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

Mcinnes, 6

Law

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6th Edition

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Managing the Law, 6e (McInnes) Chapter 01: Risk Management and Sources of Law 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. a True b False Difficulty: 2 QuestionID: 01-1-01 Topic: Why Study Law? Skill: Recall Answer: a. True 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. a True b False Difficulty: 2 QuestionID: 01-1-02 Topic: Risk Management Skill: Applied Answer: b. False 3. As described in the text, the four forms of risk management are risk avoidance, risk elimination, risk transfer, and risk acceptance. a True b False Difficulty: 1 QuestionID: 01-1-03 Topic: Risk Management Skill: Recall Answer: b. False 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. 1 © 2023 Pearson Canada Inc.a True b False Difficulty: 2 QuestionID: 01-1-04 Topic: Risk Management Skill: Applied Answer: a. True 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. a True b False Difficulty: 2 QuestionID: 01-1-05 Topic: Risk Management Skill: Applied Answer: b. False 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. a True b False Difficulty: 3 QuestionID: 01-1-06 Topic: Map of the Law Skill: Recall Answer: b. False 7. "Administrative law" derives its name from the fact that it is concerned with the administration of the trial courts and appellate courts. a True b False Difficulty: 1 QuestionID: 01-1-07 Topic: Map of the Law Skill: Recall Answer: b. False 2 © 2023 Pearson Canada Inc.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. a True b False Difficulty: 1 QuestionID: 01-1-08 Topic: Map of the Law Skill: Applied Answer: a. True 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. a True b False Difficulty: 3 QuestionID: 01-1-09 Topic: Map of the Law Skill: Applied Answer: a. True 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. a True b False Difficulty: 3 QuestionID: 01-1-10 Topic: Map of the Law Skill: Applied Answer: b. False 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. a True 3 © 2023 Pearson Canada Inc.b False Difficulty: 2 QuestionID: 01-1-11 Topic: Sources of Law Skill: Recall Answer: b. False 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. a True b False Difficulty: 3 QuestionID: 01-1-12 Topic: Sources of Law Skill: Applied Answer: a. True 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. a True b False Difficulty: 2 QuestionID: 01-1-13 Topic: Sources of Law Skill: Applied Answer: b. False 14. A bill to amend a business corporation's statute was introduced in the House of Commons. The statute in question must be a piece of federal legislation, as opposed to provincial legislation. a True b False Difficulty: 3 QuestionID: 01-1-14 Topic: Sources of Law Skill: Applied 4 © 2023 Pearson Canada Inc.Answer: a. True 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. a True b False Difficulty: 3 QuestionID: 01-1-15 Topic: Sources of Law Skill: Applied Answer: b. False 16. The duty to consult requires the Crown to consult with Indigenous Peoples whenever it intends to act in a way that may adversely affect Indigenous rights. a True b False Difficulty: 1 QuestionID: 01-1-16 Topic: Sources of Law Skill: Recall Answer: a. True 17. Delta Mining wants to start its operations on Indigenous lands. Delta Mining would have no obligation to undertake direct contact with the affected Indigenous Peoples because the duty to consult only applies to the Crown. a True b False Difficulty: 2 QuestionID: 01-1-17 Topic: Sources of Law Skill: Applied Answer: b. False 5 © 2023 Pearson Canada Inc.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. Difficulty: 2 QuestionID: 01-2-01 Topic: Risk Management Skill: Recall Answer: C) identification, evaluation, and response. 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. Difficulty: 1 QuestionID: 01-2-02 Topic: Risk Management Skill: Applied Answer: C) risk shifting. 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. Difficulty: 1 QuestionID: 01-2-03 Topic: Risk Management Skill: Applied Answer: B) risk avoidance. 6 © 2023 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. Difficulty: 1 QuestionID: 01-2-04 Topic: Risk Management Skill: Applied Answer: E) risk acceptance. 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. Difficulty: 2 QuestionID: 01-2-05 Topic: Risk Management Skill: Applied Answer: D) risk shifting. 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. 7 © 2023 Pearson Canada Inc.Difficulty: 2 QuestionID: 01-2-06 Topic: Risk Management Skill: Applied Answer: B) Noriko can both help to resolve legal problems and help to prevent legal problems from arising in the first place. 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. Difficulty: 3 QuestionID: 01-2-07 Topic: Risk Management Skill: Recall Answer: 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. 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 cannot affect liability for property damage. 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. Difficulty: 2 QuestionID: 01-2-08 Topic: Risk Management Skill: Recall Answer: A) An exclusion clause can be inserted into a contract for the sale of goods. 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. 8 © 2023 Pearson Canada Inc.D) vicarious liability, employment, and the Charter. E) independent contractors, exclusion clauses, and residual powers. Difficulty: 1 QuestionID: 01-2-09 Topic: Risk Management Skill: Recall Answer: C) incorporation, insurance, and exclusion clauses. 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. Difficulty: 1 QuestionID: 01-2-10 Topic: Map of the Law Skill: Applied Answer: B) a legal system that can be traced to England. 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. Difficulty: 2 QuestionID: 01-2-11 Topic: Map of the Law Skill: Recall Answer: 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. 12. Eric, who is a resident of Saskatchewan, has sued Trois Étoiles Ltd, which is a company based in 9 © 2023 Pearson Canada Inc.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. Difficulty: 2 QuestionID: 01-2-12 Topic: Map of the Law Skill: Applied Answer: 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. 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 isthe 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. Difficulty: 2 QuestionID: 01-2-13 Topic: Map of the Law Skill: Recall Answer: D) Administrative law isthe law by which the decisions of government-appointed decision-makers and government-appointed tribunals are reviewed by the courts. 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 10 © 2023 Pearson Canada Inc.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. Difficulty: 3 QuestionID: 01-2-14 Topic: Map of the Law Skill: Applied Answer: 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. 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. Difficulty: 1 QuestionID: 01-2-15 Topic: Map of the Law Skill: Recall Answer: B) constitutional law and tax law, among other things. 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. Difficulty: 2 QuestionID: 01-2-16 Topic: Map of the Law Skill: Recall Answer: B) real estate transactions, lawsuits based on deceit, and the violation of copyrights, among other things. 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 11 © 2023 Pearson Canada Inc.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. Difficulty: 3 QuestionID: 01-2-17 Topic: Map of the Law Skill: Recall Answer: 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. 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. Difficulty: 3 QuestionID: 01-2-18 Topic: Sources of Law Skill: Applied Answer: 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. 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 12 © 2023 Pearson Canada Inc.of property rights. E) The Charter cannot be amended unless the government holds a referendum and allows individual Canadians to vote on the issue. Difficulty: 3 QuestionID: 01-2-19 Topic: Sources of Law Skill: Applied Answer: B) The Charter cannot be amended unless, among other things, the federal Parliament agrees. 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. Difficulty: 2 QuestionID: 01-2-20 Topic: Sources of Law Skill: Applied Answer: E) be concerned with the federal government and constitutional law. 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. Difficulty: 3 QuestionID: 01-2-21 Topic: Sources of Law Skill: Applied Answer: B) the province acted contrary to the division of powers because it enacted legislation that it did not have the constitutional jurisdiction to enact. 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. 13 © 2023 Pearson Canada Inc.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. Difficulty: 3 QuestionID: 01-2-22 Topic: Sources of Law Skill: Applied Answer: 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. 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. Difficulty: 1 QuestionID: 01-2-23 Topic: Sources of Law Skill: Recall Answer: A) It was introduced in 1982. 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 14 © 2023 Pearson Canada Inc.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. Difficulty: 2 QuestionID: 01-2-24 Topic: Sources of Law Skill: Applied Answer: 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. 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. Difficulty: 1 QuestionID: 01-2-25 Topic: Sources of Law Skill: Recall Answer: D) equality based on religion, age, and ethnic origin. 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. Difficulty: 3 QuestionID: 01-2-26 Topic: Sources of Law Skill: Applied 15 © 2023 Pearson Canada Inc.