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Managing The Law: The Legal Aspects Of Doing Business, 3rd Edition Test Bank

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    Exam Name___________________________________ MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Which of the following statements is TRUE with respect to administrative law? 1) A) Administrative law is concerned with the behaviour of public officials and therefore is not particularly important to business people. B) Administrative law affects the government, but not private individuals or corporations. C) Administrative law is usually classified as a branch of criminal law. D) because of the Constitution , administrative law applies at the federal and provincial levels, but not at the municipal level E) Administrative law is necessary because of the tendency of modern governments to delegate authority. Answer: E Explanation: A) B) C) D) E) 2) 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? 2) A) Since the Charter applies to the relationship between private citizens, it should protect economic and property rights. 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) 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. D) 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. E) The introduction of a new Charter right for the protection of economic and property rights would probably make it easier for courts to compel governments to ensure that every Canadian enjoys adequate housing. Answer: E Explanation: A) B) C) D) E) 1

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    3) The rights and freedoms contained in the Charter are limited 3) A) to cases involving substantial amounts of money. B) to cases involving interactions between different governments. C) by the ability of a federal or provincial government to invoke the notwithstanding clause. D) to situations in which the government created a law in bad faith. E) to human beings, with the result that the Charter cannot work in favour of a company. Answer: C Explanation: A) B) C) D) E) 4) Eric, who is a resident of Saskatchewan, has sued Trois Etoiles Ltd, which is a company based in Quebec, for breach of contract. Which of the following statements is TRUE? 4) A) The case will be heard in a "civilian jurisdiction" if the claim is heard by a Saskatchewan court applying the laws of Saskatchewan. B) The case can be classified as a "public matter" because it involves a person suing a company for breach of contract. C) The case would be classified as a "criminal matter" if Eric sued the government of Quebec rather than the Quebec company. D) 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. E) The case can be classified as a "international law" matter if the claim is heard by a Quebec court applying the laws of Quebec. Answer: D Explanation: A) B) C) D) E) 5) Which of the following statements is TRUE with respect to risk management and incorporation? 5) A) 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. B) Incorporation is irrelevant to risk management because corporations cannot be held liable C) 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. D) Incorporation completely eliminates the risk of liability because the government is responsible for a corporation's debts. E) Incorporation increases the risk of liability because a shareholder of a corporation is personally liable for all of the corporation's torts. Answer: C Explanation: A) B) C) D) E) 2

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    6) Which of the following statements is TRUE? 6) A) The Prime Minister is the person who leads the party that has the most number of senators. B) Before a bill becomes a federal law, it must receive royal proclamation, which is given by the Lieutenant General on behalf of the Queen. C) In Parliament, a bill can become a law only if it is supported by at least two - thirds of senators. D) In Parliament, a bill cannot become a law unless it has passed through four readings in the House of Commons and four readings in the Senate. E) Regulations, statutory instruments, ordinances, and Orders - in - Council are types of subordinate legislation. Answer: E Explanation: A) B) C) D) E) 7) 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? 7) A) 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 . B) 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 C) 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 D) 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. E) Even if the Dark Room Bookstore is a private company, the Charter may apply because the Criminal Code is a government statute. Answer: E Explanation: A) B) C) D) E) 8) The Charter includes (among other things) rights regarding 8) A) equality based on religion, age, and ethnic origin. B) ownership, expression, and association. C) Aboriginals, multiculturalism, and accommodation. D) mobility, housing, and equality. E) contracts, sexual orientation, and religion. Answer: A Explanation: A) B) C) D) E) 3

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    9) 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? 9) A) 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 B) The Charter cannot be amended unless, among other things, the federal Parliament agrees. C) The Charter cannot be amended unless the government holds a referendum and allows individual Canadians to vote on the issue. D) The CCPR has no need to worry because property rights are already expressly protected by the Charter. E) The Charter can be amended as long as at least half of the Canadian population supports the protection of property rights. Answer: B Explanation: A) B) C) D) E) 10) Omicron Inc claims that a municipal bylaw violates its right to equality under section 15(1) of the Charter . Section 15(1) states: "Every individual is equal before and under the law and has the right to the equal protection and equal benefit of the law without discrimination" based on various grounds. The company will lose its argument because 10) A) although some parts of the Charter apply to corporations, section 15(1) is limited to "individuals" and therefore cannot apply to Omicron B) Section 15(2) of the Charter prevents Omicron Inc from using section 15(). C) the Charter applies to federal, provincial, and territorial statutes, but not to municipal bylaws. D) the Charter never applies to corporations. E) section 15(1) of the Charter was recently repealed (that is, done away with). Answer: A Explanation: A) B) C) D) E) 11) 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 11) A) strike down the statute, but suspend the effect of that remedy in order to give the government time to re - draft the legislation. B) declare that the relevant provision is valid under the Charter and is therefore unconstitutional. C) allow the federal government to amend the provincial statute. D) grant an injunction that allows the parents to re - draft the statute in a way that extends the allowance to birth parents. E) read in a broader definition of "parent" that excludes both adoptive parents and birth parents. Answer: A Explanation: A) B) C) D) E) 4

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    12) Our 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? 12) A) The relationship between an employer and an employee is governed entirely by the law of contract. B) A lawyer who provides careless services sometimes may be sued in both tort and contract. C) 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. D) "White collar crime" is a misleading phrase because the relevant concepts arise in tort law rather than criminal law. E) 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. Answer: B Explanation: A) B) C) D) E) 13) 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 ? 13) A) Although Lamda enjoys freedom of religion and freedom of expression, it is not a person and therefore it does not enjoy equality rights. 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 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 . 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 Explanation: A) B) C) D) E) 14) Subordinate legislation 14) A) always consists of bylaws. B) involves a statute that was introduced to change an existing statute. C) always prohibits certain forms of behaviour. D) is practically necessary because it is impossible for legislators to constantly monitor all of their statutes. E) is always created at the provincial level, rather than at the federal level. Answer: D Explanation: A) B) C) D) E) 5

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    15) Which of the following statements is TRUE with respect to the law of Quebec? 15) A) Even though Quebec inherited much of its law from France, it uses some of the same laws that apply in other parts of Canada. B) because Quebec inherited its laws from France, its criminal laws are different from those that apply in other parts of Canada C) Quebec is considered a common law jurisdiction because it inherited most of its laws from England. D) Quebec is considered a common law jurisdiction because it inherited laws that were once common to all parts of the Roman empire. E) because Quebec inherited its laws from France, its constitutional laws are different from those that apply in other parts of Canada Answer: A Explanation: A) B) C) D) E) 16) Which of the following statements is TRUE with respect to exclusion clauses and risk management? 16) 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 represents a type of risk acceptance. D) An exclusion clause always shifts the risk of liability onto an insurance company. E) An exclusion clause can be used by a person, but not by a corporation. Answer: A Explanation: A) B) C) D) E) 17) The Town of Blackville created a set of rules for the licencing of businesses. Which of the following statements is likely TRUE? 17) A) The rules take the form of statutes, rather than bylaws. B) The rules are a form of superior legislation. C) Blackville is located in Quebec. D) The Town of Blackville was created under the authority of a provincial statute E) Blackville was created by a statute in Parliament. Answer: D Explanation: A) B) C) D) E) 6

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    18) Which of the following statements is TRUE? 18) A) The territories have legislatures, but not senates. B) Each province has a senate. C) The legislature in each and every province and territory is called the Legislative Assembly. D) Parliamentary bills are always introduced in the House of Commons before being sent to the Senate. E) The Queen is represented by a lieutenant governor in each province and territory. Answer: A Explanation: A) B) C) D) E) 19) 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 19) A) because Canadian universities are private institutions, the facts do not reveal any government action that could possibly trigger the Charter 's provisions B) 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. C) the scholarship is unconstitutional because the federal government has exclusive jurisdiction over education as a result of section 92 of the Constitution D) the scholarship is valid under section 15(2) of the Charter because it is aimed at improving the conditions of a disadvantaged group E) 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 Answer: D Explanation: A) B) C) D) E) 20) 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? 20) A) Even if Attila and Epsilon Inc are convicted of crimes, they may also be sued privately. B) A "white collar crime" is the same thing as a "corporate crime." C) 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. 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) Neither Attila nor Epsilon Inc can be charged with a "corporate crime" unless they broke a law that was intended to protect another corporation. Answer: A Explanation: A) B) C) D) E) 7

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    21) Betta 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 21) A) risk denial. B) risk reduction. C) risk acceptance. D) risk destruction. E) risk avoidance. Answer: E Explanation: A) B) C) D) E) 22) 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 22) A) risk elimination. B) risk capitalization. C) risk avoidance. D) risk shifting. E) risk acceptance. Answer: D Explanation: A) B) C) D) E) 23) 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 23) A) a legal system that can be traced to England. B) the provision of a statute. 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: A Explanation: A) B) C) D) E) 8

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    24) Techniques for managing risks include 24) A) insurance and incorporation, but not exclusion clauses. B) vicarious liability, employment, and the Charter . C) incorporation, insurance, and exclusion clauses. D) exclusion clauses, negligence, and contract. E) independent contractors, exclusion clauses, and residual powers. Answer: C Explanation: A) B) C) D) E) 25) 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. That means that 25) A) 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. 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) there must be unanimous agreement by all of the provincial legislatures. 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 Explanation: A) B) C) D) E) 26) 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 26) A) vicarious liability. B) independent responsibility. C) risk shifting. D) risk allowance. E) incorporation. Answer: C Explanation: A) B) C) D) E) 9

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    27) 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 27) A) risk aversion. B) risk acceptance. C) risk ignorance. D) risk displacement. E) risk harmonization. Answer: B Explanation: A) B) C) D) E) 28) The notwithstanding clause 28) A) must be re - invoked every ten years in order to remain in effect. B) is seldom used by governments because it involves a decision to override fundamental rights and freedoms. C) is contained in section 1 of the Charter . D) is applied to Canadian laws regularly. E) can be applied with respect to each and every the right and freedom contained in the Charter . Answer: B Explanation: A) B) C) D) E) 29) During a trial, a lawyer raised an argument based on the concept of the "residual power." The lawyer's argument must 29) A) be concerned with the federal government. B) involve an issue of private law. C) have something to do with the municipal governments. D) be concerned with the amending formula. E) be based on either section 98 or section 99 of the Constitution . Answer: A Explanation: A) B) C) D) E) 10

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    30) Epsilon Inc has recently retained the services of Noriko as in - house counsel. Which of the following statements is most likely TRUE? 30) A) Noriko can both help to resolve legal problems and help to prevent legal problems from arising in the first place . B) Epsilon Inc has hired Noriko for the purpose of resolving a single legal problem that it expects will drag on for several years. C) Noriko may provide advice to Epsilon, but she cannot represent the company in court. D) 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. E) 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. Answer: A Explanation: A) B) C) D) E) 31) A court recently found, as a matter of fact, that a party's ability to advertise was restricted. In some circumstances, such a restriction violates section 2(b) of the Charter . Ultimately, however, the court's decision did not allow the affected party to advertise as it wished. Which of the following statements may explain that end result? 31) A) The restriction was imposed by a statute and the government responsible for that statute reacted to the court's decision by invoking the residual clause. B) The restriction was saved under section 15(2) of the Charter. C) The party was not entitled to freedom of expression because it is a company, rather than a human being. D) The restriction was imposed by a private party, rather than by a government actor. E) The court held that the restriction was an "unreasonable limitation" on the freedom of expression. Answer: D Explanation: A) B) C) D) E) 32) The category of public law contains 32) A) criminal law, employment law, and constitutional law. B) constitutional law and tax law, among other things. C) administrative law and tax law, but not criminal law. D) constitutional law and administrative law, but not tax law. E) any case in which a government sues or is being sued. Answer: B Explanation: A) B) C) D) E) 11

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    33) The category of private law contains 33) A) 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. B) contract law and property law, but not tort law, which is closely related to criminal law. C) only those cases that the parties resolve themselves, or with the assistance of a neutral third party other than a judge. D) contract law and tort law, but not if a government has sued or is being sued. E) real estate transactions, lawsuits based on deceit, and the violation of copyrights, among other things. Answer: E Explanation: A) B) C) D) E) 34) The three steps in risk management are 34) A) realization, response, and reaction. B) evaluation, qualification, and litigation. C) assessment, formulation, and implementation. D) recognition, evaluation, and insurance. E) identification, evaluation, and response. Answer: E Explanation: A) B) C) D) E) 35) Which of the following statements is TRUE with respect to municipalities? 35) A) Cities are municipalities, but towns are not. B) Some types of subordinate legislation have nothing to do with municipalities. C) A municipality is created when a higher level of government passes a by - law. D) Most municipalities are created by the federal government, rather than by provincial governments. E) Laws that are created by municipalities are called subordinate legislation. Answer: B Explanation: A) B) C) D) E) 12

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    36) 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 he tries to do so, however, he wants to know as much as possible about the notwithstanding clause. Which of the following statements is TRUE? 36) A) The notwithstanding clause can be used against equality rights, but not against mobility rights. B) If the notwithstanding clause is invoked, it will have effect for ten years, after which it will lapse unless it is re - applied. C) The notwithstanding clause has been invoked frequently in the western provinces, but not in Ontario. D) The notwithstanding clause can be invoked by the federal government, but not by a provincial government. E) The notwithstanding clause cannot be invoked unless the relevant people are willing to amend the Constitution . Answer: A Explanation: A) B) C) D) E) 37) 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? 37) A) 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. B) The federal government has jurisdiction over international trade, but not over inter - provincial trade. C) because property rights are protected by the Charter , the statute is constitutionally invalid D) The statute is at least partially intra vires because provinces have the authority to regulate the production or manufacture of things like soy milk. E) Inter - provincial trade is an issue that provinces are entitled to decide for themselves. Answer: D Explanation: A) B) C) D) E) 38) A province created a statute. A court ruled that the statute was ultra vires . That means that 38) A) the statute must violate the Charter . B) the province acted contrary to the division of powers. C) the statute must deal with public law, rather than private law. D) the statute has full force ( ultra means "most" and vires means "strength," as in "virility"). E) the statue applies both inside and outside of the province. Answer: B Explanation: A) B) C) D) E) 13

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    39) Sigma Inc sued Tau Ltd for breach of contract and asked for the remedy of specific performance. The case will be heard in Alberta. Which of the following statements is TRUE? 39) A) Because of the fusion of courts, there no longer is any need to draw a distinction between law and equity. B) Sigma Inc's claim against Tau Ltd is a common law claim because it will be decided on the basis of laws that historically were developed in French courts. C) Specific performance is a common law remedy because it was historically created by judges, rather than by legislators. D) Specific performance is an equitable remedy because it historically was awarded by the court of legislators. E) Sigma Inc's claim against Tau Ltd is an example of legislative litigation because it involves a claim by one private party against another private party. Answer: C Explanation: A) B) C) D) E) 40) Which of the following statements is TRUE with respect to the Charter ? 40) A) It only applies in favour of a government or a government actor. B) because it is intended to protect people's rights and freedoms, it severely limits the grounds upon which courts can strike down laws C) It is a federal statute. D) It was introduced in 1982. E) It applies to federal laws, but not provincial laws. Answer: D Explanation: A) B) C) D) E) TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. 41) Bianca punched Mick. She now finds herself in court. The person arguing the case 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. 41) Answer: True False Explanation: 42) Paul has committed a legal wrong against Buckmaster Strings Inc. Depending upon the circumstances, it may be possible for legal proceedings to be taken against Paul in both criminal law and tort law. 42) Answer: True False Explanation: 14

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    43) 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. 43) Answer: True False Explanation: 44) 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. 44) Answer: True False Explanation: 45) Quebec is said to be a "civil law system" because it is derived from the legal system that governed the citizens of ancient Greece. 45) Answer: True False Explanation: 46) 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. 46) Answer: True False Explanation: 47) 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. 47) Answer: True False Explanation: 48) 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. 48) Answer: True False Explanation: 49) Betta Inc has recently discovered that a defect in one of its products poses a risk of injury to consumers. Its only option, from a risk management perspective, is to eliminate the risk of liability by removing the product from the market. 49) Answer: True False Explanation: 50) 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. 50) Answer: True False Explanation: 15

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