Business Law Today, Standard Edition, 9th Edition Test Bank

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1©2011CengageLearning.AllRights Reserved. May not be scanned, copied orduplicated,orpostedtoapublicly accessible website, in whole or in part.Chapter 1TheLegal EnvironmentN.B.:TYPEindicates that a question is new, modified, or unchanged, as follows.NAquestionnewto this edition of the Test Bank.+A questionmodifiedfrom the previous edition of the Test Bank,=A questionincludedin the previous edition of the Test Bank.TRUE/FALSE QUESTIONS1.The law establishes rights, duties, and privileges that are consistent with the values ofsociety.ANSWER:TPAGE:2TYPE:=NAT: AACSB ReflectiveAICPA Critical Thinking2.Law includes enforceable rules governing relationships between individuals and theirsociety.ANSWER:TPAGE:2TYPE:=NAT: AACSB AnalyticAICPA Legal3.A federal law that conflicts with the U.S. Constitution will be deemed unconstitutional.ANSWER:TPAGE:5TYPE:=NAT: AACSB AnalyticAICPA Legal4.Constitutional law includes only the U.S. Constitution.

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2UNIT ONE: THE LEGAL ENVIRONMENT OF BUSINESS©2011CengageLearning.AllRights Reserved. May not be scanned, copied orduplicated,orpostedtoapublicly accessible website, in whole or in part.ANSWER:FPAGE:5TYPE:=NAT: AACSB AnalyticAICPA Legal

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CHAPTER 1: THE LEGAL ENVIRONMENT3©2011CengageLearning.AllRights Reserved. May not be scanned, copied orduplicated,orpostedtoapublicly accessible website, in whole or in part.5.A state law that conflicts with the U.S. Constitution will be deemed unconstitutional.ANSWER:TPAGE:5TYPE:=NAT: AACSB AnalyticAICPA Legal6.The U.S. Constitution is the supreme law of the United States.ANSWER:TPAGE:5TYPE:=NAT: AACSB AnalyticAICPA Legal7.Whether a law is constitutional depends on its source.ANSWER:FPAGE:5TYPE:=NAT: AACSB AnalyticAICPA Legal8.A state constitution is supreme within the state’s borders so long as it does notconflict with the U.S. Constitution or a federal law.ANSWER:TPAGE:5TYPE:=NAT: AACSB AnalyticAICPA Legal9.Uniform laws apply in all states, including those in which the laws have not beenadopted.ANSWER:FPAGE:6TYPE:=NAT: AACSB AnalyticAICPA Legal10.Federal statutes apply to all states.ANSWER:TPAGE:6TYPE:=NAT: AACSB AnalyticAICPA Legal11.No state has adopted the Uniform Commercial Code in its entirety.ANSWER:FPAGE:6TYPE:+NAT: AACSB ReflectiveAICPA Legal12.Federal administrative agencies specify the powers of Congress.

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4UNIT ONE: THE LEGAL ENVIRONMENT OF BUSINESS©2011CengageLearning.AllRights Reserved. May not be scanned, copied orduplicated,orpostedtoapublicly accessible website, in whole or in part.ANSWER:FPAGE:7TYPE:=NAT: AACSB AnalyticAICPA Legal13.State agency regulations take precedence over conflicting federal agency regulations.ANSWER:FPAGE:7TYPE:=NAT: AACSB AnalyticAICPA Legal14.The basis for the U.S. legal system is the natural law school.ANSWER:TPAGE:9TYPE:NNAT: AACSB EthicsAICPA Critical Thinking15.Courts can rely on the common law as a guide to interpreting legislation.ANSWER:TPAGE:9TYPE:NNAT: AACSB AnalyticAICPA Legal16.Common law is a term for the law that is known to most of us.ANSWER:FPAGE:9TYPE:=NAT: AACSB AnalyticAICPA Critical Thinking17.A decision on a given issue by a court is not binding on an inferior court.ANSWER:FPAGE:10TYPE:=NAT: AACSB AnalyticAICPA Legal18.Judges use precedent when deciding a case in a common law legal system.ANSWER:TPAGE:10TYPE:=NAT: AACSB AnalyticAICPA Legal19.Stare decisisis a doctrine obligating judges to help persons who have failed to protecttheir own rights.ANSWER:FPAGE:10TYPE:N

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CHAPTER 1: THE LEGAL ENVIRONMENT5©2011CengageLearning.AllRights Reserved. May not be scanned, copied orduplicated,orpostedtoapublicly accessible website, in whole or in part.NAT: AACSB AnalyticAICPA Legal20.Courts do not depart from precedents.ANSWER:FPAGE:10TYPE:=NAT: AACSB ReflectiveAICPA Critical Thinking21.A court may depart from a precedent if the court decides that the precedent shouldno longer be followed.ANSWER:TPAGE:10TYPE:=NAT: AACSB ReflectiveAICPA Critical Thinking22.Equity is a branch of unwritten law that seeks to supply remedies of equal measure tothe parties in a legal dispute.ANSWER:FPAGE:11TYPE:NNAT: AACSB AnalyticAICPA Legal23.A defendant is a person against whom a lawsuit is brought.ANSWER:TPAGE:11TYPE:=NAT: AACSB AnalyticAICPA Legal24.A plaintiff is a person against whom a lawsuit is brought.ANSWER:FPAGE:11TYPE:=NAT: AACSB AnalyticAICPA Legal25.Monetary damages is a remedy at law.ANSWER:TPAGE:11TYPE:=NAT: AACSB AnalyticAICPA Legal26.In most states, the courts no longer grant “equitable” remedies.ANSWER:FPAGE:11TYPE:NNAT: AACSB AnalyticAICPA Legal

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6UNIT ONE: THE LEGAL ENVIRONMENT OF BUSINESS©2011CengageLearning.AllRights Reserved. May not be scanned, copied orduplicated,orpostedtoapublicly accessible website, in whole or in part.27.A court’s direction to a party to do or to refrain from doing a particular act is arescission.ANSWER:FPAGE:11TYPE:=NAT: AACSB AnalyticAICPA Legal28.Equitable remedies include injunctions.ANSWER:TPAGE:11TYPE:=NAT: AACSB AnalyticAICPA Legal29.How judges apply the law to specific disputes may depend in part on their personalphilosophical views.ANSWER:TPAGE:13TYPE:=NAT: AACSB ReflectiveAICPA Critical Thinking30.A substantive law creates or defines legal rights and obligations.ANSWER:TPAGE:14TYPE:=NAT: AACSB AnalyticAICPA Legal31.Criminal law focuses on duties that exist between persons.ANSWER:FPAGE:15TYPE:=NAT: AACSB AnalyticAICPA Legal32.International law is the law of a foreign nation and varies from country to country.ANSWER:FPAGE:17TYPE:=NAT: AACSB AnalyticAICPA Legal33.A reference to “28 U.S.C. Section 1332” means that a federal court’s decision can befound on page 28 of section 1332 of theUnited States Cases.ANSWER:FPAGE:22TYPE:=NAT: AACSB AnalyticAICPA Research

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CHAPTER 1: THE LEGAL ENVIRONMENT7©2011CengageLearning.AllRights Reserved. May not be scanned, copied orduplicated,orpostedtoapublicly accessible website, in whole or in part.34.Rules and regulations adopted by federal administrative agencies are compiled in theCode of Federal Regulations.ANSWER:TPAGE:23TYPE:=NAT: AACSB AnalyticAICPA Research35.Most state trial court decisions are not published.ANSWER:TPAGE:23TYPE:=NAT: AACSB AnalyticAICPA Research

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8UNIT ONE: THE LEGAL ENVIRONMENT OF BUSINESS©2011CengageLearning.AllRights Reserved. May not be scanned, copied orduplicated,orpostedtoapublicly accessible website, in whole or in part.MULTIPLE-CHOICEQUESTIONS1.Krystal is a federal judge. Krystal’s judicial decisions are part of case law. This lawincludes interpretations ofprimarysources of law. These sources includea.administrative regulations.b.articles in law reviews and other legal journals.c.compilations summarizing court decisions on particular topics.d.legal encyclopedias.ANSWER:APAGE:4TYPE:NNAT: AACSB ReflectiveAICPA Legal2.Lewis is a state court judge. Like other judges, Lewis often refers tosecondarysourcesof law for guidance. These sources includea.official comments to statutes.b.other states’ statutes.c.state constitutions.d.the U.S. Constitution.ANSWER:APAGE:4TYPE:NNAT: AACSB ReflectiveAICPA Legal3.Under Ohio’s state constitution, the Ohio Environmental Protection Agency issues anew rule, the Polk County Commission approves a new property tax measure, and theprofessors and students at Ohio Law School publish the results of their most recentlegal research. Sources of law donotincludea.the measures approved by local governing bodies.b.the results of legal scholars’ research.c.the rules issued by state administrative agencies.d.the states’ constitutions.ANSWER:BPAGE:4TYPE:NNAT: AACSB ReflectiveAICPA Legal

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CHAPTER 1: THE LEGAL ENVIRONMENT9©2011CengageLearning.AllRights Reserved. May not be scanned, copied orduplicated,orpostedtoapublicly accessible website, in whole or in part.4.In Nebraska, the highest-ranking (superior) law isa.a case decided by the Nebraska Supreme Court.b.a provision in the Nebraska constitution.c.a rule created by a Nebraska state administrative agency.d.a statute enacted by the Nebraska legislature.ANSWER:BPAGE:5TYPE:=NAT: AACSB ReflectiveAICPA Legal5.Hawaii enacts a state law that violates the U.S. Constitution. This law can be enforcedbya.no one.b.the federal government only.c.the state of Hawaii only.d.the United States Supreme Court only.ANSWER:APAGE:5TYPE:=NAT: AACSB ReflectiveAICPA Legal6.The legislature of the state of Missouri enacts a new statute that sets standards forthe liability of businesses selling defective products. This statute appliesa.only in Missouri.b.only in Missouri and its border states.c.in all states.d.in all states but only to matters not covered by other states’ laws.ANSWER:APAGE:6TYPE:NNAT: AACSB ReflectiveAICPA Legal7.The River City Council, the Santa Clara County Board, the Texas state legislature, andthe U.S. Congress enact laws.These laws constitutea.administrative law.b.case law.c.stare decisis.

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10UNIT ONE: THE LEGAL ENVIRONMENT OF BUSINESS©2011CengageLearning.AllRights Reserved. May not be scanned, copied orduplicated,orpostedtoapublicly accessible website, in whole or in part.d.statutory law.ANSWER:DPAGE:6TYPE:=NAT: AACSB ReflectiveAICPA Critical Thinking

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CHAPTER 1: THE LEGAL ENVIRONMENT11©2011CengageLearning.AllRights Reserved. May not be scanned, copied orduplicated,orpostedtoapublicly accessible website, in whole or in part.8.The U.S. Congress enacts a new federal statute that imposes liability on businessesemitting significant amounts of a certain pollutant into the environment. This statuteappliesa.only to matters not covered by state law.b.only to those states that adopt the statute.c.to all of the states.d.to none of the states.ANSWER:CPAGE:6TYPE:=NAT: AACSB ReflectiveAICPA Legal9.The Federal Trade Commission (FTC) is a government agency that issues rules, orders,and decisions. The Georgia state legislature enacts statutes. The Jackson County Boardand the Peach City Council enacts ordinances. Administrative law includesa.all law that affects a business’s operation.b.the rules, orders, and decisions of the Federal Trade Commission.c.statutes enacted by the Georgia state legislature.d.ordinances created by the Jackson County Board and the city council of PeachCity, Georgia.ANSWER:BPAGE:7TYPE:=NAT: AACSB ReflectiveAICPA Legal10.Crater Tools Company is subject to regulations issued by the Occupational Safety andHealth Administration (OSHA). Like other federal administrative agencies, the OSHAwas created bya.Congress, through enabling legislation.b.the Federal Trade Commission, through the rulemaking process.c.the president, through an executive order.d.the U.S. Department of Labor, through a final order.ANSWER:APAGE:7TYPE:NNAT: AACSB ReflectiveAICPA Legal

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12UNIT ONE: THE LEGAL ENVIRONMENT OF BUSINESS©2011CengageLearning.AllRights Reserved. May not be scanned, copied orduplicated,orpostedtoapublicly accessible website, in whole or in part.11.The Securities Exchange Commission is an administrative agency. The chief purpose ofsuch agencies is toa.act as liaisons between federal and state governments.b.impose uniform laws on the states.c.perform specific government functions.d.standardize laws for the executive and judicial branches.ANSWER:CPAGE:7TYPE:NNAT: AACSB ReflectiveAICPA Legal12.The federal government and the state governments constitute the U.S. legal system.This system is based on the legal system ofa.Ancient Greece.b.England.c.France.d.the natural law school.ANSWER:BPAGE:9TYPE:+NAT: AACSB ReflectiveAICPA Legal13.As a judge, Potter applies common law rules. These rules develop froma.administrative regulations.b.court decisions.c.federal and state statutes.d.proposed uniform laws.ANSWER:BPAGE:9TYPE:=NAT: AACSB ReflectiveAICPA Legal14.Jill is an appellate court judge. In this capacity, Jill establishes a rule of law. Under thedoctrine ofstare decisis,the principle must be adhered to bya.all courts.b.courts of lower rank only.c.that court and courts of lower rank.

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CHAPTER 1: THE LEGAL ENVIRONMENT13©2011CengageLearning.AllRights Reserved. May not be scanned, copied orduplicated,orpostedtoapublicly accessible website, in whole or in part.d.that court only.ANSWER:CPAGE:10TYPE:=NAT: AACSB ReflectiveAICPA Legal15.InBen v. City Car Dealership, a state supreme court held that a minor could cancel acontract for the sale of a car. Now a trial court in the same state is decidingDaphne v.Even Steven Auto Deals, Inc.,, a case with similar facts. Under the doctrine ofstare de-cisis, the trial court is likely toa.allow the minor theDaphnecase to cancel the contract.b.disregard theBencase.c.order the minor in theDaphnecase to cancel the contract.d.require the minor in theDaphnecase to fulfill the contract.ANSWER:APAGE:10TYPE:=NAT: AACSB ReflectiveAICPA Critical Thinking16.Sam is a judge hearing the case ofLocal Co. v. National Corp.Applying the relevantrule of law to the facts of the case requires Sam to find previously decided cases that,in relation to the case under consideration, area.as different as possible.b.as similar as possible.c.at odds.d.exactly identical.ANSWER:BPAGE:10TYPE:=NAT: AACSB ReflectiveAICPA Critical Thinking17.InSales Distribution Corp. v. Consumer Products Co., the court decides that aprecedent is incorrect or inapplicable. The courta.may rule contrary to the precedent.b.must apply the precedent.c.must ask a higher court to rule on the case.d.must refuse to decide the case.

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14UNIT ONE: THE LEGAL ENVIRONMENT OF BUSINESS©2011CengageLearning.AllRights Reserved. May not be scanned, copied orduplicated,orpostedtoapublicly accessible website, in whole or in part.ANSWER:APAGE:10TYPE:+NAT: AACSB ReflectiveAICPA Legal

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CHAPTER 1: THE LEGAL ENVIRONMENT15©2011CengageLearning.AllRights Reserved. May not be scanned, copied orduplicated,orpostedtoapublicly accessible website, in whole or in part.18.Network Corporation files a suit against Omega, Inc., alleging that Omega breached acontract to sell Network a computer system. Network isa.the appellant.b.the appellee.c.the defendant.d.the plaintiff.ANSWER:DPAGE:11TYPE:=NAT: AACSB ReflectiveAICPA Legal19.A state trial court has before itEagle Manufacturing Co. v. Four Feathers ProductsCorp., a case with no binding authority. The court cana.not refuse to decide theEagle case.b.postpone decidingEagleindefinitely.c.postpone decidingEagleuntil there is binding authority.d.refuse to decideEagle.ANSWER:APAGE:11TYPE:=NAT: AACSB ReflectiveAICPA Legal20.In an action against Elin, Frank obtains aremedy. This isa.an administrative agency’s enforcement of its rule.b.a principle of the law derived from earlier court cases.c.a statute enacted by a state legislature or Congress.d.the legal means to recover a right or to redress a wrong.ANSWER:DPAGE:11TYPE:NNAT: AACSB ReflectiveAICPA Legal21.InExport Co. v. Imports, Inc.,there is no precedent on which the court can base adecision. The court can considera.neither public policy nor social customs and values.b.public policy only.c.public policy or social customs and values.

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