incorporation increases the risk of liability because a shareholder of a corporation is personally liable for all of the corporation's torts. C) Incorporation completely eliminates the risk of liability because the government is responsible for a corporation's debts. D) Incorporation reduces the risk of liability because the doctrine of limited liability usually means that a corporation's debts must be paid by the corporation and not by the people who run the corporation. E) Incorporation spreads the risk of liability because if one corporation becomes liable, every other corporation in the same province may be required to pay the debt. Answer: D Diff: 3 Type: MC Page Ref: 6 Topic: Risk Management Skill: Recall 8) Which of the following statements is TRUE with respect to exclusion clauses and risk management? A) An exclusion clause can be inserted into a contract for the sale of goods. B) An exclusion clause can affect liability for property damage but not for personal injury. C) An exclusion clause can be used by a person but not by a corporation. D) An exclusion clause represents a type of risk acceptance. E) An exclusion clause always shifts the risk of liability onto an insurance company. Answer: A Diff: 2 Type: MC Page Ref: 5 Topic: Risk Management Skill: Recall 9) Techniques for managing risks include A) insurance and incorporation but not exclusion clauses. B) exclusion clauses, negligence, and contract. C) incorporation, insurance, and exclusion clauses. D) vicarious liability, employment, and the Charter. E) independent contractors, exclusion clauses, and residual powers. Answer: C Diff: 1 Type: MC Page Ref: 5-6 Topic: Risk Management Skill: Recall 7 © 2020 Pearson Canada Inc. 10) Red River Inc, which is based in Winnipeg, Manitoba, has sued a company called Eiffel Tours, which is based in Paris, France. That dispute will be decided by the "common law." That most likely means that the case will be decided by A) the provision of a statute. B) a legal system that can be traced to England. C) a legal system that can be traced to France. D) a government official, other than a judge. E) a law that is frequently applied in both France and Manitoba. Answer: B Diff: 1 Type: MC Page Ref: 8 Topic: Map of the Law Skill: Applied 11) Which of the following statements is TRUE with respect to the law of Quebec? A) Because Quebec inherited its laws from France, its criminal laws are different from those that apply in other parts of Canada. B) Because Quebec inherited its laws from France, its constitutional laws are different from those that apply in other parts of Canada. C) Even though Quebec inherited much of its law from France, it has the same criminal law as provinces and territories that inherited most of their laws from England. D) Quebec is considered a common law jurisdiction because it inherited most of its laws from England. E) Quebec is considered a common law jurisdiction because it inherited laws that were once common to all parts of the Roman Empire. Answer: C Diff: 2 Type: MC Page Ref: 8 Topic: Map of the Law Skill: Recall 12) Eric, who is a resident of Saskatchewan, has sued Trois Étoiles Ltd, which is a company based in Quebec, for breach of contract. Which of the following statements is TRUE? A) The case can be classified as a "public matter" because it involves a person suing a company for breach of contract. B) The case will be heard in a "civilian jurisdiction" if the claim is heard by a Saskatchewan court applying the laws of Saskatchewan. C) The case can be classified as an "international law" matter if the claim is heard by a Quebec court applying the laws of Quebec. D) The case would be classified as a "criminal matter" if Eric sued the government of Quebec rather than the Quebec company. E) The case can be classified as a "civil matter" under the "common law" if it is decided on the basis of the laws of Saskatchewan. Answer: E Diff: 2 Type: MC Page Ref: 8 Topic: Map of the Law Skill: Applied 8 © 2020 Pearson Canada Inc. 13) Which of the following statements is TRUE with respect to administrative law? A) Administrative law is concerned with the behaviour of public officials and therefore is not particularly important to business people. B) Because of the Constitution, administrative law applies at the federal and provincial levels but not at the municipal level C) Administrative law affects the government but not private individuals or corporations. D) Administrative law is the law by which the decisions of government-appointed decision-makers and government-appointed tribunals are reviewed by the courts. E) Administrative law is usually classified as a branch of criminal law. Answer: D Diff: 2 Type: MC Page Ref: 9 Topic: Map of the Law Skill: Recall 14) Attila works for Epsilon Inc. The police recently became aware of illegal activities in connection with that organization. Which of the following statements is TRUE? A) Epsilon Inc may be charged with a "white collar crime," which is any crime that was committed by a corporate organization rather than an individual. B) Neither Attila nor Epsilon Inc can be charged with a "corporate crime" unless they broke a law that was intended to protect another corporation. C) A "white collar crime" is the same thing as a "corporate crime." D) Attila may be charged with a crime, but Epsilon Inc cannot, because only a human being can be convicted of a criminal offence. E) Even if Attila and Epsilon Inc are convicted of crimes, they may also be sued privately if their actions also amounted to torts committed against other individuals. Answer: E Diff: 3 Type: MC Page Ref: 9 Topic: Map of the Law Skill: Applied 15) The category of public law contains A) constitutional law and administrative law but not tax law. B) constitutional law and tax law, among other things. C) criminal law, employment law, and constitutional law. D) administrative law and tax law but not criminal law. E) any case in which a government sues or is being sued. Answer: B Diff: 1 Type: MC Page Ref: 8 Topic: Map of the Law Skill: Recall 9 © 2020 Pearson Canada Inc. 16) The category of private law contains A) contract law and tort law but not if a government has sued or is being sued. B) real estate transactions, lawsuits based on deceit, and the violation of copyrights, among other things. C) contract law and property law but not tort law, which is closely related to criminal law. D) only those cases that the parties resolve themselves, or with the assistance of a neutral third party other than a judge. E) rules that govern personal matters, such as the right to privacy but not rules that govern public matters, such as the contracts of a public company. Answer: B Diff: 2 Type: MC Page Ref: 11 Topic: Map of the Law Skill: Recall 17) The Canadian legal system contains various types of laws. It occasionally is necessary to consider the relationship between two or more areas of law. Which of the following statements is TRUE? A) Because they deal with different types of rules, it is impossible for criminal law and tort law to ever apply to the same set of facts. B) Because they involve obligations that arise from different sources, it is impossible for tort law and contract law to ever apply to the same set of facts. C) "White collar crime" is a misleading phrase because the relevant concepts arise in tort law rather than criminal law. D) The relationship between an employer and an employee is governed entirely by the law of contract. E) A lawyer who provides careless services usually is sued in both tort and contract because the lawyer owes the client a duty of care to not be careless and is also bound by the terms of the contract with the client not to be careless. Answer: E Diff: 3 Type: MC Page Ref: 11 Topic: Map of the Law Skill: Recall 10 © 2020 Pearson Canada Inc. 18) Suppose that there is a general feeling in certain parts of the country that judges should be elected rather than appointed. A system of electing judges can be introduced only through a constitutional amendment. This means that A) there must be unanimous agreement by all of the provincial legislatures. B) the federal Parliament can adopt the new system as long as there is majority support in both the House of Commons and the Senate. C) the prime minister must call an election. D) the new system must be supported by at least half the provinces, and those provinces must contain at least two-thirds of the country's population. E) the new system must be supported by Parliament, plus two-thirds of the provinces, where those consenting provinces represent at least half of the Canadian population. Answer: E Diff: 3 Type: MC Page Ref: 13 Topic: Sources of Law Skill: Applied 19) The Citizen's Coalition for Property Rights (the CCPR) believes that the Charter should protect the right to own property. Which of the following statements is TRUE? A) The CCPR has no need to worry because property rights are already expressly protected by the Charter. B) The Charter cannot be amended unless, among other things, the federal Parliament agrees. C) Because property rights are listed under section 91 of the Constitution, the CCPR will not have to persuade the federal government to amend the Charter. D) The Charter can be amended as long as at least half of the Canadian population supports the protection of property rights. E) The Charter cannot be amended unless the government holds a referendum and allows individual Canadians to vote on the issue. Answer: B Diff: 3 Type: MC Page Ref: 18 Topic: Sources of Law Skill: Applied 20) During a trial, a lawyer raised an argument based on the concept of the "residual power." The lawyer's argument must A) involve an issue of private law. B) be concerned with the amending formula. C) be based on either section 98 or section 99 of the Constitution. D) have something to do with the municipal governments. E) be concerned with the federal government and constitutional law. Answer: E Diff: 2 Type: MC Page Ref: 13 Topic: Sources of Law Skill: Applied 11 © 2020 Pearson Canada Inc. 21) A province created a statute. A court ruled that the statute was ultra vires. That means that A) the statute has full force (ultra means "most" and vires means "strength," as in "virility"). B) the province acted contrary to the division of powers because it enacted legislation that it did not have the constitutional jurisdiction to enact. C) the statute must violate the Charter. D) the statute applies both inside and outside of the province. E) the statute must deal with public law rather than private law. Answer: B Diff: 3 Type: MC Page Ref: 14 Topic: Sources of Law Skill: Applied 22) In an effort to protect its dairy industry, a provincial government passed a law that prohibits the importation or manufacture of soy milk. If a soy milk company challenges that statute on constitutional grounds, what would a court likely say? A) Because property rights are protected by the Charter, the statute is constitutionally invalid. B) Inter-provincial trade is an issue that provinces are entitled to decide for themselves. C) The federal government has jurisdiction over international trade but not over inter-provincial trade. D) The statute is entirely ultra vires because federal jurisdiction over international and inter-provincial trade extends to every issue that is related to trade, including the manufacture or production of soy milk. E) The statute is at least partially intra vires because provinces have the authority to regulate the production or manufacture of things like soy milk within the province, but the law may be constitutionally ultra vires because it interferes with the federal jurisdiction over inter-provincial trade, or mobility rights under the Charter. Answer: E Diff: 3 Type: MC Page Ref: 14, 18 Topic: Sources of Law Skill: Applied 23) Which of the following statements is TRUE with respect to the Charter? A) It was introduced in 1982. B) It is a federal statute. C) Because it is intended to protect people's rights and freedoms, it severely limits the grounds upon which courts can strike down laws. D) It only applies in favour of a government or a government actor. E) It applies to federal laws but not provincial laws. Answer: A Diff: 1 Type: MC Page Ref: 16 Topic: Sources of Law Skill: Recall 12 © 2020 Pearson Canada Inc. 24) The federal, provincial, and territorial governments have decided to re-consider the contents of the Charter. They are particularly interested in the possibility of protecting economic and property rights. Which of the following statements is TRUE? A) Although the Charter does not currently contain a section devoted exclusively to the protection of economic and property rights, the right to "liberty" in section 7 of the Charter has been judicially interpreted in a way that broadly provides such protection. B) The introduction of a new Charter right for the protection of economic and property rights would be desirable primarily because it would increase the federal government's ability to regulate natural resources. C) The Supreme Court of Canada has said that because the Charter does not limit economic and property rights, every Canadian enjoys the unconstrained right to transact business whenever one wishes. D) The introduction of a new Charter right for the protection of economic and property rights might allow courts to compel governments to ensure that every Canadian enjoys adequate housing. E) Since the Charter applies to the relationship between private citizens, it should protect economic and property rights. Answer: D Diff: 2 Type: MC Page Ref: 18 Topic: Sources of Law Skill: Applied 25) The Charter includes (among other things) rights regarding A) mobility, housing, and equality. B) contracts, sexual orientation, and religion. C) ownership, expression, and association. D) equality based on religion, age, and ethnic origin. E) Aboriginals, multiculturalism, and accommodation. Answer: D Diff: 1 Type: MC Page Ref: 17 Topic: Sources of Law Skill: Recall 13 © 2020 Pearson Canada Inc. 26) A provincial government recently enacted a statute that established a scholarship for "Aboriginal students who are enrolled at Canadian universities." Melissa, a university student whose ancestors were all born in England, believes that the scholarship is unconstitutional because it unfairly discriminates against her on the basis of her race. If Melissa brought that complaint to court, a judge would likely say that A) the scholarship presumably is unconstitutional because it discriminates on the basis of race, and that it can be saved, if at all, only under section 1 of the Charter. B) the scholarship is unconstitutional because the federal government has exclusive jurisdiction over education as a result of section 92 of the Constitution. C) the scholarship is valid under section 15(2) of the Charter because it is aimed at improving the conditions of a disadvantaged group. D) because Canadian universities are private institutions, the facts do not reveal any government action that could possibly trigger the Charter's provisions. E) Melissa is entitled to participate in the scholarship scheme because she is a woman and because the Charter prefers rights based on sex to rights based on race. Answer: C Diff: 3 Type: MC Page Ref: 17 Topic: Sources of Law Skill: Applied 27) The rights and freedoms contained in the Charter are limited A) to cases involving interactions between different governments. B) to human beings, with the result that the Charter cannot work in favour of a company. C) by the ability of a federal or provincial government to invoke the notwithstanding clause only in relation to the rights and freedoms in section 2 or sections 7 to 15 of the Charter, and the general limitation of those limits demonstrably justified in a free and democratic society pursuant to section 1. D) to situations in which the government created a law in bad faith. E) to cases involving substantial amounts of money. Answer: C Diff: 1 Type: MC Page Ref: 19 Topic: Sources of Law Skill: Recall 14 © 2020 Pearson Canada Inc. 28) Lamda Corp is based in Vancouver but sells products across Canada. Which of the following statements is TRUE with respect to Lamda Corp and the Charter? A) Although the people who work for Lamda Corp enjoy Charter protection, the company itself is not a person and therefore is not protected by the Charter. B) Although Lamda Corp enjoys freedom of religion, it does not enjoy freedom of expression. C) Although Lamda Corp enjoys freedom of expression, it does not enjoy freedom of religion. D) Although Lamda Corp enjoys freedom of religion and freedom of expression, it is not a person and therefore it does not enjoy equality rights. E) Although Lamda Corp does not enjoy any Charter rights, it may be sued if it violates the Charter rights of one of its employees. Answer: C Diff: 3 Type: MC Page Ref: 19 Topic: Sources of Law Skill: Applied 29) The premier of your province wants to invoke the notwithstanding clause in order to avoid the consequences of a recent decision by the Supreme Court of Canada. Before trying to do so, however, the premier wants to know as much as possible about the notwithstanding clause. Which of the following statements is TRUE? A) The notwithstanding clause cannot be invoked unless the relevant people are willing to amend the Constitution. B) If the notwithstanding clause is invoked, it will have effect for 10 years, after which it will lapse unless it is reapplied. C) The notwithstanding clause can be invoked by the federal government but not by a provincial government. D) The notwithstanding clause can be used against equality rights but not against mobility rights. E) The notwithstanding clause has been invoked frequently in the western provinces but not in Ontario. Answer: D Diff: 2 Type: MC Page Ref: 19 Topic: Sources of Law Skill: Applied 15 © 2020 Pearson Canada Inc. 30) The Dark Room Bookstore was recently charged under the Criminal Code with selling magazines that contain photographs of people involved in violent and degrading sexual acts. The owner of the bookstore believes, however, that the government should not interfere in the private lives of its citizens and that he has a right to express his sexuality through the sale of such magazines. Which of the following statements is TRUE with respect to the Charter in this situation? A) Because freedom of expression is one of the fundamental rights that is contained in section 2 of the Charter, it cannot be subject to the notwithstanding clause. B) Once a court decides that the relevant provision of the Criminal Code does violate the right to freedom of expression, it becomes impossible to save that provision under section 1 of the Charter. C) The Charter is irrelevant in this case because the corporation that owns the store is not a person and therefore cannot claim the right to freedom of expression. D) Because the Charter applies only to government actions, it will not apply to this case unless the court is satisfied that at least one of the magazines was sold to a government official. E) The owner would have a good legal defence that his Charter rights of freedom of expression are infringed by the law. However, that law may be upheld as a reasonable infringement of the right of expression, if infringement is demonstrably justified in a free and democratic society. Answer: E Diff: 3 Type: MC Page Ref: 19 Topic: Sources of Law Skill: Applied 31) A provincial statute says that a monthly allowance of $250 is available to "any parent or set of parents that cares for an adopted child who is under the age of 12." That provision was challenged under the Charter by a parent who cares for a young child to whom she gave birth. The court agrees that the statute discriminates against "birth parents." As a remedy, the court could A) declare that the relevant provision is valid under the Charter and is therefore unconstitutional. B) allow the federal government to amend the provincial statute. C) grant an injunction that allows the parents to re-draft the statute in a way that extends the allowance to birth parents. D) read in a broader definition of "parent" that excludes both adoptive parents and birth parents. E) strike down the statute, but suspend the effect of that remedy in order to give the government time to re-draft the legislation. Answer: E Diff: 3 Type: MC Page Ref: 20 Topic: Sources of Law Skill: Applied