Ethics and Legal Environment Test Preparation
Course Introduction
This course explores the principles of ethical decision-making and the legal frameworks that govern the business environment. Students will examine key ethical theories, analyze contemporary moral issues in business, and gain a foundational understanding of the legal system, including contracts, torts, property law, and regulatory compliance. By integrating real-world case studies and practical scenarios, the course emphasizes the importance of ethical leadership and legal responsibility in organizational settings, preparing students to navigate complex ethical dilemmas and legal challenges in their professional careers.
Recommended Textbook
The Legal and Regulatory Environment of Business 16th Edition by O. Lee Reed
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22 Chapters
2167 Verified Questions
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Page 2
Chapter 1: Law As a Foundation for Business
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102 Verified Questions
102 Flashcards
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Sample Questions
Q1) Which of the following statements about a breach of contract is false?
A) If a breach by one party is serious enough, the other party may be permitted to rescind or cancel the contract.
B) The remedy of an injured party may be an order by the court commanding the other party actually to perform a bargain as agreed.
C) The single largest number of lawsuits today involves businesses suing one another for a breach of contract.
D) A tort is a kind of breach of contract which is a civil wrongdoing.
E) Compensatory damages along with additional consequential damages may be awarded in some cases of breach of contract.
Answer: D
Q2) Each of the following is a remedy in case of a breach of contract EXCEPT:
A) punitive damages.
B) consequential damages.
C) specific performance.
D) rescind the contract.
E) cancel the contract.
Answer: A
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Chapter 2: The Role of Ethics in Decision Making
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Sample Questions
Q1) How could a utilitarian argue for the view that the tobacco industry is a positive part of society?
Answer: Utilitarian's view of the tobacco industry as a positive part of society: 1) tobacco products have been consumed in the United States since at least the early 1600s; 2) hundreds of thousands of people are involved in the growing, manufacturing, distributing, and selling of tobacco products; and 3) tobacco companies spend about $13 billion annually in advertising and promoting tobacco sales which benefits the economy.
Q2) Growing diversity in the workplace has reduced concerns over ethical values.
A)True
B)False
Answer: False
Q3) Formalism is primarily a duty-based view of ethics that creates moral obligations that one must satisfy in order to be ethical.
A)True
B)False
Answer: True
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Chapter 3: The Court System
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Sample Questions
Q1) Josh and Shiela are neighbors. One morning they have a motor vehicle accident. Amanda is severely injured and suffers $95,000 worth of medical and property damages. She believes that the accident was Josh's fault and wishes to sue. What would have to be different in order for Sheila to be able to file an initial complaint against Josh in a federal court?
A) The amount must be less than $75,000.
B) Josh must have severely injured Sheila.
C) Josh and Sheila must live in different states.
D) Sheila must petition her elected officials.
E) Josh must have been intoxicated during the accident.
Answer: C
Q2) The federal courts have original jurisdiction over all of the following matters EXCEPT:
A) questions of federal law.
B) suits between citizens of the same state.
C) controversies among the states.
D) when the U.S. is a party.
E) cases arising out of the U.S. Constitution.
Answer: B
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Chapter 4: Litigation
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Sample Questions
Q1) A shareholder of one of the two companies involved in a merger could sue to stop the combination of these companies,
A)True
B)False
Q2) If the defendant, upon being served, decides to sue the plaintiff, the defendant is then called the _____.
A) plaintiff
B) counterplaintiff
C) counterdefendant
D) appellant
E) appellee
Q3) An individual may not assert the rights of the general public or of a group of which he or she is not a member as a plaintiff.
A)True
B)False
Q4) In jury selections, challenges for cause are also called peremptory challenges.
A)True
B)False
Q5) What is the meaning of res judicata and what is its effect?
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Chapter 5: Alternative Dispute Resolution
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Sample Questions
Q1) A(n) _____ is a decision that arises when parties already in dispute decide that arbitration is better than litigation.
A) submission
B) motion to compel arbitration
C) injunction
D) arbitrability award
E) postdispute arbitration agreement
Q2) The final step of a successful mediation is:
A) submitting any conclusions to a judge for judicial approval prior to implementation.
B) writing down the basic agreement reached and having it signed by all the parties.
C) providing all evidence given during the mediation to the parties' attorneys for use in the next phase of litigation.
D) agreeing that all future disputes be resolved in the same manner.
E) turning the results over to the arbitrator as the submission for arbitration.
Q3) What is arbitral misconduct? List five instances of arbitrator misconduct that would lead to the vacating of an arbitrator's award.
Q4) Discuss the importance of arbitration for labor relations disputes.
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Chapter 6: The Constitution
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Sample Questions
Q1) Describe the two clauses included in the concept of freedom of religion.
Q2) Due process means that government may not act in a manner that is arbitrary, capricious, or unreasonable.
A)True
B)False
Q3) Luke, Rocky, Nelly, and Mario are graffiti artists who belong to a minority community. They spray paints on a public wall in their city. They create designs and paintings on the wall depicting political and social issues that affect their community. This way, they protest against unfair practices. Which form of first amendment protection are these artists engaging themselves in?
A) Freedom of the press
B) Freedom of religion
C) Freedom of speech
D) Establishment clause
E) Free exercise clause
Q4) What is a libel?
Q5) Briefly explain the supremacy clause.
Q6) Explain the aspects of the contract clause.
Q7) Explain the concept of the incorporation doctrine.
Page 8
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Chapter 7: The Property System
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Sample Questions
Q1) A(n) _____ means that an adjoining landowner cannot do anything that would cause your land to cave in or collapse, such as digging a ditch that would cause the land on your side to collapse.
A) easement by prescription
B) negative easement
C) mutual benefit bailment
D) eminent domain
E) accession
Q2) The Supreme Court has stated that it is unconstitutional for governments or government entities to take private land for public development.
A)True
B)False
Q3) The right of redemption allows a mortgagor, before foreclosure, to get back land upon payment of the full amount of the debt.
A)True
B)False
Q4) Name three types of deeds and explain how they differ.
Q5) Explain the rule of first possession.
Q6) What steps must be taken for a security interest to attach?
Page 9
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Chapter 8: Contract Formation
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Sample Questions
Q1) An _____ contract is one that is partially or completely unperformed.
A) executed
B) executory
C) express
D) exculpatory
E) unenforceable
Q2) Misrepresentation is simply a misstatement without intent to mislead.
A)True
B)False
Q3) Miguel asks Alicia, an accountant, for her professional advice regarding his portfolio, Miguel is not obligated to pay Alicia since he did not express a promise to pay for her advice.
A)True
B)False
Q4) An executed contract is one that is fully performed.
A)True
B)False
Q5) Discuss how undue influence creates voidable contracts.
Q6) What is a novation?
Q7) Explain the doctrine of promissory estoppel.
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Chapter 9: Contractual Performance and Breach
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Sample Questions
Q1) Which of the following is true in case an employee carries a respondeat superior insurance?
A) The employer can sue the employee for reimbursements.
B) The employee will be held liable for the employer's torts, while working with the employer.
C) The insurer who has paid the respondeat superior claim will sue the employee who caused the claim.
D) The employee is entitled to receive respondeat superior claims from the employer.
E) An employer will be held liable for an employee's tortious acts whether or not they are in the scope of employment.
Q2) _____ occurs when a principal voluntarily decides to honor an agreement, which otherwise would not be binding due to an agent's lack of authority.
A) Novation
B) Ratification
C) Negotiation
D) Release
E) Waiver
Q3) Discuss substantial performance?
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Chapter 10: Torts Affecting Business
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Sample Questions
Q1) Many advertisers and marketers have been required to pay damages to individuals when pictures of them have been used without authorization to promote products. In this situation, which of the following torts was committed by the advertisers and marketers?
A) Assault
B) Defamation
C) Battery
D) Invasion of privacy
E) Malicious prosecution
Q2) The majority of states impose strict liability upon tavern owners for injuries to third parties caused by their intoxicated patrons. The acts imposing this liability are called dram shop acts.
A)True
B)False
Q3) For a successful assumption-of-the-risk defense, assumption of the risk may be implied from the circumstances, or it can arise from an express agreement.
A)True
B)False
Q4) Explain the tort of trespass.
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Page 12
Chapter 11: Intellectual Property
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Sample Questions
Q1) Which of the following types of intellectual property can be assigned to the invention of a plant that can be reproduced asexually?
A) Patent
B) Copyright
C) Trademark
D) Trade name
E) Brand mark
Q2) In determining whether a particular use is a fair one, a court will consider which of the following?
A) The distinctiveness of the copyright.
B) The amount of profit expected by the user claiming the fair use.
C) The amount and substantiality of the portion used in relation to the copyrighted work as a whole.
D) The royalties awarded to the inventor before using the copyright since copyright laws protect inventors.
E) The degree of damage caused.
Q3) How does the law define misappropriation in case of trade secret violation?
Q4) Discuss the subject matter of a patent as a way of testing the validity of a patent.
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Chapter 12: International Law
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Sample Questions
Q1) What are some of the criticisms of the World Trade Organization?
Q2) The World Trade Organization is the only global international trade organization dealing with the rules of trade between nations.
A)True
B)False
Q3) The International Court of Justice has been a major force in settling disputes since it began functioning in 1946.
A)True
B)False
Q4) Discuss the International Court of Justice in brief.
Q5) The CISG applies to contracts for the commercial sale of goods (consumer sales for personal, family, or household use are excluded) between parties whose businesses are located in different nations.
A)True
B)False
Q6) Discuss the advantages of the Convention on the International Sale of Goods.
Q7) Discuss the Agreement on Trade-Related Aspects of Intellectual Property Rights.
Q8) What are the advantages of a licensing arrangement for an international business?
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Chapter 13: Criminal Law and Business
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101 Flashcards
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Sample Questions
Q1) To prove a pattern of racketeering the government must show:
A) Two acts of racketeering in a five year period.
B) Five acts of racketeering in a five year period.
C) Two acts of racketeering in a ten year period.
D) Five acts of racketeering in a ten year period.
E) One act of racketeering in a five year period.
Q2) _____ is defined as any act or threat involving specified state law crimes, any "act" indictable under various specified federal statutes, and certain federal "offenses."
A) Fraudulent misrepresentation
B) Racketeering
C) Money laundering
D) Embezzlement
E) Larceny
Q3) Whether a particular punishment is considered criminal or civil is largely a matter of statutory construction. What are the factors that courts use as guidelines to make a determination as to when these statutory guidelines are so punitive as to have transformed civil penalties into criminal ones?
Q4) Discuss good faith as a defense to accusations of fraud.
Q5) Discuss the double jeopardy clause.
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Chapter 14: Business Organizations
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Sample Questions
Q1) A corporate charter is issued following an application made by individuals known as:
A) incorporators.
B) corporate officers.
C) board members.
D) corporate panel.
E) proxies.
Q2) A corporation created under the authority of a foreign country may be called a(n) _____ corporation.
A) imported
B) offshore
C) alien
D) distant
E) external
Q3) Which of the following is a basic form of business organization?
A) LLC
B) Limited partnership
C) LLP
D) Sole proprietorship
E) S corporation
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Page 16
Chapter 15: The Regulatory Process
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Sample Questions
Q1) Regulation is often a substitute for competition. Explain with example.
Q2) The police powers are limitless, sometimes allowing the state government to be arbitrary, capricious, or unreasonable.
A)True
B)False
Q3) How is imposition of undue burdens dealt with?
Q4) The Environmental Protection Agency (EPA) regulates civil aviation to provide safe and efficient use of airspace.
A)True
B)False
Q5) In no federal law, a state law is unconstitutional if it:
A) is in irreconcilable conflict with federal law.
B) constitutes any burden on interstate commerce.
C) discriminates against intrastate commerce in favor of interstate commerce.
D) discriminates against interstate commerce in favor of intrastate commerce.
E) is in compromising conflict with the federal law.
Q6) Police powers have limitations. Explain.
Q7) Summarize police powers.
Q8) What is apportionment of business tax?
Q9) What are the basic functions of administrative agencies? Page 17
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Page 18
Chapter 16: Regulating Competition_Antitrust Laws
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Sample Questions
Q1) Your school decides to expand and open a new campus in another state. Rather than acquiring land and building new buildings, the school board decides to merge with an existing school that has similar programs in the other state. The school you're merging with is a small commuter school with no dorms. 98% of its students are not only instate, but from the city the school is located in. This merger would be best described as a:
A) vertical merger.
B) geographic market extension merger.
C) product market extension merger.
D) horizontal extension merger.
E) conglomerate merger.
Q2) What is the Colgate doctrine?
Q3) Crimes under the Sherman Act are felonies.
A)True
B)False
Q4) Vertical agreements involving pricing (high and low) and territorial arrangements within channels of distribution are analyzed under the rule of reason.
A)True
B)False
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Chapter 17: Financial and Securities Regulations
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Sample Questions
Q1) The Financial Stability Oversight Council was established by the:
A) Securities Exchange Act of 1934.
B) Sherman Antitrust Act of 1890.
C) Sarbanes-Oxley Act of 2002.
D) Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.
E) Securities Act of 1933.
Q2) Which of the following statements is true of a seller?
A) It refers to anyone who contracts with a purchaser or who is a motivating influence that causes the purchase transaction to occur.
B) It refers to the individual or business organization offering a security for sale to the public.
C) It refers to anyone who participates in the original distribution of securities by selling such securities for the issuer or by guaranteeing their sale.
D) It refers to a person with whom some article is left, usually pursuant to a contract who is responsible for the safe return of the article to the owner when the contract is fulfilled.
E) It refers to anyone who controls or is controlled by the issuer, such as a major stockholder of a corporation.
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Page 20
Chapter 18: Privacy and Consumer Protection
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Sample Questions
Q1) A report containing information solely as to transactions between the consumer and the person making the report is not a "consumer report" covered by the Fair Credit Reporting Act (FCRA).
A)True
B)False
Q2) When the Bureau of Consumer Protection prosecutes a violator for violation of the FTC, the violator is called a(n):
A) respondent.
B) claimant.
C) appellant.
D) plaintiff.
E) pursuer.
Q3) The trustee in a bankruptcy is elected by the debtor to represent the debtor's estate during the bankruptcy.
A)True
B)False
Q4) What remedies are used by the FTC, apart from penalty fines and corrective advertising, to protect consumers in trade regulation cases?
Q5) What are the five powers granted to a trustee in bankruptcy?
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Chapter 19: Environmental Regulation and Resource Sustainability
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Sample Questions
Q1) Landfills are the primary disposal site for household solid waste, but not business solid waste.
A)True
B)False
Q2) Government regulation of private action under the Clean Air Act is a _____ effort.
A) federal
B) state
C) local government
D) joint federal and state
E) joint federal, state, and local government
Q3) An environmental impact statement:
A) includes available alternatives to the proposed action.
B) includes positive environmental effects of the proposed action.
C) includes a statement of any reversible use of resources.
D) must be included in most major federal actions significantly affecting the quality of the human environment.
E) must be included in most recommendations or reports on proposals for legislation affecting the environment.
Q4) What reforms have been proposed to the Superfund law by the business community?
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Chapter 20: Discrimination in Employment
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Sample Questions
Q1) How did the 1991 amendments affect the Civil Rights Act of 1964?
Q2) With regard to the Equal Pay Act, courts have recognized that "equal" means:
A) identical.
B) indistinguishable.
C) substantially equal.
D) vaguely equal.
E) similar.
Q3) A typical state act makes it an unfair employment practice for any employer to refuse to hire any individual because of his/her ancestry.
A)True
B)False
Q4) Even if the plaintiff proves disparate treatment, the defendant can win by showing that all or substantially all members of the plaintiff's class cannot perform the duties of the job.
A)True
B)False
Q5) What kind of alterations would an employer expect to make to accommodate a disabled employee?
Q6) What is a seniority system and what does it affect?
Page 23
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Chapter 21: Employment Laws
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Sample Questions
Q1) Employers are not required to compensate nursing mothers for breaks taken for the purpose of expressing milk.
A)True
B)False
Q2) Which of the following holds true for the Fair Labor Standards Act (FLSA)?
A) It addresses issues regarding disability benefits.
B) It addresses issues regarding reemployment rights after performing uniformed service.
C) It addresses issues regarding minimum wage.
D) It addresses issues regarding workplace safety.
E) It addresses issues regarding private pension plans.
Q3) Mekon Ltd., operates a paper mill which employs more than 1,000 workers. The mill is quite old. It has a number of places in which unguarded moving machine parts operate. There are open-sided platforms unguarded or inadequately guarded against falls. Some of the stairs in the mill are without railings and there are several locations where the floors are not kept dry. The mill has not witnessed a single injury or death in all these years of operation. Does the mill violate any law?
Q4) How does "writing" as a piece of documentation help the employer?
Q5) When may public employees be drug tested?
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Chapter 22: Labor-Management Relationship
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Sample Questions
Q1) The Clayton Act expressly grants employees the protected right to join a union.
A)True
B)False
Q2) Yellow dog contracts were made illegal through the enactment of the:
A) Clayton Act.
B) Norris LaGuardia Act.
C) Wagner Act.
D) Sherman Act.
E) Comstock Act
Q3) In a case involving interstate commerce, union carpenters refused to work for a brewing company by which they were employed, or on construction work being done for it and for its adjoining tenant; they attempted to persuade members of other unions similarly to refuse to work; they picketed the brewer's premises, displaying signs "Unfair to Organized Labor". In this case, are the actions of the employees protected from federal prosecution?
Q4) Unions are allowed to use members' dues to support political activities.
A)True
B)False
Q5) Name the issues that are classified as compulsory bargaining issues in union negotiations?
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