1. Laws and government regulations affect almost all business activities.
a.
True
b.
False
ANSWER:
2. Many different laws may apply to a single business transaction.
3. Law consists of enforceable rules governing relationships among individuals and between individuals and their society.
4. Businesspersons are expected to make decisions that are ethically sound.
5. Being a small-business owner means that you will never have to take on the role of finance manager, marketing manager or accountant.
6. Whether financial statements created by an accountant need to be verified for accuracy is not a legal question.
7. There are legal questions involved when considering ways to raise capital so a business can grow.
8. There are legal questions involved when choosing an appropriate business organizational form.
9. A small business owner is likely to face legal questions when determining ways to reduce his small business’s taxes.
10. In order to truly understand the law, it is important to understand the origins of the law.
11. Administrative law is a source of American law that is comprised of statutes.
12. Statutes are laws enacted by Congress and the state legislatures and comprise one of the sources of American law.
13. Stare decisis is a doctrine obligating judges to help persons who have failed to protect their own rights.
14. In a common law system, judges generally follow stare decisis unless there is a compelling reason to overturn a precedent.
15. Courts do not depart from precedents.
16. Damages are a remedy at law.
17. Remedies in equity include injunctions.
18. In most states, the courts no longer grant “equitable” remedies.
19. The term common law refers to law that is common throughout the world.
20. Common law is a term for the laws that are familiar to most of us.
21. Constitutional law includes only the U.S. Constitution.
22. Whether a law is constitutional depends on its source.
23. The U.S. Constitution reserves to the federal government all powers not granted to the states.
24. Statutory law includes state statutes.
25. Uniform laws apply in all states, including those in which the laws have not been adopted.
26. Statutory law does not include county ordinances.
27. The courts, in interpreting statutory law, may rely on sources outside of the statute (such as legislative history in response to common law precedents) as a guide to what the legislators intended.
28. No state has adopted the Uniform Commercial Code in its entirety.
29. A judge’s function is to make the law.
30. Administrative law consists of the rules, orders, and decisions of administrative agencies.
31. Administrative law includes only state regulations.
32. Criminal law focuses on duties that exist between persons.
33. Criminal acts are prohibited only by federal government statutes.
34. Any federal government authority can enforce any federal government law.
35. International law is the law of a foreign nation and varies from country to country.
Multiple Choice
36. Data Analytics, Inc., is a corporation engaged in the business of compiling, analyzing, and marketing data. To accomplish its purposes, Data Analytics obtains financing, and hires and fires employees. Laws and government regulations affect such business activities as
hiring and firing decisions.
the manufacturing and marketing of products.
c.
business financing.
d.
all of the choices.
d
37. Cato and Dolly are involved in a lawsuit. The best definition of a lawsuit is
a criminal prosecution, not a civil proceeding.
a failure to perform a legal obligation.
a judicial proceeding for the resolution of a dispute.
an enactment of law by a legislative body.
c
38. Congress enacts a statute, the Federal Deposit Insurance Corporation (an administrative agency) issues rules, the Southeast Financial Institutions Association (a private organizations) issues instructions, South Valley Bank posts a memo with orders for its employees, and Tina tells her co-worker about a recent news story. Sources of law include
the instructions issued by private associations.
the orders posted by employers.
the rules issued by federal administrative agencies.
the stories released by news agencies.
39. Under Ohio’s state constitution, the Ohio Environmental Protection Agency issues a new rule, the Polk County Commission approves a new property tax measure, and the professors and students at Ohio Law School publish the results of their most recent legal research. Sources of law include
the measures approved by local governing bodies.
the results of legal scholars’ research.
the rules issued by state administrative agencies.
the measures approved by local governing bodies and the rules issued by state administrative agencies.
40. Much of American law is based on
the English legal system.
the Spanish legal system.
the civil law of the Greeks.
Ancient Chinese law.
a
41. Kevin is a judge hearing the case of Local Dispatch Co. v. National Transport Corp. Applying the relevant rule of law to the facts of the case requires Kevin to find previously decided cases that, in relation to the case under consideration, are
as different as possible.
as similar as possible.
at odds.
exactly identical.
b
42. As a judge, Bonnie applies common law rules. These rules develop from
decisions of the courts in legal disputes.
regulations issued by administrative agencies.
statutes enacted by Congress and the state legislatures.
uniform laws drafted by legal scholars.
43. There are no precedents on which the court deciding the case Standard Resource Co. v. Topline Inventory, Inc., can base its decision. The court can consider, among other things,
the opinions of the friends and relatives of the judge.
the results of a poll of those in the courtroom.
public policy or social values.
none of the choices.
44. Mike and Nan are involved in a case. The best definition of a case is
a type of regulation applied to a business.
45. Charles is a federal judge whose judicial decisions are part of case law, which does not include interpretations of
regulations created by administrative agencies.
constitutional provisions.
statutes enacted by legislatures.
parties’ subjective motives for engaging in litigation.
46. In the case of Retail Sales Corp. v. Trucking Delivery Co., the court may rule contrary to a precedent if the court decides that the precedent
is incorrect or inapplicable.
is not in line with the judge’s personal values.
would lead to unintended consequences.
would not bring about the result the judge prefers.
47. In Benny v. City Car Dealership, a state supreme court held that a minor could cancel a contract for the sale of a car. Now a trial court in the same state is deciding Dora v. Even Steven Auto Deals, Inc., a case with similar facts. Under the doctrine of stare decisis, the trial court is likely to
allow the minor to cancel the contract.
disregard the Benny case.
order the minor to cancel the contract.
require the minor to fulfill the contract.
48. Judge Karen, a state appellate court judge, decides that the precedent for the case she is hearing is no longer correct due to technological changes. Her decision to overturn the case must be followed by
her state’s Supreme Court.
other state’s Supreme Courts.
trial courts under the jurisdiction of her appellate court.
other state’s trial courts.
49. Deb and Earl are involved in a judicial proceeding for the resolution of a dispute. This is
an action.
a breach.
an injunction.
a remedy.
50. In an action against Gina, Harry obtains a remedy. This is
an administrative agency’s enforcement of its rule.
a principle of the law derived from earlier court cases.
a statute enacted by a state legislature or Congress.
the legal means to recover a right or to redress a wrong.
51. Eliza is a state court judge. Flora appears in a case in Eliza’s court, claiming that Glover breached a contract. Eliza may
award damages.
imprison Glover.
cancel the contract.
award damages or cancel the contract.
52. James and Kay enter into a contract for the sale of a bicycle, but Kay later refuses to deliver the goods. James asks a court to order Kay to perform as promised. Ordering a party to perform what was promised is
an equitable remedy.
an unenforceable demand.
beyond the court’s authority.
53. Oak Street Market has a cause of action, which is best defined as
a criminal prosecution, not a civil proceeding.
a situation giving a person a right to initiate a judicial proceeding.
54. In a suit against Ian, Jenna obtains an injunction. This is
an order to do or to refrain from doing a particular act.
an order to perform what was promised.
a payment of money or property as compensation.
the cancellation of a contract.
55. Distinguishing between legal and equitable remedies is
not important because legal remedies cannot be granted today.
not important because equitable remedies cannot be granted today.
important so that statistical data on the remedies can be compiled.
important because the type of remedy available will depend on the type of harm suffered.
56. In a suit against Ethan, Francisco obtains an award of damages. This is
a payment of money or property as compensation.
57. In the early King’s Court of England, a court of law could grant as a remedy only
damages.
an order to perform a contract as promised.
a judicial proceeding for the resolution of a dispute.
an injunction.
58. If a provision in the California state constitution conflicts with a provision in the U.S. Constitution
neither provision applies.
the provisions are balanced to reach a compromise.
the state constitution takes precedence.
the U.S. Constitution takes precedence.
59. The Tenth Amendment of the U.S. Constitution
defines the powers and limitations of the federal government.
gives state law precedence over federal law.
gives the federal government the power to tax state governments.
gives all citizens the right to bear arms.
60. The Pennsylvania legislature enacts a state law that violates the U.S. Constitution. This law can be enforced by
no one.
the federal government only.
the state of Pennsylvania only.
the United States Supreme Court only.
61. Café Espresso is a coffee shop subject to the laws of Illinois. In Illinois, the highest-ranking (superior) law is
a case decided by the Illinois Supreme Court.
a rule created by a Illinois state administrative agency.
a provision in the Illinois constitution.
a statute enacted by the Illinois legislature.
62. The Uniform Commercial Code has been adopted, at least in part, in
all states.
forty-five states.
thirty-five states.
no state.
63. The Consumer Product Safety Commission is a government agency that issues rules, orders, and decisions. The Colorado state legislature enacts statutes. The Washington County Board and the Silver City Council enact ordinances. Administrative law includes
all laws that affect a business’s operation.
the rules, orders, and decisions of the Consumer Product Safety Commission.
statutes enacted by the Colorado state legislature.
ordinances enacted by the Washington County Board and the Silver City Council.
64. The Bay City Planning Department, the Coastal County Zoning Commission, the Delaware Environmental Quality Agency, and the U.S. Bureau of Land Management issue regulations. These rules constitute
administrative law.
case law.
constitutional law.
statutory law.
65. The branch of law dealing with the enforcement of private rights and duties between parties is
administrative law.
civil law.
constitutional law.
federal law.
66. Criminal law is concerned with
the prosecution of private individuals by other private individuals.
the prosecution of public officials by private individuals.
the relief available when a person’s rights are violated.
wrongs committed against the public as a whole.
67. Criminal acts are prohibited by
local statutes only.
state statues only.
federal statutes only.
local, state, and federal statutes.
68. National law is
law that pertains to a particular nation.
law that has an extraterritorial effect.
all law that is applied within a nation’s courts, including international law and the law of another country.
federal law, as opposed to state law.
69. A nation is a sovereign entity. This means that
a nation must submit to international law.
there is no higher authority to which a nation must submit.
a nation must adhere to the standards of the United Nations.
a nation is subject to the laws of its neighboring nations.
70. If Japan violates an international trade law, other countries may not
impose fines on Japan.
boycott Japan’s goods.
imprison responsible individuals for willful violations.
tax Japanese citizens.
Essay
71. Americans with a Better Cause (ABC), a nonprofit organization, files a suit against the U.S. Department of Justice (DOJ), claiming that a certain federal statute the DOJ is empowered to enforce conflicts with the U.S. Constitution and with a state constitution. In each situation, which source of law has priority?
The U.S. Constitution is the supreme law of the land. A law in violation of the Constitution, no matter what its source, will be declared unconstitutional and will not be enforced. Thus, the federal statute does not have priority over the Constitution. The federal statute would have priority over the state constitution, however, because under the U.S. Constitution, when there is a conflict between a federal law and a state law, the state law is rendered invalid.
72. In a dispute between Digital Hardware Corporation and Software Engineering Associates, Inc., the court applies the doctrine of stare decisis. What is this doctrine? What does this doctrine have to do with the American legal system?
In a common law legal system, past judicial decisions are binding in current disputes with similar facts. This feature of the common law, which is the basis of the American legal system, is unique because, unlike the law in other legal systems, it is judge-made law. Within the common law system, when possible, judges attempt to be consistent and to base their decisions on the principles suggested by earlier cases. The body of principles and doctrines that form the common law emerged over time as judges applied the principles announced in earlier cases to subsequent legal controversies. The practice of deciding cases with reference to former decisions, or precedents—the cornerstone of the American legal system—is called the doctrine of stare decisis. Under this doctrine, judges are obligated to follow the precedents established within their jurisdictions. This helps courts to be more efficient, and makes the law more stable and predictable.
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