Law and Ethics in Business Chapter Exam Questions
Course Introduction
Law and Ethics in Business examines the legal frameworks and ethical principles that guide decision-making in the business environment. The course introduces students to key areas such as contracts, torts, employment law, property rights, intellectual property, and corporate governance. It also explores ethical theories and their application to issues such as social responsibility, environmental stewardship, and workplace conduct. Through case studies and real-world examples, students will learn to identify, analyze, and resolve legal and ethical dilemmas, preparing them to act with professionalism and integrity in a complex, global business landscape.
Recommended Textbook
Canadian Business and the Law 5th Edition by Dorothy Duplessis
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Chapter 1: Knowledge of Law As a Business Asset
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Q1) What is the primary asset needed to maximize protection of entrepreneurs and the entire business enterprise?
A) inventory tracking software
B) accounting software
C) surveillance cameras
D) knowledge of business law
Answer: D
Q2) Which of the following best exemplifies some of the most important contributions the law provides when facilitating commercial activities?
A) structure, confidence, and preclusion
B) structure, certainty, and prevention
C) structure, certainty, and predictability
D) structure, confidence, and promise
Answer: C
Q3) An outdoor adventure business that inhumanely kills sled dogs may face prosecution under animal welfare statutes and even the Criminal Code of Canada.
A)True
B)False
Answer: True
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Page 3
Chapter 2: The Canadian Legal System
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Q1) What is the source of the law that governs lawmaking authority within the Canadian legal system?
A) parliamentary bills
B) constitutional law
C) the Civil Code
D) constitutional conventions
Answer: B
Q2) Municipal legislation compelling the annual payment of a fee pertaining to the licensing of dog ownership requires the enactment of a bylaw.
A)True
B)False
Answer: True
Q3) Canada's federal Parliament is composed of the House of Commons and the Senate.
A)True
B)False
Answer: True
Q4) The legislative branch of government is the source of statute law.
A)True
B)False
Answer: True
Page 4
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Chapter 3: Managing Legal Risks
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Q1) In-house legal counsel are highly trained commercial law specialists, capable of handling all of the business's litigation matters.
A)True
B)False
Answer: False
Q2) Why will a legal risk management plan be an effective tool for a business experiencing a breach of customer security data?
A) A plan to address the risk is already in place.
B) Senior management must manage the risk.
C) Security breaches are considered commonplace, low-level risks.
D) Computer security breaches generally pose less serious risk.
Answer: A
Q3) Identify and describe the four steps in creating a legal risk management plan.
Answer: The four steps are:
1) identifying the legal risks
2) evaluating the potential loss associated with those risks
3) devising a legal risk management plan to address those risks
4) implementing the plan
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5
Chapter 4: Dispute Resolution
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Q1) Which of the following would be a valid criticism of the use of arbitration clauses in contracts between investment brokers and their clients?
A) A code of conduct includes legislated procedures for resolving consumer complaints.
B) Clients are unable to ensure the independence and expertise of a suggested arbitrator.
C) Arbitration firms favour brokers and deny the clients due process.
D) An arbitration procedure requires clients to pay a fee to have their complaint remedied.
Q2) SolarCell Corp. has decided to litigate a dispute over an $8,000 outstanding account. Over the course of the business relationship, the customer has proven to be both unreliable and unreasonable. SolarCell is no longer interested in maintaining the business relationship. Which court will have jurisdiction to decide the outcome of SolarCell's claim?
A) small claims court
B) class actions court
C) the Trial Court of Canada
D) the Superior Court of Justice
Q3) Contrast the advantages and disadvantages of alternate dispute resolution. To view all questions and flashcards with answers, click on the resource link above.
Chapter 5: An Introduction to Contracts
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Q1) If someone has suffered a legal wrong, he or she should automatically sue the wrongdoer.
A)True
B)False
Q2) What is a valid reason for a court to accept that there is a legally binding contract governing the actions of the parties named to it?
A) Under contract law, each party must get what it bargained for.
B) The parties are permitted to rely on the terms they negotiated.
C) Only the parties to a contract can sue or be sued on it.
D) The contract clearly contains an offer and acceptance of that offer.
Q3) Fatima needs to copy and bind five sets of legal submissions with beige covers, but none are left in the supply cabinet. The office manager offers to reimburse Fatima for the cost of the covers and buy her lunch from petty cash if she will dash to the nearby office supply store to buy them. Fatima agrees. What is the nature of the arrangement negotiated between Fatima and the office manager?
A) a formal accord
B) an informal business arrangement
C) a haphazard promise
D) a binding agreement
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Page 7
Chapter 6: Forming Contractual Relationships
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Q1) On Tuesday, Jatelle offered to sell one of her racing motorcycles to Rofan for $8000. Rofan said he needed time to consider her offer. On Friday morning, Jatelle sent Rofan an e-mail message advising the offer was no longer open. Which of the following actions would allow Rofan to try to complete the purchase of her motorcycle?
A) present Jatelle with an offer to buy the motorcycle
B) revitalize the offer by communicating a counteroffer
C) immediately communicate a need for more time to Jatelle
D) immediately communicate the acceptance of Jatelle's offer
Q2) How do the courts get around the basic rule that a gratuitous promise is not enforceable if they feel that not enforcing such a promise would be unfair? Identify and briefly describe the requirements for this "get around."
Q3) In an option agreement, the offeror sells her right to revoke the offer.
A)True
B)False
Q4) A gratuitous promise is never enforceable.
A)True
B)False
Q5) Explain the difference between offer and invitation to treat. Give an example of each.
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Page 8
Chapter 7: The Terms of a Contract
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Q1) What is meant by the term "contractual quantum meruit"?
A) as much as merited or deserved
B) a term required to imply payment
C) as much as someone will pay
D) a promise to pay a fair price
Q2) EcoGrow Inc. contractually agreed to deliver two tons of organic fertilizer on March 16 to Organics Inc. The contract provided for the payment of $1000 for each day the delivery may be delayed. An ice storm closed highways, causing Eco to deliver four days late. What could you likely expect a lawyer representing Organics to argue before the court hearing a dispute over the non-payment of the late fee?
A) to have the court apply the parole evidence rule to the contract
B) to ignore the parties' intentions and apply the plain-meaning rule
C) to have the court apply the rules of construction to the contract
D) to ignore the rules of construction and apply the entire contract rule
Q3) Identify and briefly explain the circumstances in which a court will imply a term where that term is alleged to have not been addressed in the contract as an express term. Identify and briefly describe the classic courtroom scenario that would be presented to a judge hearing such a case. Provide a brief explanation as to which party in the suit would bear the burden of proof.
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Page 9
Chapter 8: Non Enforcement of Contracts
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Q1) Johan is a director on the board of a corporation considering entering into a contract with a company in which Johan holds a beneficial interest. Johan has decided it is in his best economic interests not to disclose this fact to the board. Discuss the possible legal consequences, if any, that may befall Johan as a result of his decision.
Q2) What exerts the greatest influence on the law's focus on the enforcement of a contract after negotiations are complete and the formal contract is executed?
A) the endeavour to achieve a good faith between two competing goals
B) the preservation of the integrity, predictability, and reliability of contractual relationships
C) the endeavour to preserve the real agreement reached by the parties
D) the preservation of good faith, honesty, and diligent conduct in contractual relationships
Q3) To establish undue influence, evidence of actual pressure requires the party seeking relief to show, among other things, that the influence existed.
A)True
B)False
Q4) When is a contract considered to be contrary to public policy? Give an example.
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Chapter 9: Termination and Enforcement of Contracts
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Q1) Which of the following is synonymous with the phrase "a party who seeks equity must come with clean hands"?
A) doctrine of probabilities
B) rules of equity
C) duty to mitigate
D) doctrine of frustration
Q2) Under common law, an individual improperly fired from their employment has a duty to their former employer to try to find a replacement job as quickly as possible.
A)True
B)False
Q3) The courts are reluctant to allow a breaching party to rely on the protection of a limited liability clause when the breach is severe and undermines the foundation of the contract.
A)True
B)False
Q4) Either party can decide to terminate a contract at any time.
A)True
B)False
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Chapter 10: Introduction to Tort Law
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Q1) Tort law generally denies compensation for injury to a person's sense of honour in cases of defamation or libel.
A)True
B)False
Q2) Which of the following is a valid defence to a claim for damages for losses arising from an alleged negligent act?
A) The act causing the harmful event was unintentional.
B) The loss was reasonably unforeseeable or reasonably unpreventable
C) The act is an indictable offence under the Criminal Code of Canada.
D) The loss was reasonably foreseeable or reasonably preventable.
Q3) Under what circumstances will a court hearing a civil action most likely determine it is necessary to punish a tort-feasor's offensive behaviour?
A) where the defendant has sufficient assets to warrant such an award
B) where the victim requires modifications to his living accommodations
C) where the defendant might otherwise profit from the objectionable behaviour
D) where there has been significant out-of-pocket expenses resulting from injury
Q4) Distinguish between pecuniary and non-pecuniary losses. Which of these can lead to compensation under the principles of tort law?
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Page 12
Chapter 11: The Tort of Negligence
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Q1) Which of the following would be owed a duty of care by a manufacturer of dairy products?
A) government, taxpayers, consumers
B) competitors, retailers, consumers
C) distributors, retailers, consumers
D) industry competitors, consumers
Q2) A large group of members who have similar claims against the same defendant are unlikely to be given certification as a class action in Canadian courts.
A)True
B)False
Q3) Identify the four steps to an action for the tort of negligence and explain the significance of establishing an affirmative response at each step in the process. What specific considerations will apply if the case at bar presents a novel situation?
Q4) Which of the following established the neighbour principle?
A) Donoghue v. Stevenson [1932] A.C. 562 (H.L.)
B) Hercules Managements Ltd. v. Ernst & Young [1997] 2 S.C.R. 165
C) Kauffman v. Toronto Transit Commission [1960] S.C.R. 251
D) Donoghue v. Simpson [1932] A.C. 562 (H.L.)
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Page 13
Chapter 12: Other Torts
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Q1) Suspecting a burglar was attempting to enter his garage, Hakim let his Dobermans outside to take care of the threat. He was shocked six months later when he was served with a lawsuit claiming damages for the serious injuries inflicted by the Dobermans' bites on the thief's hands and legs. Why has Hakim been named as a defendant in this lawsuit?
A) Hakim owed a duty of care to restrict the number of bites his dogs could inflict.
B) The injuries result from his reckless disregard for the trespasser's presence.
C) Hakim owed a generalized duty of care based on the neighbour principle.
D) The thief must be a child in order for injury to a trespass to be actionable.
Q2) Alexis positioned his new fence exactly where he wanted it, even though it significantly encroaches on his neighbour's property. Which of the following would immediately let Alexis know he has most likely erred on the wrong side of the law?
A) being served with a claim for negligent construction
B) being served with a claim for occupiers' liability
C) having to defend an action for trespass
D) having to defend an action for nuisance
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Page 14
Chapter 13: The Agency Relationship
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Questions
Q1) Marta sold Phillip's racing cycle to Bill while Phillip was away on business in Toronto. Phillip hadn't expected Marta to act in this way, but he happily accepted the $1500 cash and signed a receipt. In this instance, the agency relationship exemplifies which of the following?
A) implied authority
B) agency by estoppel
C) agency by ratification
D) actual authority
Q2) Which of the following is considered, as a general rule, to be within the scope of an agent's fiduciary duties?
A) full disclosure of acceptance of each secret commission and profit
B) absolute prohibition against acting for two principals
C) sending a client's file for storage with an outside storage facility
D) personal interests supersede the interests of the principal
Q3) A fiduciary owes a duty of good faith toward another because of their relationship.
A)True
B)False
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Chapter 14: Business Forms and Arrangements
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Q1) Which of the following is a characteristic of a franchisor-franchisee relationship?
A) a joint venture
B) a contractual arrangement
C) a limited partnership
D) a limited liability partnership
Q2) The potential for a board management base that exists in the corporation creates many levels of authority that can be an impediment to decision making.
A)True
B)False
Q3) A partnership is a simple form of legal relationship that automatically arises when two or more people do business together with the objective of making a profit.
A)True
B)False
Q4) Choosing how to own a business is of little consequence to the ultimate determination of who is financially liable for the business.
A)True
B)False
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Chapter 15: The Corporate Form: Organizational Matters
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Q1) Daenna resides in Manitoba and is creating a new business entity. She has not settled on a name. She does intend to carry on business in the Western provinces and will be importing goods from Scandinavian countries in the near term. Which of the following business names will most likely accommodate Daenna's business needs and expectations, as well as legislative requirements?
A) 36993636 Canada Corp.
B) 12361239 Manitoba Inc.
C) 36993636 Incorporated
D) Daenna's Import Co.
Q2) Which of the following is synonymous with the term "closely held" with respect to corporate entities?
A) unlimited liability corporation
B) limited liability corporation
C) private corporation
D) public corporation
Q3) Which of the following is a distinguishing characteristic of a corporation?
A) the ease of transfer of ownership
B) it is entirely funded by stockholders
C) the ease of understanding tax consequences
D) it has entirely secured debt arrangements
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Chapter 16: The Corporate Form: Operational Matters
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Q1) Isabella and Emily both attended a recent seminar for directors regarding corporate governance. The seminar focused on the recent departure of certain courts from the traditional shielding of directors from personal liability where their actions were taken in furtherance of their duties to the company and their conduct was justifiable. What type of liability are Emily and Isabella concerned with?
A) liability in tort
B) liability in contract
C) statutory offence liability
D) criminal offence liability
Q2) In assessing a claim for oppression, a court must determine (i) whether the evidence supports the reasonable expectation of the stakeholder, and (ii) whether the reasonable expectation of the stakeholders was violated by the oppressive conduct. Identify the factors that must be considered by the court in order to answer both of these questions.
Q3) Identify and briefly explain the amendments to the Criminal Code regarding the level of fines that may be imposed on a corporation as a result of a positive finding of that corporation's criminal liability.
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Chapter 17: Personal Property
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Q1) A court is hearing an argument from plaintiff's counsel regarding a matter involving serious injury to a downhill skier. Counsel contends the cause of his client's injuries was that the rental skis were outfitted with either defective or improperly secured bindings. Which of the following will cause the onus of proof to shift to the bailor, with respect to the responsibility for preventing this mishap and damages for ensuing harms?
A) The bailor's fit or intended purpose warranty is extremely burdensome.
B) The standard of care in a bailment for value focuses on a bailor's misconduct.
C) The bailor's warranty for responsible manner of use has been established.
D) The bailee's reasonable manner of use of the skis has been established.
Q2) What is the primary source of the requirement that a lessor's property be reasonably fit for its intended use?
A) commercial chattel leases
B) implied statutory term
C) implied common law term
D) general law of contract
Q3) In law, intellectual types of property are known as choses in action.
A)True
B)False
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Page 19
Chapter 18: Intellectual Property
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Q1) What characteristic distinguishes intellectual property identified as "confidential business information" from other forms of "confidential information"?
A) information of a commercial nature
B) specific statutory provisions
C) a narrow range of information
D) creative incentives and rewards
Q2) Briefly discuss the Berne Convention, including who it applies to and what it provides.
Q3) Which of the following distinguishes the evolution in a particular state of the art or knowledge from an inventive step with respect to a patent application?
A) utility
B) obviousness
C) industrial value
D) novelty
Q4) An assignment of intellectual property involves the consent given by the owner of rights to someone to do something that only the owner can do.
A)True
B)False
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Chapter 19: Real Property
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Q1) Which of the following is a common policy shared among many world nations?
A) the restriction on the quantity of land allowed to be owned by foreign interests
B) the delegation of authority to control and use to municipal governments
C) the delegation of authority to regulate environmental risks to municipal government
D) the restriction on governments regarding the imposition of land ownership restrictions
Q2) What is the legal term for the legal interest considered to be the closest to full ownership in real property?
A) joint tenancy
B) fee simple
C) tenancy in common
D) deeded title
Q3) The rights of the mortgage lender are limited to a combination of the following three remedies: suing the borrower, taking possession of the land, and foreclosure.
A)True
B)False
Q4) Briefly discuss tenancy in common.
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Chapter 20: The Employment Relationship
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Q1) Marjorie and Jean, human resource managers, are meeting to discuss the possible reaction of other employees to Hector, who has recently become blind. What is most likely the intention of this employer with respect to Hector?
A) to prove undue hardship relating to the guidelines for the productivity of the organization
B) to accommodate employees with special needs
C) to prove the impossibility of accommodating special needs
D) to follow the Supreme Court guidelines regarding what constitutes undue hardship
Q2) Ontario and Quebec are the only provinces in which pay equity legislation applies to the private sector.
A)True
B)False
Q3) The Criminal Code provides that it is an offence to intercept a private communication, but the section does not apply to communications that are not private or to an interception that is consented to by one of the parties.
A)True
B)False
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Chapter 21: Terminating the Employment Relationship
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Q1) Joseph's employer may issue notice of termination of his employment while he is on parental leave from his position.
A)True
B)False
Q2) Employment standards legislation typically provides that an employee is, on average, entitled to receive one month's notice for each year of employment, up to a maximum of 24 months.
A)True
B)False
Q3) One of the primary factors to be considered by an employer when determining an employee's entitlement to a specific amount of notice of termination of employment is the availability of similar employment in the local job market.
A)True
B)False
Q4) In addition to damages claimed for wrongful dismissal, the dismissed employee may sue for defamation and intentional infliction of mental suffering.
A)True
B)False
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Chapter 22: Professional Services
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Q1) Which of the following is synonymous with a "retainer" with regard to professional services?
A) the client's contractual obligation to provide accurate information for the professional opinion
B) a document setting out the terms of liability of the professional for professional negligence
C) a written promise of the professional to act in the best interests of the client
D) the advance payment requested by the professional to fund the professional's services
Q2) How has the Supreme Court of Canada limited the potential for third-party claims for economic loss (in the Hercules Managements v. Ernst & Young case)?
Q3) If a contract price is not stated in a professional services contract, the principle of quantum meruit will be deemed to be inapplicable.
A)True
B)False
Q4) Briefly discuss the effects of a limited liability partnership on liability for partners of a firm and the firm itself.
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24
Chapter 23: Sales and Marketing: the Contract, Product, and Promotion
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Q1) False or misleading advertising involves illegal business practices that exploit the unequal bargaining position of consumers.
A)True
B)False
Q2) Which of the following would be essential to determining a remedy with respect to the breach of a term under the sale of goods legislation?
A) product safety classification
B) the classification of the term
C) anticompetitive practices
D) disclosure on packaging
Q3) When a condition in a sale of goods contract is breached, the sale of goods legislation permits the buyer to ask the court to reduce the purchase price due to the breach.
A)True
B)False
Q4) Identify the warranties that are implied in sales transactions by the Sale of Goods Act.
Q5) With respect to the sale of goods legislation, briefly discuss the remedies for breach of warranty.
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Chapter 24: Sales and Marketing: Price, Distribution, and Risk Management
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Q1) What is the term for a specialized form of conspiracy by producers/suppliers to manipulate a market through price that can result in a fine and/or imprisonment?
A) bid rigging
B) tied selling
C) abuse of dominant position
D) predatory pricing
Q2) Which of the following has jurisdiction to regulate unsolicited telemarketing communication as a result of the Canadian National Do Not Call List becoming operational on September 30, 2008?
A) Competition Bureau
B) provincial privacy legislation
C) Canadian Association of Internet Providers
D) Canadian Radio-television and Telecommunications Commission
Q3) The Competition Bureau is particularly concerned about differentials between prices posted on store shelves and those stored in automatic price-scanning systems, as infractions result in the criminal offence of double ticketing.
A)True
B)False
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Chapter 25: Business and Banking
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Q1) Emily gave Pierre a cheque for $5000 as payment for the car he sold her. Pierre owed Henry $5000, and he provided Emily's cheque to Henry to satisfy the debt. Henry couldn't make it to the bank, so he gave it Nigel to deposit for him. How did Henry's bank respond to Nigel's request to deposit the cheque?
A) The Bills of Exchange Act required the bank to hold the cheque for 10 days.
B) Provided all endorsements were in order, the bank accepted the cheque for deposit.
C) The bank refused the cheque because acceptance effectively extended credit.
D) The bank was required by FINTRAC to verify the validity of the transaction.
Q2) Briefly discuss the legislative amendment that applied to consumer notes and its ramifications.
Q3) Marina is transferring a cheque to Scott by endorsing his name and her signature to the instrument. What is the legal name for this type of endorsement?
A) special endorsement
B) direct endorsement
C) blank endorsement
D) restrictive endorsement
Q4) Describe the various models for electronic cashless transactions.
Q5) Discuss the purpose of the banking agreement.
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Chapter 26: The Legal Aspects of Credit
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Q1) What province limits a lender's remedy, in the event of a borrower's default, to the proceeds from seized assets and prohibits the lender from suing the debtor for any resulting deficiency?
A) Ontario
B) Alberta
C) New Brunswick
D) Nova Scotia
Q2) When a lender has appointed a receiver, its primary objective is redeeming sufficient assets to clear a loan. To which of the following is the ability of the receiver to control the business to the exclusion of the debtor directly related?
A) Courts recognize that creditors are in the lending business.
B) Creditors have a duty to deal with assets in a commercially responsible way.
C) The survival of the business is secondary to the creditor.
D) Creditors must avoid creating conflicts of interest.
Q3) Explain the environmental due diligence process.
Q4) A pledge given by a borrower to repay the bank for its loan is sufficient to classify the loan as a secured debt.
A)True
B)False
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Chapter 27: Bankruptcy and Insolvency
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Q1) Which of the following would most likely influence the creditor's decision with regard to its options relating to the deteriorating financial health of a business debtor?
A) whether a greater recovery of debt is possible through a proposal or through legal remedies
B) the creditor's ability to accelerate repayment of the debt to payment on demand
C) the ability of a secured creditor to take private action against specific assets
D) the ability to enter into negotiations with other creditors to gain greater debt recovery
Q2) What legislation specifically affects conveyances of real or personal property made with the intent to, among other things, default or defraud a bankrupt's creditors?
A) Part XIII of the Bankruptcy and Insolvency Act
B) Companies' Creditors Arrangements Act
C) federal Bankruptcy and Insolvency Act
D) provincial fraudulent conveyances legislation
Q3) Identify the purposes that a proposal is intended to achieve.
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Chapter 28: Insurance
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70 Verified Questions
70 Flashcards
Source URL: https://quizplus.com/quiz/27019
Sample Questions
Q1) An insured has noted on its insurance application that its restaurant has a wood fireplace, but it has omitted to comment that occasionally escaped sparks can cause a fire risk. Why would the insured be considered as having complied with its duty to disclose?
A) The insured has to be in a position to fully assess the risk.
B) The insurer has been candid and forthcoming.
C) The insurer is expected to be worldly wise.
D) The insured has to show personal judgement.
Q2) What is the most likely result of malicious acts or acts of vandalism caused by an insured?
A) the denial of coverage by operation of a rider
B) the insured's right of subrogation
C) the insured's right to endorsement
D) the denial of coverage by operation of an exclusion clause
Q3) Which of the following would most strongly support the decision to purchase key-person life insurance by a firm?
A) the age of each key-person involved in the ownership of the business
B) the extent of the ownership held by each key person
C) a means of financing the purchase of a deceased shareholder's interest
D) the financial ability of the business to pay the premiums
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