Law and Ethics in Business Final Exam
Course Introduction
Law and Ethics in Business provides students with an understanding of the legal frameworks and ethical considerations that shape the modern business environment. The course explores key topics such as contract law, torts, intellectual property, employment law, and regulations affecting business practices. In addition, it examines ethical theories, corporate social responsibility, and the role of personal and organizational ethics in decision-making. Through case studies and real-world examples, students learn to identify and analyze legal issues and ethical dilemmas, fostering critical thinking skills for responsible management and leadership in business settings.
Recommended Textbook
Canadian Business and the Law 4th Edition by Dorothy Duplessis
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Page 2
Chapter 1: Knowledge of Law as a Business Asset
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Q1) It is a rule of law that a party who suffers a breach of contract is entitled to be put in the position it would have been in had the contract been fulfilled.
A)True
B)False
Answer: True
Q2) Novel Swings Inc.has a contract to begin construction of a school's swing set on June 15th and work is to be completed by August 1st.After weeks of wet weather,the ground was unsuitable for work to begin in June and Novel will not meet the completion deadline.Which of the following best describes the legal status of the contractual relationship between Novel and the school?
A) The contract is void due to wet weather.
B) The contract requires renegotiation.
C) The contract is in good standing.
D) The contract has been breached.
Answer: D
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3
Chapter 2: The Canadian Legal System
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Q1) Federal and provincial legislatures are constitutionally provided with authority to appoint judges within specified judicial jurisdictions.
A)True
B)False
Answer: True
Q2) Which of the following is an example of a provincially appointed administrative body?
A) the Radio, Television and Telecommunications Commission
B) the Securities Commission
C) the Food and Drug Agency
D) the Atomic Energy Commission
Answer: B
Q3) Which of the following is the name given to the document used in Canada's common law court system to set out the basis of a legal dispute?
A) statement of code infraction
B) statement of complaint
C) statement of claim
D) statement of dispute
Answer: C
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Page 4
Chapter 3: Managing Legal Risks
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Q1) The best mix of approaches to risk management is rooted in cost-benefit analysis.
A)True
B)False
Answer: True
Q2) Anders will be able to support his recommendation that the business undertake development of a legal risk management plan by performing a subjective evaluation involving an assessment of both the probability and the severity of loss.
A)True
B)False
Answer: True
Q3) Rahim's decision to increase the amount of the deductible on his business liability insurance policy will result in the business having to absorb the loss resulting from a future materialization of a legal risk.
A)True
B)False
Answer: True
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Chapter 4: Dispute Resolution
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Q1) One of the most important factors to be considered when deciding whether to proceed with a litigation of a conflict that failed to be remedied through negotiation is whether the business can devote the necessary resources to proceed with the dispute.
A)True
B)False
Q2) A store manager of a large grocery chain made a verbal offer to compensate a customer for a serious hand injury requiring medical attention.Even though the store manager's offer was refused,he was seriously reprimanded by the vice president of the legal risk department.Which of the following likely held the greatest significance with regard to the vice president's concern?
A) an objective to pay as small a settlement as possible
B) a need to clarify the situation before entering negotiations
C) the primary goal of reaching a fair and acceptable outcome
D) negotiating could imperil risk insurance coverage
Q3) A commercial business should seek to manage risk of loss by securing a basic coverage insurance policy with a reputable insurance company.
A)True
B)False
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Chapter 5: An Introduction to Contracts
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Q1) With respect to disparity in the bargaining power between the parties to a contract,which of the following would exemplify the circumstances that will most likely lead a court to set a contract aside?
A) a lack of sufficient equality of the benefits received by each party
B) an attempt to take advantage of a handicapped, vulnerable person
C) whether the contract was entered into after October 1, 2008
D) whether the contract was entered into before October 1, 2008
Q2) Which of the following factors would have the greatest degree of influence regarding a retailer's decision concerning the commencement of a lawsuit against a supplier for breach of a business contract?
A) the significance of the economic harm caused by the defaulting party's breach
B) the ability to secure an adequate supply of the stock from another supplier
C) the costs associated with obtaining the stock from a different supplier
D) the impact of the lawsuit on the reputation of the defaulting company
Q3) When hearing a case,the court will generally assume equality of bargaining power,even though it is not always a valid assumption.
A)True
B)False
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Chapter 6: Forming Contractual Relationships
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Q1) Which of the following is the key ingredient that must be present in order to distinguish a legally enforceable promise from one that is legally unenforceable?
A) acceptance
B) formalization
C) consideration
D) revocation
Q2) Once made,an offer cannot be revoked.
A)True
B)False
Q3) A firm offer differs from an offer because it contains a promise to leave the offer open for a set period of time.
A)True
B)False
Q4) The postbox rule prohibits formation of contracts through the mail.
A)True
B)False
Q5) Briefly describe the options available to a party to a contract who wishes to avoid problems related to cost increases?
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Chapter 7: The Terms of a Contract
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Q1) In what manner could you reasonably expect a court to apply the parole evidence rule when asked to interpret the meaning of a nebulous term in a written contract?
A) Abide by the rule and use its discretion to infer a clarification of the term.
B) Disregard the rule and allow extrinsic evidence to resolve the ambiguity.
C) Abide by the rule and use its discretion to apply implied terms for clarification.
D) Disregard the rule and apply the reasonable person test to interpret the term.
Q2) Which of the following would automatically end a contract with a supplier if the buyer's sales fall below a stated level?
A) an exemption clause
B) a condition precedent
C) a liquidated damages clause
D) a condition subsequent
Q3) Bad faith is conduct that is contrary to community standards of honesty,reasonableness,or fairness.
A)True
B)False
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Chapter 8: Non-enforcement of Contracts
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Q1) With respect to non-competition clauses,which of the following is an element that would be considered by a court when determining enforceability on the grounds of reasonableness?
A) contravention of the Real Estate and Business Brokers Act
B) the reasonableness of location and time restrictions
C) contravention of anti-price maintenance legislation
D) the need to maintain free and open competition
Q2) Johan is negotiating the possible sale of one of his company's regional business operations to Bill.In response to Bill's inquiry regarding the duration remaining on the existing supply contracts,Johan provided the end dates of the contracts themselves.Johan did not advise Bill that two of the customers were on the brink of insolvency.If Bill relies on the information Johan provided,what recourse will contract law allow him?
A) The contractual defect is so substantial that it is of no force or effect.
B) A misrepresentation must meet the requirements imposed by legislation.
C) An aggrieved party can choose to enforce the deal or bring it to an end.
D) Partial provision of information allows the contract to be rescinded.
Q3) If a contract is one that the Statute of Frauds requires must be written in order to be enforceable,what must appear in writing?
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Page 10
Chapter 9: Termination and Enforcement of Contracts
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Q1) A court has refused to order specific performance owing to the effects it would have on a third party.Which of the following would the defendant's lawyer most likely identify as the circumstances that gave rise to the court's refusal?
A) impossibility to enforce an employment contract
B) improper behaviour on the part of the defendant
C) improper imposition of severe hardship
D) improper delay on the part of the defendant
Q2) With respect to an assignment relating to a contract,which party is entitled to receive the assigned benefits due under the original contract?
A) the signator
B) the assignee
C) the creditor
D) the assignor
Q3) An employee is typically considered at law to be a party to the employer's contracts.
A)True
B)False
Q4) What four requirements must be met in order for a contract to be terminated by frustration?
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11
Chapter 10: Introduction to Tort Law
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Q1) Which of the following would immediately let you know that a business has been ignoring the need to manage tort risk?
A) instituting training programs
B) loss of insurance coverage
C) loss of brand recognition
D) instituting hiring policies
Q2) Tort law generally denies compensation for injury to a person's sense of honour in cases of defamation or libel.
A)True
B)False
Q3) Which of the following denotes the categories of pecuniary damages that may be awarded in accordance with tort law?
A) compensation awarded to the plaintiff to punish the defendant for particularly offensive behaviour
B) compensation for pain and suffering, loss of enjoyment of life, and loss of life expectancy
C) compensation for out-of-pocket expenses, loss of future income, and cost of future care
D) no-fault compensation for injured employees in lieu of their right to sue
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Page 12
Chapter 11: The Tort of Negligence
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Q1) One of the most important areas in Canadian tort law that involves the application of strict liability is vicarious liability.
A)True
B)False
Q2) Identify and briefly describe the rule that follows the legal principle that only the type of injury must be foreseeable.
Q3) Explain the difference between the standard of care that is applied to average members of society and the one that is applied to persons who have specialized training.
Q4) Manufacturers are not held in tort law to owe a duty to consumers of their products.
A)True
B)False
Q5) What is the commonality that exists in law between the tort of negligent misstatement and negligent misrepresentation?
A) Both strongly support a claim arising from third-party reliance.
B) Both must arise from communication with a professional.
C) Both may be perfectly justifiable.
D) Both arise from communication.
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Chapter 12: Other Torts
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Q1) The act of coming onto another's property without the occupier's express invitation or implied consent gives rise to the tort of invasion of privacy.
A)True
B)False
Q2) In law,the group of parties recognized as having the ability to exercise some degree of control over land or buildings on that land,is defined by which of the following terms?
A) occupant
B) occupier
C) licensee
D) tenant
Q3) Which of the following would your law professor most likely identify as being problematic in the legal context of comparative and negative advertising?
A) qualified privilege
B) injurious falsehood
C) fair comment
D) defamation
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Page 14
Chapter 13: The Agency Relationship
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Questions
Q1) Geoff regularly calls his investment broker to discuss current market conditions.Occasionally,Geoff requires his agent to carry out his instructions involving maturing bonds and trades of shares.How will a court view the relationship of agency that exists between Geoff and his broker?
A) as a relationship that reposes itself in vulnerability
B) as relationship that reposes itself in reliance
C) as a fiduciary relationship.
D) as a non-fiduciary relationship
Q2) Bonita and Laraleigh want to create a relationship with insurance broker Lee Kim.If they want to use the most common method available to accomplish the desired outcome,how should they proceed?
A) deposit
B) retainer
C) contract
D) letter of intent
Q3) A duty imposed on a person who has a special relationship of trust with another is legally known as a fiduciary duty.
A)True
B)False
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Page 15
Chapter 14: Business Forms and Arrangements
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Q1) The fact that a corporation is a separate legal entity allows it to be fully shielded from compliance requirements with laws of general application.
A)True
B)False
Q2) A description that includes triggering events,how each event is to be handled,and valuation of assets is most likely to indicate which of the following?
A) a change of partnership clause in a partnership agreement
B) a profit distribution clause in a partnership agreement
C) a capital contribution clause in a partnership agreement.
D) a dissolution clause in a partnership agreement
Q3) 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
Q4) Briefly discuss how the law restricts the actions of a partner in relation to the partnership and its business activities.
Q5) Discuss the distribution of profits of a corporation.
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Chapter 15: The Corporate Form: Organizational Matters
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Q1) Amarilla is willing to contribute capital to her son's new business enterprise.She has asked for qualified assurance of the return of her share capital should the entity wind down its business activity at some future time.Which of the following would a lawyer most likely indicate as providing the qualified assurance Amarilla is seeking?
A) redemption rights distributed among the classes of shares
B) shares with financial rights for buyback at a set price
C) shares with preferred rights on dissolution
D) preference shares with redemption rights
Q2) Amber has received a lucrative offer to purchase her shares in a closely held corporation.She is required to give her fellow shareholders an opportunity to acquire her shares at the same price offered by the outsider.Why is Amber required to do so?
A) A shareholders' agreement gives the remaining shareholders a right of first refusal.
B) A shareholders' agreement provides the legal elements for valuing the entity's shares.
C) The corporation is listed on an exchange as a publicly traded entity.
D) The share structure prohibits the transfer of shares to outside parties.
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17
Chapter 16: The Corporate Form: Operational Matters
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Q1) A dispute has arisen between the various factions of shareholders over the proposed change of name of SunEnergy4U Inc.,a publicly traded company.In circumstances such as these,which of the following would a corporate lawyer indicate to be important to each of the competing shareholder groups?
A) the statutory oppression remedy
B) exercise of their automatic pre-emptive rights
C) the shareholders' agreement
D) successful solicitation of proxy votes
Q2) Traditionally,courts have shown little reluctance to say that a director or officer is automatically liable for a tort he or she committed on company time.
A)True
B)False
Q3) What is the authority an individual must possess to trigger an organization's criminal liability?
A) the ability to enact organizational policy
B) the ability to act as a subordinate manager
C) criminal liability arises solely where the directing mind commits the offence
D) combining authority with two or more individuals in a single chain of command
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Chapter 17: Personal Property
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Q1) A bailee performing repairs has a right to a lien against property for value of repairs made to it.Identify one example of a legislated legal source of that lien right and provide a brief discussion of a bailee's legislated lien right in these circumstances.
Q2) A defect that no one in the distribution chain could reasonably have foreseen would most likely be described by a business law professor using which of the following legal terms?
A) languishing defect
B) passive defect
C) latent defect
D) patent defect
Q3) If a bailment is without reward and for the benefit of the person possessing the property,which of the following is most likely to result?
A) The bailor's standard of care will be high.
B) The bailee's standard of care will be low.
C) The bailor's standard of care will be very high.
D) The bailee's standard of care will be very high.
Q4) Remedies for failure to perform obligations arising in a bailment relationship originate in two contexts.Discuss.
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Page 19
Chapter 18: Intellectual Property
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Q1) Identify the general categories of information commonly used in a business or commercial context that would be considered confidential.
Q2) With respect to the patent application process,which of the following would a patent lawyer most likely indicate as being the source of a description of a product's manufacturing process?
A) Canadian patent office
B) opinion of the patent agent
C) specifications noted in the application
D) claims sequentially detailed in the application
Q3) Briefly discuss how entitlement to registration of a trademark is established.
Q4) As the technological evolution continues,items such as computers,cellphone video cameras,and MP3 players readily facilitate the unimpeded use of intellectual property with impunity.
A)True
B)False
Q5) Fair dealing is a permitted defence to copyright infringement that allows the copying of works for unlimited purposes.
A)True
B)False
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Chapter 19: Real Property
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Q1) Marina has given the required 90 days' notice that she will not be renewing her lease to her landlord.Marina's business has leased space from this landlord under a periodic tenancy arrangement.
A)True
B)False
Q2) The legal interest considered to be the closest to full ownership in real property is legally described as which of the following?
A) joint tenancy
B) fee simple
C) tenancy in common
D) deeded title
Q3) Often,matters relating to either the supply of water or soil contamination are addressed in an accepted offer for the purchase and sale of real property.In instances where such matters are addressed in this manner,which of the following is most likely to be a valid statement with respect to future legal relevance?
A) They are most often influenced by misuse of erroneous information.
B) They are both forms of contractual warranties that survive closing.
C) They are both typically excluded by entire agreement clauses.
D) They are most often affected by misuse of negligent information.
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Page 21
Chapter 20: The Employment Relationship
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Q1) Public sector legislation protects employee information such as performance reviews,work activity reports,disciplinary reports,and credit ratings.Private sector employees,on the other hand,lack legislated protection and therefore must be concerned with which of the following?
A) duration that personal information is retained by the employer
B) the designation of a personal information supervisor
C) security safeguards implemented to protect their personal information
D) the employer's control, collection, and use of their personal information
Q2) A body that administers labour relations legislation and recognizes certification of a union as a bargaining agent for a group of employees is typically described as the industrial labour relations board.
A)True
B)False
Q3) Human rights legislation prohibits all types of discrimination in employment.
A)True
B)False
Q4) Define harassment and list the various forms that such conduct may take.
Q5) Discuss the jurisdiction of both the federal and provincial governments to make laws that affect employees.
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Chapter 21: Terminating the Employment Relationship
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Q1) To terminate an employment relationship for cause,what must be evident after an employee has been given a warning and an opportunity to improve?
A) adequate training due to visual impairment
B) economic hardship due to reduced business
C) a respectful extended debate of the matter
D) continuing substandard level of performance
Q2) Briefly explain how a low-level employee may pursue an action for constructive dismissal and any benefits that may flow to that employee as a result.
Q3) Kyrie has filed a wrongful termination suit alleging bad faith on the part of her former employer of nine years.At the time of her dismissal from her law clerk position,Kyrie earned $52 000 annually and fringe benefits of $100 per month.Which of the following is most likely the calculation of the damage award Kyrie's lawyer has suggested could be awarded under the labour standards legislation in these circumstances?
A) $44 800
B) $98400
C) $11 200
D) $32 800
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Chapter 22: Professional Relationships
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Q1) Dr.Walton,a practising psychologist,prepared a report for litigation purposes,as requested by Hayley's lawyer.Hayley has been receiving disability benefits,which the insurer would like to terminate if it can prove she has recovered sufficiently.The insurance company has written to Dr.Walton,requesting a copy of the report prepared for Hayley's lawyer.Which of the following will most likely be the appropriate response?
A) The report must be forwarded or Hayley will lose entitlement to benefits.
B) The duty of professional-client privilege is inapplicable to psychologists.
C) The request is denied, as the report is subject to professional-client privilege.
D) All professionals are bound by a duty of confidentiality.
Q2) In order to advance a claim for professional negligence,the defendants must be in a position to prove the requisite causation and lack of remoteness of damage.
A)True
B)False
Q3) The fiduciary must comply with the spirit of the obligations owed by it and not merely the letter.
A)True
B)False
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Page 24
Chapter 23: Sales and Marketing: The Contract, Product, and Promotion
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Q1) In the case of Chalmers Suspensions International Ltd.v.B&B Automation Equipment Inc.,2008 CanLII 15767 (ON S.C.),the court determined,among other things,that the plaintiff's rejection of equipment and its claim for return of payments was justified.Which of the following most likely formed the basis for the court's finding in this instance?
A) defendant's awareness of plaintiff's past and present reliance on its expertise
B) defendant's complete knowledge of plaintiff's intended purpose for the machine
C) breach of an implied warranty under sale of goods legislation
D) breach of an implied condition that went to the root of the contract
Q2) Tinsel X-Mas Trees received 200 trees from Misty Tree Farms Ltd.for sale during the holiday season.Tinsel paid a deposit of $500 and Misty granted payment terms of 30 days from date of delivery.Should Tinsel sell all of the trees but neglect to remit payment within the 30 days,Misty will be entitled to claim an action for the price.
A)True
B)False
Q3) Briefly discuss the right of repudiation with respect to the sale of goods.
Q4) Discuss regulation relating to the product component of the marketing mix.
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Page 25
Chapter 24: Sales and Marketing: Price, Distribution, and Risk Management
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Q1) A producer's failure to provide similar pricing terms and conditions to competing wholesalers or retailers for equivalent volume sales at an equivalent time is recognized as a criminal offence under the federal Competition Act.
A)True
B)False
Q2) False,misleading,or deceptive advertising or claims are sources of legal risks that arise from marketing promotion activities.
A)True
B)False
Q3) Which of the following is recommended in addition to best practices for managing legal risks that require basic shipping terminology to be defined to facilitate understanding of implications of contractual terms by employees?
A) avoid structuring anticompetitive distribution channels
B) standard practices should transfer all risk
C) complete disclosure of anticompetitive criminal activity
D) a corporate compliance program
Q4) Discuss the criticisms surrounding the Scanner Price Voluntary Code.
Q5) List the sources of legal risks in marketing that relate to price.
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Chapter 25: Business and Banking
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Q1) Identify the essential point for a creator of a cheque and briefly discuss what is required in order for the bank to honour the cheque with respect to a payee or holder in due course.
Q2) In legal terms,which of the following is synonymous with the concept that liability for payment of a negotiable instrument is independent of the original debtor-creditor relationship?
A) A negotiable instrument has a life of its own.
B) Each cheque is valuable evidence of contractual obligations.
C) There is always good reason for liability to be borne by the other party.
D) It is convenient and dependable for commerce.
Q3) A written contract that contains an unconditional promise or order to pay a specified sum on demand or on a specific date to a specific individual or bearer is legally known as a bill of exchange.
A)True
B)False
Q4) The risk associated with a retailer accepting payment for goods in cash is that,while payment is immediate,the money may be counterfeit.
A)True
B)False
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Chapter 26: The Legal Aspects of Credit
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Q1) What role does legislation play with respect to enabling a creditor to begin legal action for arrears,retain or take possession of collateral,and appoint a receiver or manager?
A) confirms and supplements contractual remedies
B) protects borrowers' assets in the event of deficiency
C) protects borrowers from acceleration clauses
D) classifies status of creditors as secured or unsecured
Q2) With respect to the priority of registered interests in a personal property security registry,which of the following would be given priority as a result of the limitation regarding after-acquired property?
A) general financing statements
B) blanket financing statements
C) specific security agreements
D) general security agreements
Q3) Payday loan lenders must be extremely cautious and take care that the actual cost of loans does not exceed the 60 percent rate allowable under the Criminal Code of Canada.Failure to do so will result in the criminal prosecution of the payday lender.
A)True
B)False
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Page 28
Chapter 27: Bankruptcy and Insolvency
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Q1) In circumstances where a insolvent's proposal is found to be unacceptable by its creditors,which of the following will result?
A) debtor's deemed assignment in bankruptcy
B) scarcity of DIP financing limiting viability of bankruptcy protection
C) lack of DIP financing leading directly to bankruptcy and liquidation
D) extension of time for payment of the claims
Q2) With respect to distribution to creditors,which of the following would most strongly support a type of superior priority that allows employees to be paid from a government fund that would then have a subrogated claim against a bankrupt's estate?
A) provincial fraudulent conveyancing legislation
B) the Bankruptcy and Insolvency Act
C) the Wage Earner Protection Act
D) Wage Earner Protection Program
Q3) Identify the actions of a debtor that will result in the debtor committing an act of bankruptcy.
Q4) Describe the purposes of early bankruptcy legislation that are confirmed in the Canadian version of bankruptcy legislation.
Q5) Identify the purposes that a proposal is intended to achieve.
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Chapter 28: Insurance
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Sample Questions
Q1) Which of the following would provide coverage through insurance for the costs of a machine breakdown?
A) business interruption insurance
B) property insurance
C) casualty insurance
D) equipment life and disability insurance
Q2) Because financing a buyout on the death of one of the shareholders of a company is challenging,that legal risk is typically reduced by shareholder life insurance policies that will provide all or a portion of the financing needed to complete the buyout.
A)True
B)False
Q3) With respect to insurance products,which of the following is protected by collision coverage?
A) loss or damage to the insured's vehicle itself
B) loss or injury to third parties
C) coverage against injury or death of a third party
D) loss or injury to the insured and to third parties
Q4) Discuss subrogation.
Q5) Identify and briefly describe the basic kinds of insurance.
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