Ethics and the Legal Environment
Exam Answer Key
Course Introduction
This course explores the intersection of ethical principles and the legal frameworks that govern business and professional activities. Students will examine key ethical theories and apply them to contemporary legal issues, focusing on areas such as corporate social responsibility, compliance, and the regulatory environment. Through case studies and critical discussions, the course emphasizes the importance of ethical decision-making within legal boundaries, fostering a deeper understanding of the moral and legal obligations of individuals and organizations in society.
Recommended Textbook
The Legal Environment Today 7th Edition by Roger LeRoy Miller
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27 Chapters
1810 Verified Questions
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2
Chapter 1: Business and Its Legal Environment
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Sample Questions
Q1) Judges use precedent when deciding a case in a common law legal system. A)True
B)False Answer: True
Q2) A federal law that conflicts with the U.S.Constitution will be deemed unconstitutional. A)True
B)False Answer: True
Q3) Refer to Fact Pattern 1-1.These opinions are collected and published in volumes called A)citations. B)codes.
C)regulations. D)reporters. Answer: D
Q4) Monetary damages is a remedy at law.
A)True
B)False Answer: True
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Chapter 1: A: Online Developments:
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Sample Questions
Q1) Leilani,a high school student,gains unauthorized access to a plagiarism service's database to which she and other students had been asked to submit their assignments.A federal court is most likely to find that this access violates
A)the Computer Fraud and Abuse Act.
B)the Virginia Computer Crimes Act.
C)federal copyright law.
D)no federal or state law.
Answer: A
Q2) Khalil and Jasmin sign a prenuptial agreement that provides for any dispute to be arbitrated according to Islamic law.When a dispute arises over the parties' marital property in Iowa,Jasmin files a suit in an Iowa state court to contest the arbitration provision.According to rulings in other states' courts in similar cases,the provision will most likely be
A)enforced.
B)rewritten to remove the Islamic law clause.
C)struck down as outside the common legal framework of our society.
D)suspended while the court considers an equitable result.
Answer: A
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Chapter 2: Ethics and Business Decision Making
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Sample Questions
Q1) A business firm can sometimes predict whether a given action is legal.
A)True
B)False
Answer: True
Q2) Ryan,the owner of SuperMart Stores,Inc.,adheres to the "principle of rights" theory.Under this theory,a key factor in determining whether a business decision is ethical is how that decision affects
A)the right determination under a cost-benefit analysis.
B)the rights of others.
C)the "right" thing to do.
D)the right to make a profit.
Answer: B
Q3) Sharon,the human resources director for Tempo Corporation,attempts to comply with the law in dealing with applicants and employees.One of the challenges Sharon faces is that the legality of an action is
A)always clear.
B)never clear.
C)sometimes clear.
D)usually clear.
Answer: C
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Chapter 3: Courts and Alternative Dispute Resolution
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Sample Questions
Q1) A lawsuit involving a federal question can originate in a federal court.
A)True
B)False
Q2) The function of the courts is to interpret and apply the law.
A)True
B)False
Q3) Kit loses her suit against Lou in a Minnesota state trial court.Kit appeals to the state court of appeals and loses again.Kit would appeal next to
A)a U.S.district court.
B)the Minnesota Supreme Court.
C)the United States Supreme Court.
D)the U.S.Court of Appeals for the Eighth Circuit.
Q4) A judge instructs a jury as to the law that applies in a case.
A)True
B)False
Q5) To have standing to sue,a party must have been harmed or have been threatened with harm by the action about which he or she complains.
A)True
B)False
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Chapter 4: Constitutional Authority to Regulate Business
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Sample Questions
Q1) Federico,the president of Gems Retail Corporation,claims that certain actions by the federal government and the state of New Mexico infringe on rights guaranteed by the Bill of Rights.Most of these rights limit
A)neither New Mexico nor the federal government.
B)the federal government only.
C)New Mexico and the federal government.
D)New Mexico only.
Q2) Under their police powers,states can regulate only public activities,such as political demonstrations.
A)True
B)False
Q3) Because the Constitution does not specifically a right to privacy,this right is denied to people.
A)True
B)False
Q4) The checks and balances in the U.S.Constitution prevent any one branch of government from exercising too much power.
A)True
B)False
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Chapter 5: Torts,cyber Torts,and Strict Liabiity
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Sample Questions
Q1) An Internet service provider cannot be held liable for disseminating defamatory remarks under any circumstances.
A)True
B)False
Q2) Bette backs out of City Parking Garage,colliding with Dill's car.Dill may recover $7,500 to cover the cost of the repairs if Bette failed to act as
A)a blameless person.
B) a faultless person.
C)a reliable person.
D)a reasonable person.
Q3) Liz trespasses on Mega Corporation's property.Through the use of reasonable force,Mega's security guard Ned detains Liz until the police arrive.Mega is liable for A)assault and battery.
B)false imprisonment.
C)intentional infliction of emotional distress.
D)none of the choices.
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Chapter 6: Criminal Law and Cyber Crime
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Sample Questions
Q1) Smitty,driving while intoxicated,causes a car accident that results in the death of Tiffany.Smitty is arrested and charged with a felony.A felony is a crime punishable by death or imprisonment for A)any period of time.
B)more than one year.
C)more than six months.
D)more than ten days.
Q2) Identity theft occurs when a wrongdoer steals another's form of identification. A)True
B)False
Q3) Only private attorneys prosecute criminal defendants. A)True
B)False
Q4) Divestiture of a business interest is a possible penalty under RICO. A)True B)False
Q5) Only blue-collar crimes are prosecuted under RICO. A)True B)False
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Chapter 7: International Law in a Global Economy
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Sample Questions
Q1) Restrictions on imports may include quotas.
A)True
B)False
Q2) Dumping is the sale of imported goods at "greater than fair value."
A)True
B)False
Q3) The United States is a member of the World Trade Organization,which,among its members,
A)does not affect trade barriers.
B)maximizes trade barriers.
C)minimizes trade barriers.
D)outlaws trade barriers.
Q4) Quality Energy Company,a U.S.firm,and Royal Petro,a Dutch firm,enter into a contract that includes an arbitration clause.This clause must provide that the arbitrator will be
A)any specified third party.
B)the American Arbitration Association.
C)the Dutch Arbitration Organization.
D)the International Chamber of Commerce.
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Page 10
Chapter 8: Intellectual Property and Internet Law
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Sample Questions
Q1) A trade name cannot be registered with the federal government if it is also a trademark.
A)True
B)False
Q2) Standard Corporation can not claim a trademark in the phrase "Quality Is Standard" if the phrase
A)has a secondary meaning.
B)is descriptive.
C)is generic.
D)means nothing.
Q3) In Case 8.1,Coca-Cola Co.v.Koke Co.of America,the United States Supreme Court upheld an injunction prohibiting competing beverage companies from calling their products "Koke."
A)True
B)False
Q4) Each member country of the TRIPS agreement must include in its domestic laws broad intellectual property rights.
A)True
B)False
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Chapter 8: A: Online Developments:
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Sample Questions
Q1) Winston applies to the U.S.Patent and Trademark Office for a patent on a process that uses transactions to hedge the risk in securitiies (stocks and bonds)trading.The patentability of business processes is controversial because business process patent applications involve
A)computer programs.
B)ideas.
C)machines.
D)transformations of particular articles into different states or objects.
Q2) Sports Fit Company sponsors the "$100,000 Game" in which contestants compete in ten separate athletic events over a period of weeks.Sports Fit announces that the winner of each event will be awarded $5,000 with the "Ultimate Champion"-the winner of the most events-awarded $50,000.If the "$100,000 Game" is treated as a unilateral contract,Sports Fit can
A)cancel the contest or alter its terms at any time.
B)not modify the terms of the contest after it begins.
C)reduce the amount of the event prizes but not the grand prize.
D)reduce the amount of the grand prize but not the event prizes.
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Page 12
Chapter 9: Formation in Traditional and E-Contracts
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Sample Questions
Q1) An implied contract is implied from the conduct of the parties.
A)True
B)False
Q2) The E-Sign Act preempts the uniform version of the Uniform Electronic Transactions Act.
A)True
B)False
Q3) An invitation to negotiate-"can you afford this"-is an offer.
A)True
B)False
Q4) When Jeff's car breaks down,he asks Kwik Tow,Inc.,to tow it from its location to Loyal Repair Shop.There is no discussion of a price,and Jeff and Kwik do not sign any documents.After the tow,Kwik sends Jeff a bill.With respect to Jeff's obligation to pay the bill,this is
A)an express contract.
B)an implied contract.
C)a formal contract.
D)no contract.
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Chapter 10: Contract Performance,breach,and Remedies
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Sample Questions
Q1) Lester and Myrtle want to rescind their contract under which Lester sold an MP3 player for $40.To rescind the contract
A)Lester must return the $40 and Myrtle must return the player.
B)Lester must return the $40 only.
C)Myrtle must return the player only.
D)the parties can keep the "benefits" of their bargain.
Q2) Under the Statute of Frauds,all contracts must be in writing to be enforceable.
A)True
B)False
Q3) As a general rule,any contract duty can be delegated. A)True
B)False
Q4) Compensatory damages are foreseeable damages that arise from a party's breach of a contract.
A)True
B)False
Q5) Any breach-material or minor-discharges the nonbreaching party from the contract.
A)True
B)False
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Chapter 11: Sales,leases,and Product Liability
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Sample Questions
Q1) Merchants are required to warrant that the goods they sell or lease are fit for the particular purpose for which a buyer or lessee will use the goods.
A)True
B)False
Q2) Gunmakers Pride Corporation contracts for the sale of twelve hunting rifles to Hunters Supply store.Gunmakers delivers nonconforming goods.Acceptance will be presumed unless Hunters Supply rejects the goods
A)within a reasonable time after delivery.
B)within a reasonable time after ordering the goods.
C)within any time,since hunting rifles are not perishable.
D)before the last day of the current hunting season.
Q3) Under the UCC,a firm offer for a sale or lease of goods made by a merchant can be revoked at any time before acceptance.
A)True
B)False
Q4) A product liability action may be based on warranty theories.
A)True
B)False
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15
Chapter 12: Creditor-Debtor Relations and Bankruptcy
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Sample Questions
Q1) In a repayment plan case,after the debtor has completed all payments,the court grants a discharge of all debts provided for by the plan.
A)True
B)False
Q2) The holder of an artisan's lien can foreclose and sell the property subject to the lien to satisfy the debt.
A)True B)False
Q3) Mac files a petition for a discharge in bankruptcy.Mac's failure to appear at a meeting of the creditors listed in Mac's schedules may result in Mac being A)denied a discharge of bankruptcy. B)fined.
C)held in contempt. D)imprisoned.
Q4) Certain debts are not dischargeable in bankruptcy. A)True B)False
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Page 16
Chapter 13: Mortgages Foreclosures After the Recession
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Sample Questions
Q1) A lender can make a higher-priced mortgage loan based on the value of the consumer's home without verifying the consumer's other credit obligations.
A)True B)False
Q2) A subprime mortgage is a loan made to a borrower who does not qualify for a standard mortgage.
A)True B)False
Q3) Community Trust Bank provides Devlin with a mortgage to buy a home.The rate of interest is fixed for seven years.At the end of that period,a large payment for the entire balance of the mortgage loan is due.This is
A)a balloon mortgage.
B)a hybrid mortgage.
C)a reverse mortgage.
D)a violation of the law.
Q4) If a homeowner defaults,the lender has the right to foreclose on the mortgaged property.
A)True B)False
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Chapter 14: Small Business Organizations
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Sample Questions
Q1) A limited liability partnership allows its partners to avoid personal liability for the malpractice of other partners.
A)True
B)False
Q2) Location! Realty LLC is a limited liability company (LLC).Like other LLCs,for federal jurisdictional purposes,Location! Realty is most likely a citizen of A)all states.
B)every state in which its members are citizens.
C)no state.
D)only the state in which it was formed.
Q3) Jay is a member of Kitchen Cookouts,LLC,a limited liability company.Jay is liable for Kappa's debts
A)in proportion to the total number of members.
B)to the extent of his investment in the firm.
C)to the extent that the other members do not pay the debts.
D)to the full extent.
Q4) On a partner's dissociation,his or her duty of loyalty to the partnership ends.
A)True
B)False
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Chapter 14: A: Landmark in the Legal Environment:
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Sample Questions
Q1) Jewel Property Company hires Klint,an independent contractor,to wash the windows of Jewel's commercial building.Jewel's tenant Lucy is injured when Klint closes a window on her hand.In determining whether Jewel is liable for Lucy's injury,the most important factor is
A)Jewel's employment of Klint.
B)Jewel's investigation of Klint's background and experience.
C)the condition of the premises,especially the window.
D)the degree of control that Jewel maintained over Klint's actions.
Q2) Dingo Bangles Company wants to present information in "disclosure documents" via the Internet to prospective franchisees.Among other legal requirements with which Dingo must comply,prospective franchisees must
A)agree to settle any lawsuits that may arise over the documents.
B)be able to download or save all electronic documents.
C)provide e-mail addresses for Dingo to verify users' authenticity.
D)register with the Federal Trade Commission via Dingo's Web site.
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19
Chapter 15: Corporations
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Sample Questions
Q1) The board of directors normally can remove a corporate officer at any time with or without cause.
A)True
B)False
Q2) A director does not need to disclose any conflict of interest before voting on a proposed transaction.
A)True B)False
Q3) Skyla and Terry want to form and do business as Unbound Games Corporation.Most statutes governing the formation and use of corporations are guided by A)city or county corporate codes.
B)the Entrepreneur's Corporate Handbook.
C)the federal Administrative Procedure Act.
D)the Revised Model Business Corporation Act.
Q4) The first step in the incorporation process is to select a state in which to operate. A)True
B)False
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Chapter 16: Agency
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Sample Questions
Q1) Employees who deal with third parties are agents of their employers.
A)True
B)False
Q2) Delite Candy Company hires Elton to sell Delite's products in a certain area.Delite agrees to pay Elton a salary,plus commission,for a trial period.They also agree that Elton can sell using any methods and during any hours that seem appropriate.The key factor in whether Elton is Delite's employee is
A)the amount of Elton's salary.
B)the control Delite has over the details of the work.
C)the length of the trial period.
D)the title that designates Elton's position.
Q3) A licensed professional can employ an unlicensed agent to perform professional actions.
A)True
B)False
Q4) A principal is not liable for an agent's fraud unless the agent has the apparent authority to commit torts.
A)True
B)False
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Chapter 17: Employment,immigration,and Labor Law
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Sample Questions
Q1) Thalia is an employee of Universal Insurance Company.Universal's employee manual states that workers will be dismissed only for good cause.With respect to the employment-at-will doctrine,this is
A)an example of the doctrine.
B)an exception based on contract theory.
C)an exception based on public policy.
D)an exception based on tort theory.
Q2) Frida is an employee of Green Recycled Products Company.A state statute protects Frida from Green's retaliation if Frida reports to state officials,or others,that Green is involved in unsafe or illegal activity.With respect to the employment-at-will doctrine,this is
A)an example of the doctrine.
B)an exception based on contract theory.
C)an exception based on public policy.
D)an exception based on tort theory.
Q3) Generally,an employer's monitoring of electronic communications in the workplace does not violate employees' privacy rights.
A)True
B)False
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Page 22
Chapter 18: Employment Discrimination
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Sample Questions
Q1) Rona is Stu's administrative assistant and both work for TriCounty Labor Inc.Stu tells Rona that for sexual favors,he will give her an excellent performance review and recommend a raise.This is
A)harassment on the basis of sexual orientation.
B)hostile-environment harassment.
C)not harassment.
D)quid pro quo harassment.
Q2) The Age Discrimination in Employment Act of 1967 prohibits employment discrimination on the basis of age against persons over eighteen.
A)True
B)False
Q3) Research Statistics Corporation uses a merit system to pay its employees according to their job performance.Suki,a female,and Troy,a male,are Research employees with comparable jobs.Due to superior performance,Suki is paid more than Troy.This is
A)disparate-impact discrimination.
B)gender discrimination.
C)not discrimination.
D)reverse discrimination.
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23
Chapter 19: Powers and Functions of Administrative Agencies
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Q1) An administrative agency can issue a guidance document to advise the public on the agency's legal and policy position.
A)True
B)False
Q2) If the meaning of a statute's language is unclear and an agency interprets it,a court must follow the interpretation as long as it is reasonable.
A)True
B)False
Q3) The U.S.Fish and Wildlife Service utilizes notice-and-comment rulemaking.This involves a period during which
A)judges,legislators,and the president are asked about a proposed rule.
B)potential violators of a proposed rule are notified and publicized.
C)the administrators "notice" a problem and "comment" on it.
D)the public is asked to comment on a proposed rule.
Q4) Administrative agencies can conduct warrantless searches in some situations.
A)True
B)False
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Chapter 20: Consumer Protection
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Sample Questions
Q1) Labels on vegetables and fruits are not required to indicate where the food originated.
A)True
B)False
Q2) Labels must be accurate.
A)True
B)False
Q3) Upson Down Company sells its wares to consumers over the Internet.Upson's site includes an on-screen notice indicating its refund and return policies,where its business is physically located,its legal name,and other details.This is
A)dictated by members of the Good Business Association.
B)mandated by federal law.
C)required by California state law.
D)strictly voluntary.
Q4) Labels must use words that are easily understood by the ordinary marketing executive.
A)True
B)False
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Chapter 21: Protecting the Environment
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Q1) Only offshore oil facilities that discharge oil into navigable waters are liable for the clean-up costs.
A)True
B)False
Q2) It is a violation of federal law to destroy or deface any labeling required on a pesticide or herbicide.
A)True
B)False
Q3) Environmental clean-up efforts include control of toxic chemicals used in agriculture and in industry.
A)True
B)False
Q4) There are no plans to develop national standards regulating the fuel economy and emissions for medium- and heavy-duty trucks.
A)True
B)False
Q5) States may not restrict emissions from motor vehicles.
A)True
B)False
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Chapter 22: Real Property and Land-Use Control
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Q1) Refer to Fact Pattern 22-1.Nika deeds some of her land to Polly.The deed states,"To Polly,for life,then to Quay." Nika has given Polly
A)a fee simple absolute.
B)a leasehold estate.
C)a life estate.
D)an easement.
Q2) Consumer Shops,Inc.,signs a lease for a storefront owned by Downtown Building Company.Unlike a purchaser of real property,Consumer Shops
A)acquires only temporary possession of the premises.
B)enjoys exclusive possession of the premises.
C)holds only temporary title to the premises.
D)retains temporary,exclusive possession and title to the premises.
Q3) Under the covenant of quiet enjoyment,a landlord promises that a tenant will not be disturbed in the possession of the premises.
A)True
B)False
Q4) In most states,the seller of a new house warrants that it is fit for habitation.
A)True
B)False
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Chapter 23: Antitrust Law and Promoting Competition
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Sample Questions
Q1) HVAC Parts Company charges different buyers different prices for identical goods.HVAC's prices are subject to evaluation under A)the Clayton Act.
B)the Federal Trade Commission Act.
C)the Sherman Act.
D)no antitrust law.
Q2) Refer to Fact Pattern 23-1.Cardio pays Emitate not to sell its product.This is A)a customer restriction.
B)a joint venture.
C)an exclusive-dealing contract.
D)a price-fixing agreement.
Q3) An act must have a substantial impact on interstate commerce to violate antitrust law.
A)True
B)False
Q4) Acquiring monopoly power through anticompetitive means violates antitrust law.
A)True
B)False
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Chapter 24: Investor Protection and Corporate Governance
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Q1) Della,an officer for Energy Petrol Corporation (EPC),buys 100 shares of EPC stock.One week later,EPC announces that it will merge with a competitor,Fuel Oil Company,and the price of EPC stock increases.One month later,Della sells her shares for a profit.Under Section 16(b)of the Securities Exchange Act of 1934,Della would not be liable if,after buying the stock,she had waited
A)less than fourteen days to sell it.
B)more than six months to sell it.
C)ninety days to sell it.
D)two months to sell it.
Q2) Generally,stock offerings that are made in a limited manner during any twelve-month period are not exempt from the registration requirement.
A)True
B)False
Q3) "Forward-looking" financial forecasts are prohibited under SEC Rule 10b-5.
A)True
B)False
Q4) Generally,states have antifraud patterned after federal securities law.
A)True
B)False
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