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Canadian Business And The Law, 4th Edition Test Bank

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Canadian Business And The Law, 4th Edition Test Bank - Page 1 preview imageChapter 1 Knowledge of Law as a Business AssetMULTIPLE CHOICE1.Which of the following examples correctly defines business law?a.legal responsibility for the occurrence of an event causing lossb.rules governing commercial relationships and enforcement of rightsc.rules governing procedures involved when one person sues anotherd.rules providing members of a society with established rightsANS:BPTS:1DIF:EasyREF:4MSC: Remember2.Which of the following describes the primary asset needed to maximize protection of entrepreneursand the entire business enterprise?a.inventory tracking softwareb.accounting softwarec.surveillance camerasd.knowledge of business lawANS:DPTS:1DIF:MediumREF:4MSC: Analyze3.Which of the following situations best exemplifies how the law protects members of society?a.The RCMP review Robert’s e-mail without the required judicial warrant.b.Bruce’s company car is stolen; no one is charged with the crime.c.Evelyn is awarded compensation for wrongful dismissal.d.Alexis is not charged for identity theft; the two-year time limit passed.ANS:CPTS:1DIF:MediumREF:4MSC: Understand4.A small group of entrepreneurs undertaking a business venture have agreed on the roles each willassume in the business, but they must now determine the form of business structure for the enterprise.Which of the following best describes what the law facilitates by offering entrepreneurs choice inbusiness structure?a.choice of degree of exposure to liability for business risksb.rules that make written agreements between parties bindingc.opportunities to maximize the protections that law extendsd.legal certainty for activities conducted in the commercial arenaANS:APTS:1DIF:ChallengingREF:4MSC: Evaluate
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Canadian Business And The Law, 4th Edition Test Bank - Page 2 preview image
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Canadian Business And The Law, 4th Edition Test Bank - Page 3 preview image5.I’mNottaSoSmart Inc. overlooked the proper registration of its patent for a unique relay componentused in its new software before release for public sale. A year later it discovered a competitor hadused the component in its just released patented software. Which of the following best describes theconsequences to the competitor for its actions?a.Unprotected intellectual property can be used with impunity.b.Theft of business property is a criminal offence.c.Patent law infringements are punishable offences.d.Losses due to theft of business property are recoverable.ANS:APTS:1DIF:MediumREF:5MSC: Evaluate6.Windy Energy Inc. recovered most of its property stolen by a former employee. The employee wasplaced on probation and ordered to pay restitution. Which of the following correctly identifies the typeof law that determined the employee’s punishment?a.Employment law.b.Business law.c.Criminal law.d.Contract law.ANS:CPTS:1DIF:EasyREF:5MSC: Analyze7.Novel Swings Inc. has a contract to begin construction of a school’s swing set on June 15th and workis to be completed by August 1st. After weeks of wet weather, the ground was unsuitable for work tobegin in June and Novel will not meet the completion deadline. Which of the following best describesthe legal status of the contractual relationship between Novel and the school?a.The contract is void due to wet weather.b.The contract requires renegotiation.c.The contract is in good standing.d.The contract has been breached.ANS:DPTS:1DIF:MediumREF:5MSC: Evaluate8.Which of the following best describes the outcome of US government reluctance to regulate theactivities of its banks, financial institutions and markets?a.US destabilization left global markets unaffected.b.Severe destabilization of global markets and economies.c.Subprime mortgage lending continued to grow.d.US banks, markets and financial institutions flourished..ANS:BPTS:1DIF:MediumREF:7MSC: Evaluate
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Canadian Business And The Law, 4th Edition Test Bank - Page 4 preview image9.Risk managers were keen to use unregulated derivative mortgage products to shift risk off theirbalance sheets. Which of the following describes the consequence of failing to regulate investmentbusiness activities in a free-market environment?a.Unscrupulous participants use the opportunities to act exploitatively.b.Market participants voluntarily enforce ethical business practices.c.Oversight by directors is a guarantee of scrupulous behaviour.d.Market participants will cautiously push markets to expand.ANS:APTS:1DIF:MediumREF:7MSC: Evaluate10.Which of the following correctly describes the purpose of contract law?a.to ensure litigation of parties committing contractual breachb.to prescribe principles and values for use in societyc.to determine right and wrong in the business worldd.to enforce expectations and facilitate planningANS:DPTS:1DIF:EasyREF:8MSC: Remember11.After checking regulations, Meat Market Inc. refused an offer of fresh wild bison meat that could besold in Meat Market’s chain of butcher shops. Which of the following describes the applicable lawregulating the sale of wild meat in Canada that Meat Market Inc. considered?a.theWildlife Actb.theConsumer Protection Actc.theCriminal Code ofCanadad.theCivil CodeANS:APTS:1DIF:ChallengingREF:7|8MSC: Evaluate12.Mortgage Plus Inc. made outstanding profits selling derivative asset-backed investments based onsubprime mortgage products. Which of the following best describes the incentive to mortgage lendersto bundle derivative investment products with subprime mortgage loans?a.Mortgage lenders were able to avoid all risk of loss from borrower default.b.Borrowers were able to escape consequences of default on payments.c.Risk of loss to mortgage lenders resulting from borrower default was less.d.Mortgage lenders could share risk of loss from borrower default.ANS:APTS:1DIF:ChallengingREF:7MSC: Evaluate
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Canadian Business And The Law, 4th Edition Test Bank - Page 5 preview image13.Organic Veggies’4’U Inc. has entered into a one-year extendable supplier contract with EcoWiseFertilizers Ltd. for the delivery of 1.5-ton pallets of worm castings fertilizer at a price of $2,000 per tonin March and June. Which of the following would a lawyer most likely identify as the role played bycontract law and its contributions to the establishment of this business relationship?a.gacilitating role, providing definition, context, and certainty.b.ethical role, facilitating better environmental practicesc.litigation role, defining clear areas of liability for breachd.governing role, providing a comprehensive action planANS:APTS:1DIF:ChallengingREF:8|9MSC: Analyze14.Which of the following describes the contributions a legal contract provides to the businessrelationship?a.It contributes uncertainty of liability in the relationship.b.It defines the moral principles and values of the relationship.c.It provides principles of paramountcy to govern the relationship .d.It gives structure, predictability, and security to the relationship.ANS:DPTS:1DIF:MediumREF:8MSC: Remember15.Which of the following is a distinguishing characteristic of the influence of law on the businessenvironment?a.The influence of law does not have to be exacting and literal.b.The influence of law demands strict, literal enforcement.c.The influence of law requires litigation of all disputes.d.The influence of law creates rules of procedure for planning.ANS:APTS:1DIF:EasyREF:9MSC: Remember16.Which of the following best exemplifies some of the most important contributions the law provideswhen facilitating commercial activities?a.structure, confidence, preclusionb.structure, certainty, preventionc.structure, certainty, predictabilityd.structure, confidence, promiseANS:CPTS:1DIF:ChallengingREF:8|9MSC: Understand
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Canadian Business And The Law, 4th Edition Test Bank - Page 6 preview image17.Which of the following correctly matches the reality that contracts cannot recite or provide for allcontingencies, leaving some issues unstated?a.The degree of certainty established in a contract is not entirely absolute.b.Contractual disputes over unknown contingencies require litigation.c.Standard form contracts are preferred as they cover all contingencies.d.Unknown contingencies cause irreconcilable disputes between businesses.ANS:APTS:1DIF:ChallengingREF:9MSC: Understand18.Jim has retained a lawyer to file a lawsuit claiming economic loss due to theft of business revenues byhis partner. Which of the following would your law professor accept as correctly identifying the formof dispute resolution Jim has undertaken?a.arbitrationb.mediationc.litigationd.reconciliationANS:CPTS:1DIF:MediumREF:9|10MSC: Analyze19.A dispute has arisen between business entities with a lengthy relationship and each would suffereconomically if the relationship were to suddenly end. Which of the following procedures should firstbe employed to attempt to maintain the relationship and quickly resolve the dispute?a.Consult with bankers to determine whether the company can afford litigation.b.Refuse to compromise and look for alternate business relationships.c.Negotiate direct resolution, set out in formalized settlement agreement.d.Ask the company lawyer the cost of having to outsource the litigation.ANS:CPTS:1DIF:ChallengingREF:9|10MSC: Evaluate20.Which of the following describe the commonly used alternative dispute resolution methods foravoiding litigation?a.intervention, negotiation, reconciliationb.intervention, arbitration, mediationc.negotiation, mediation, adjudicationd.direct negotiation, mediation, arbitrationANS:DPTS:1DIF:EasyREF:10MSC: Remember
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Canadian Business And The Law, 4th Edition Test Bank - Page 7 preview image21.Which of the following types of law is the vehicle for ensuring that those affected by a failed businessare treated fairly, reasonably, and in accordance with agreed rules?a.bankruptcy lawb.contract lawc.criminal lawd.corporate lawANS:APTS:1DIF:MediumREF:10|11MSC: Understand22.Approaching the operation of a business with an unethical perspective combined with a lack of respectfor adherence to and enforcement of the law eventually should result in which of the followingoutcomes?a.commercial social responsibilityb.increased business moralityc.the success of the businessd.the demise of the businessANS:DPTS:1DIF:MediumREF:13MSC: Analyze23.Which of the following best describes the nature of the mediation process?a.submission to litigation of the dispute before a judge in courtb.negotiated resolution with the assistance of a neutral personc.submission to an arbitrator’s binding decision to resolve a disputed.renegotiation of the contract with the assistance of a judgeANS:BPTS:1DIF:EasyREF:10MSC: Remember24.Which of the following best describes the goal of the Canadian legal system?a.to facilitate commerceb.to facilitate arbitrationc.to facilitate free traded.to facilitate justiceANS:DPTS:1DIF:MediumREF:11MSC: Evaluate25.Which of the following would be classified as the standard forms of business structures available toentrepreneurs to facilitate creation of a for-profit business enterprise?a.sole owner, proprietor, partnershipb.sole proprietor, partnership, corporationc.sole partnership, proprietor, corporationd.sole owner, proprietor, corporationANS:BPTS:1DIF:MediumREF:15MSC: Understand
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Canadian Business And The Law, 4th Edition Test Bank - Page 8 preview image26.Which of the following best exemplifies a protective element of Canadian law?a.It seeks to make those who break the law accountable.b.It sets rules in order to encourage complexity.c.It sets rules in order to encourage complacence.d.It provides rules that prohibit making commitments.ANS:APTS:1DIF:MediumREF:4MSC: Understand27.Which of the following is an example of how business law guides business conduct?a.The law sets rules and penalties to encourage compliance.b.The law sets specific codes of ethics to guide conduct.c.The law seeks levels of compensation exceeding losses.d.The law limits executive compensation to guide conduct.ANS:APTS:1DIF:MediumREF:8MSC: Understand28.Which of the following is an example of the values represented in the Canadian legal system?a.The system seeks to be partial and flexible.b.The system strives to produce just outcomes.c.The system seeks to limit fairness and equity.d.The system demands fairness and subjectivity.ANS:BPTS:1DIF:ChallengingREF:11MSC: Understand29.Hiring a company’s accounting auditors to act as the business’s accounting compliance consultants isan example of which of the following ethical infractions?a.unfair tender of contractb.employee privacy breachc.conflict of interestd.labour code violationANS:CPTS:1DIF:ChallengingREF:14|15MSC: Understand30.Jack and Jill recently agreed to sell their business to Evergreen Solutions Inc. Evergreen’s lawyersuggested he can represent both Jack and Jill and Evergreen to reduce the legal cost of the deal. Whichof the following correctly identifies the position the lawyer would be in if he acts as counsel for bothbusiness parties in this transaction?a.privacy breachb.criminal code conflictc.conflict of interest.d.financially profitableANS:CPTS:1DIF:ChallengingREF:14|15MSC: Analyze
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Canadian Business And The Law, 4th Edition Test Bank - Page 9 preview imageTRUE/FALSE1.Canadian business law consists of a set of established bilingual rules governing commercialrelationships that exclude enforcement of rights.ANS:FPTS:1DIF:MediumREF:5MSC: Evaluate2.Canada offers an attractive commercial environment for entrepreneurs because it has an established setof laws comprised of rules and principles intended to guide conduct in business relationships andprotect the property of persons and business.ANS:TPTS:1DIF:EasyREF:5MSC: Evaluate3.A stockbroker who is employed by a large Canadian banking institution and charged with theft andcommercial fraud of a number of the bank’s customers could be prosecuted under theCriminal Codeof Canadaand, if found guilty, sued in a civil court for damages.ANS:TPTS:1DIF:MediumREF:5|6MSC: Evaluate4.Contract law refers to a collection of rules used to establish contracts as binding agreements betweencontracting parties and to ensure their obligations can be legally enforced.ANS:TPTS:1DIF:EasyREF:8MSC: Remember5.Litigation is an expensive and lengthy process that involves one business entity attempting to find aresolution for a conflict caused by the other party to the contract by actively engaging in negotiationsaided by a neutral party.ANS:FPTS:1DIF:MediumREF:9MSC: Remember6.Litigation directly involves lawyers, judges, and the court system because it is the process one personor a business must use to sue another.ANS:TPTS:1DIF:EasyREF:9MSC: Remember7.The creation of complexity in business relationships is one of the most important contributions the lawcan make to the commercial arena.ANS:FPTS:1DIF:MediumREF:8MSC: Remember8.Canadian law provides that business owners may discriminate in hiring practices and may ignore thelaws of other countries; however, they must comply with the health and safety regulations governingthe workplace.ANS:FPTS:1DIF:MediumREF:13MSC: Evaluate
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Canadian Business And The Law, 4th Edition Test Bank - Page 10 preview image9.Recent events involving fraud on the public in Canada confirmed that failure to comply with theobligation to abide by the law can lead to severe consequences for business enterprises, includingfinancial penalties and criminal prosecution.ANS:TPTS:1DIF:MediumREF:5MSC: Remember10.In every type of business dispute resolution, Canadian law requires that a judge must decide theamount of the loss to prevent hard feelings between the parties and allow the business relationship tobe maintained.ANS:FPTS:1DIF:MediumREF:9|10MSC: Remember11.A contract provides the legal backdrop to commercial relationships by defining the rights andobligations of the parties, but it is the business relationship itself that will determine whether, in aconflict, the parties will insist upon strict enforcement of their legal rights.ANS:TPTS:1DIF:MediumREF:8|9MSC: Evaluate12.In the mediation process, the parties to the dispute agree on the choice of the mediator who will beappointed to review the facts of the dispute and make a binding decision to resolve the problem.ANS:FPTS:1DIF:EasyREF:10MSC: Remember13.Parties that agree to submit disputes to a neutral party who will ultimately make a binding decision toresolve the dispute are agreeing to participate in the arbitration process.ANS:TPTS:1DIF:EasyREF:10MSC: Remember14.Businesses that have been unable to resolve complex contractual disputes may have to turn to litigationas the last resort to, among other things, establish the liability of one business to another.ANS:TPTS:1DIF:EasyREF:9MSC: Remember15.Liability is a set of moral principles and values that seek to determine right from wrong in the businessworld.ANS:FPTS:1DIF:MediumREF:10MSC: Remember16.Liability between parties engaged in a contractual business relationship refers specifically to the legalresponsibility of one party to the other for any event or loss that may occur due to breach of thecontract.ANS:TPTS:1DIF:EasyREF:10MSC: Remember
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Canadian Business And The Law, 4th Edition Test Bank - Page 11 preview image17.It is a rule of law that a party who suffers a breach of contract is entitled to be put in the position itwould have been in had the contract been fulfilled.ANS:TPTS:1DIF:EasyREF:11MSC: Remember18.In the litigation process, the party initiating a claim for breach of contract is obligated to prove its case,and the judge is obligated to be as objective as possible in determining whether the case of breach hasbeen proven.ANS:TPTS:1DIF:MediumREF:11MSC: Remember19.A supplier who commits to a contract is free of any legal obligations for direct and foreseeablefinancial consequences the other party to the contract may experience should the supplier breach thecontract.ANS:FPTS:1DIF:MediumREF:11MSC: Evaluate20.A legal risk management plan involves a business strategy that may require legal supervision to reducethe probability and severity of loss.ANS:TPTS:1DIF:EasyREF:12|13MSC: RememberSHORT ANSWER1.Briefly describe the main reasons one party to a contract might decide to overlook a breach of contractby the other party.ANS:A party to a contract might decide to overlook a breach of the contract if it is a minor breach andmaintaining the business relationship is important and desirable. A minor breach is more likely to bequickly resolved directly between the parties, while litigation is a slow and expensive process forresolving a dispute.PTS:1DIF:MediumREF:9MSC: Remember2.While dispute resolution is a function of law, there are other functions that shift the law’s focus andintent to another purpose with respect to facilitating relationships. Briefly describe the other functionsof law and what the primary focus of law is through their application.ANS:The law functions to protect persons and property. The law also functions to facilitate interaction byproviding a reasonable degree of certainty and predictability in the relationship. These functions shiftthe primary focus of law from dispute resolution to dispute prevention.PTS:1DIF:MediumREF:5MSC: Remember
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Canadian Business And The Law, 4th Edition Test Bank - Page 12 preview image3.Briefly describe the steps that parties must go through to achieve the consensus reflected in a contract.What role does a lawyer play in this process?ANS:Usually one party has identified a need and will make a proposal to another party for an exchange thatwill satisfy that need. If the other party sees benefit in making the exchange, the parties will negotiateuntil they arrive at mutually acceptable terms. Typically, each party will have a lawyer whose role is toprovide legal advice throughout the negotiation process and, once consensus is reached, to thenaccurately document the terms of the agreement in a contract.PTS:1DIF:MediumREF:10MSC: Remember4.Law suits come to court for either of two reasons: there is a dispute about the facts that actuallyoccurred or there is a dispute about the way the law treats the parties. Describe the role and obligationsof the judge, including what details must be considered and what must be proven to the court to allowit to reach a decision resolving the dispute?ANS:The role of the judge is to review the claim and consider the contract and other evidence, as well aslegal arguments presented by both sides to determine what the agreement between the parties actuallywas and what laws apply. The judge is obligated to then impartially apply the law in an objectivemanner to determine whether the initiating party’s claim has been proven, and, if so, what legalconsequences would provide a remedy to make up for the loss.PTS:1DIF:ChallengingREF:11MSC: Remember5.Identify two basicvaluesof the Canadian legal system? Discuss your own view of how successful theCanadian legal system is in its pursuit of achievingjustice,citing examples.ANS:Examples of the basic values of the Canadian system are broad application, accessibility, definition ofrights and obligations, striving for just outcomes, fair and reasonable laws applied in a fair process freeof bias, judges’ application of law with objective impartially to determine liability according to certainprinciples and procedures regarded as just, creation of certainty in relationships, protection.PTS:1DIF:EasyREF:allMSC: Remember6.Briefly describe the main reasons that some business disputes must be resolved in court.ANS:The main reasons a court must decide some business disputes involve instances where the parties areunwilling or unable to negotiate a settlement themselves, or where there is no agreement between theparties to accept arbitration of disputes or to refer disputes to mediation.PTS:1DIF:MediumREF:10MSC: Remember
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Canadian Business And The Law, 4th Edition Test Bank - Page 13 preview image7.Briefly describe the laws a Canadian business involved in contracts outside of Canada’s borders wouldhave to consider to ensure compliance.ANS:A Canadian business involved in contracts outside of Canada’s borders would have to include anyCanadian law, foreign law, treaties, and conventions that apply to their business activities in their legalrisk management plan.PTS:1DIF:MediumREF:6MSC: Remember
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Canadian Business And The Law, 4th Edition Test Bank - Page 14 preview imageChapter 2 The Canadian Legal SystemMULTIPLE CHOICE1.Which of the following best describes the paramount function of Canadian constitutional law?a.It sets a parliamentary code of ethics.b.It creates structure for ceremonial policy.c.It establishes Canada’s deference to British Parliament.d.It establishes Canada’s structure of legal authority.ANS:DPTS:1DIF:MediumREF:23MSC: Evaluate2.Which of the following is an example of why monitoring government policy is important to business?a.Rules and regulations are periodically revised.b.It is the machinery that regulates government.c.It provides rulings that resolve existing disputes.d.It can be overwhelming and very technical.ANS:APTS:1DIF:EasyREF:23MSC: Understand3.The government enacted a policy change requiring retailers to include new details in firearm salesreports. Loxy’s Rifles Inc., unaware of the new requirements, was fined for noncompliance andimmediately paid a $5,000 fine. Which of the following best describes the reason Loxy received andpromptly paid the fine?a.Opposition to the change of law led to the fine; paying the fine saved interest.b.Loxy’s is lobbying the government and must pay the fine to attend meetings.c.Loxy’s is not concerned with compliance; fines are tax-deductible.d.Ignorance of the law led to the fine; ignoring fines leads to harsher penalties.ANS:DPTS:1DIF:MediumREF:23MSC: Analyze4.Which of the following would a law professor most likely say correctly identifies the legislatureallowed to determine laws that involve the illegal use of firearms in Canada?a.The federal legislature has sole jurisdiction to create criminal law.b.The municipal and provincial legislatures share concurrent jurisdiction.c.The municipal governments receive delegated jurisdiction.d.The provincial legislatures have exclusive jurisdiction.ANS:APTS:1DIF:EasyREF:25|26|27MSC: Analyze
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Canadian Business And The Law, 4th Edition Test Bank - Page 15 preview image5.The Province of Newfoundland enacted new regulations to better control hazardous waste disposalthroughout the province. What type of law should specialized waste control businesses operating inNewfoundland refer to in order to ensure their commercial activities are legally compliant?a.civil lawb.statute lawc.private lawd.common lawANS:BPTS:1DIF:MediumREF:25MSC: Evaluate6.The House of Commons and the Senate are defining characteristics of which legislative body inCanada?a.the Parliament of Canadab.the House of Assembly of Nova Scotiac.the Supreme Court of Canadad.the Legislative Assembly of British ColumbiaANS:APTS:1DIF:EasyREF:26MSC: Remember7.The Senate of one of Canada’s legislatures has traditionally become known as the chamber of sobersecond thought. Which of the following legislatures is distinguished by being the lower chamber tothis Senate?a.the Legislative Assembly of British Columbiab.the Parliament of Canadac.the House of Assembly of Nova Scotiad.the House of CommonsANS:DPTS:1DIF:ChallengingREF:26MSC: Understand8.In circumstances where conflicting federal and provincial laws cannot be reconciled, which of thefollowing outcomes is dictated by the doctrine of paramountcy?a.The federal law prevails, except in Quebec.b.The superior law prevails.c.Concurrent provincial law prevails.d.The provincial law prevails.ANS:BPTS:1DIF:MediumREF:27MSC: Evaluate
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Canadian Business And The Law, 4th Edition Test Bank - Page 16 preview image9.In determining a constitutional challenge, the Supreme Court of Canada upheld the federalgovernment’s bilingual language rights legislation. Which of the following exemplifies the reason forthe Court’s decision?a.The Supreme Court’s decision follows the doctrine of paramountcy.b.The Court’s decision does not apply in the province of Quebec.c.Regulating language law falls within federal government jurisdiction.d.The Supreme Court’s decisions must uphold the public interest.ANS:APTS:1DIF:MediumREF:27MSC: Understand10.Which of the following denotes a required element in the procedure followed for passing federallegislation through Parliament?a.majority vote by Commons committee and approval by Senateb.quorum vote in the House of Commons and by the Senatec.majority vote of the members in the House of Commons and in the Senate.d.approval of the House of Commons and by the Senate committeeANS:CPTS:1DIF:EasyREF:25MSC: Analyze11.The delegation of authority to make law within Canada assigns jurisdiction to regulate businessactivities primarily to which of the following governing bodies?a.the federal and municipal governmentsb.the Senates of the federal and provincial governmentsc.the federal and provincial governmentsd.the provincial and municipal governmentsANS:DPTS:1DIF:MediumREF:28MSC: Understand12.Which of the following would a politician identify as areas where the federal government is givenexclusive jurisdiction to make law by the Canadian Constitution?a.currency, trade, national defenceb.administration of justice, trade, national defencec.interprovincial trade and commerce, highway regulation, licensingd.criminal law, administration of justice, hospitalsANS:APTS:1DIF:MediumREF:26MSC: Analyze
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