Legal Environment of Business Exam Bank
Course Introduction
The Legal Environment of Business explores the fundamental principles of law as they apply to the business world. This course examines the structure and function of the legal system, including an overview of court systems, sources of law, and the role of regulatory agencies. Key topics include contracts, torts, property rights, employment law, intellectual property, and ethical considerations for business decision-making. Students will analyze legal cases and current issues, gaining the tools to identify and manage legal risks in various business contexts. The course emphasizes critical thinking and the development of strategies to ensure legal compliance and support effective business operations.
Recommended Textbook
The Legal Environment Today 7th Edition by Roger LeRoy Miller
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27 Chapters
1810 Verified Questions
1810 Flashcards
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Chapter 1: Business and Its Legal Environment
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Sample Questions
Q1) The federal government and the state governments constitute the U.S.legal system.This system is based on the legal system of
A)Ancient Greece.
B)England.
C)France.
D)the natural law school.
Answer: B
Q2) Stare decisis is a doctrine obligating judges to help persons who have failed to protect their own rights.
A)True
B)False
Answer: False
Q3) A court may depart from a precedent if the court decides that the precedent should no longer be followed.
A)True
B)False
Answer: True
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Page 3
Chapter 1: A: Online Developments:
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Sample Questions
Q1) Clark appeals a decision in his suit against Dona,grounded on rights provided in the U.S.Constitution,to the United States Supreme Court.The task of the Court to interpret and give meaning to those rights is made more difficult because A)foreign laws affect the legal environment unpredictably.
B)government's role alters with each new election.
C)parties' expectations vary with each step in the judicial process.
D)society's perceptions and needs change over time.
Answer: D
Q2) According to the ruling of the United States Supreme Court in Gibbons v.Ogden,as used in the Constitution's commerce clause,commerce means A)all business dealings.
B)all business dealings that affect more than one state.
C)most business dealings that affect more than one state.
D)only business dealings that affect all of the states.
Answer: B
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4
Chapter 2: Ethics and Business Decision Making
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Sample Questions
Q1) Business ethics applies only to the owners,operators,and employees of corporations.
A)True
B)False
Answer: False
Q2) An action may be legal and ethical.
A)True
B)False
Answer: True
Q3) Solid Tool Company's decision makers view a particular risk in the use of Solid's product as open and obvious.Continuing to market the product without telling consumers of the risk could be justified from a perspective of A)duty-based ethics.
B)Kantian ethics.
C)rights-based ethics.
D)utilitarian ethics.
Answer: D
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Chapter 3: Courts and Alternative Dispute Resolution
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Sample Questions
Q1) 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.
Q2) Kelly files a suit against Lewis in a state court.The case proceeds to trial,after which the court renders a verdict.The case is appealed to an appellate court After its review of Kelly v.Lewis,the appellate court can
A)affirm,reverse,or remand all or part of the lower court's decision.
B)only affirm or reverse all or part of the lower court's decision.
C)only remand all or part of the lower court's decision.
D)only reverse or remand all or part of the lower court's decision.
Q3) Concurrent jurisdiction exists when both federal and state courts have the power to hear a particular case.
A)True
B)False
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Chapter 4: Constitutional Authority to Regulate Business
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Q1) Wisconsin,like other states,may regulate private activities to protect or promote the public order,health,safety,and general welfare under its
A)police powers.
B)taxing powers.
C)spending powers.
D)supreme powers.
Q2) The state legislature of Iowa enacts a transportation statute that impinges on interstate commerce.This statute will be
A)balanced in terms of Iowa's interest in regulating a certain matter against the burden placed on interstate commerce.
B)balanced in terms of the burden on Iowa against the merit and purpose of interstate commerce.
C)struck down.
D)upheld.
Q3) Because the Constitution does not specifically a right to privacy,this right is denied to people.
A)True
B)False
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Chapter 5: Torts,cyber Torts,and Strict Liabiity
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Sample Questions
Q1) If an actor's conduct creates no risk,there is no negligence.
A)True
B)False
Q2) Drake pushes Evon into the path of an oncoming car driven by Flip.Gina tries to rescue Evon.Drake is liable for any injuries to
A)Evon and Flip but not Gina.
B)Evon and Gina but not Flip.
C)Evon,Flip,and Gina.
D)none of the parties.
Q3) Dian,a clerk at an Entertainment Unlimited store,takes a DVD player from the store without permission.Dian is liable for A)appropriation.
B)benefiting an employee.
C)conversion.
D)wrongful interference with a business relationship.
Q4) Under the doctrine of comparative negligence,both the plaintiff's and the defendant's negligence are taken into consideration.
A)True
B)False
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Chapter 6: Criminal Law and Cyber Crime
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Sample Questions
Q1) A business takes a risk by electronically storing its customers' credit account numbers.
A)True
B)False
Q2) Britney,an employee of Computer Associates,is arrested at work.A grand jury issues a formal charge against Britney for larceny.This charge is
A)an arraignment.
B)an indictment.
C)an information.
D)an inquisition.
Q3) Kino sees a DVD player on the porch of Lulu's house,takes the player to his home,and tells everyone he owns it.Maya,holding a knife,forces Nick to give her his boom box,and runs away with it.Ollie breaks into Pam's apartment,takes a computer,and leaves.Which of these acts are crimes,and what are the differences among them
Q4) A criminal case must be proved beyond a reasonable doubt.
A)True
B)False
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Chapter 7: International Law in a Global Economy
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Sample Questions
Q1) Dumping is the exporting of environmentally polluting goods to a foreign market.
A)True
B)False
Q2) Restrictions on imports may include quotas.
A)True
B)False
Q3) Confiscation occurs when a government seizes a private property for a proper public purpose and awards just compensation.
A)True
B)False
Q4) A clause in a contract between Timber Corporation,a U.S.business,and Wang,Ltd.,a Japanese business,specifies that disputes over the contract will be adjudicated in the United States.This is
A)a choice-of-forum clause.
B)a choice-of-law clause.
C)a force majeure clause.
D)an arbitration clause.
Q5) Tariffs are taxes on imports.
A)True
B)False
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Chapter 8: Intellectual Property and Internet Law
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Sample Questions
Q1) Hawk Corporation begins making and selling motorcycles in 2000 under the mark "Hawk." Ten years later,Hawk.com,Inc.,a different company selling medical equipment and supplies,begins to use "hawk" as part of its URL and registers it as a domain name.Can Hawk Corporation stop Hawk.com's use of "hawk" If so,what must the motorcycle-maker show
Q2) There are no registration requirements for trade secrets.
A)True
B)False
Q3) Each member country of the TRIPS agreement must include in its domestic laws broad intellectual property rights.
A)True
B)False
Q4) Li'l Canine Company (LCC)uses a trademark that neither LCC nor anyone else has registered with the government.Under federal trademark law,LCC
A)can register the mark for protection.
B)cannot register a mark that has been used in commerce.
C)has committed trademark infringement.
D)must put off registration until the mark is out of use for six months.
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Page 11
Chapter 8: A: Online Developments:
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Sample Questions
Q1) The Anti-Counterfeiting Trade Agreement applies to A)pirated copyrighted works distributed via the Internet.
B)personal financial information on its owner's laptop.
C)legally downloaded recordings on a user's iPod.
D)a business firm's trade secrets cached on the firm's server.
Q2) Genie.com initiates an online dating service.To attract subscribers and encourage participation,Genie.com creates and posts profiles of fictitious persons and exaggerated profiles of actual users.Fooled by a false profile,Ham files a suit against Genie.com,claiming fraud.The court will most likely
A)dismiss the suit under the Communications Decency Act.
B)allow Ham's claim to proceed to trial on the claim of fraud.
C)allow Ham's suit to proceed but on the ground of embarrassment.
D)allow Ham's suit to proceed but on the ground of mistake.
Q3) Dale's debts are discharged in a liquidation bankruptcy.With respect to Dale's prebankruptcy debt,Even Stevens Credit Reporting Agency must automatically report A)nothing.
B)the debt as "discharged," except the nondischargeable debt.
C)the debt as "discharged," including the nondischargeable debt.
D)the debt as "unpaid."
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Page 12
Chapter 9: Formation in Traditional and E-Contracts
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Sample Questions
Q1) A partnering agreement can indicate the parties' intent with respect to subsequent contracts.
A)True
B)False
Q2) Parties are not usually free to bargain as they wish.
A)True
B)False
Q3) Employment Sources,Inc.,enters into a contract with Fred.If Fred is a minor,this contract is most likely
A)enforceable.
B)unenforceable.
C)void.
D)voidable.
Q4) Offers may not be revoked before they are accepted.
A)True
B)False
Q5) An e-contract must meet the same basic requirements as a paper contract.
A)True
B)False
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Chapter 10: Contract Performance,breach,and Remedies
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Sample Questions
Q1) Satisfaction of an accord discharges an original contractual obligation.
A)True
B)False
Q2) Ralph contracts to sell his Double-R Ranch to Samantha on May 1.On April 20,Ralph tells Samantha that he will not go through with the deal.Samantha can recover A)the cost of any property that Samantha would find suitable.
B)the cost of a similar,nearby ranch.
C)the Double-R Ranch.
D)nothing.
Q3) Anything less than complete performance is a material breach of contract. A)True
B)False
Q4) Quasi contract is a legal theory under which an obligation is imposed in the absence of an agreement.
A)True B)False
Q5) As a general rule,any contract duty can be delegated. A)True
B)False
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Chapter 11: Sales,leases,and Product Liability
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Sample Questions
Q1) A product liability action based on negligence does not require the plaintiff and the defendant to be in privity of contract.
A)True
B)False
Q2) A seller must take steps to guard against the foreseeable misuse of a product.
A)True
B)False
Q3) If performance is commercially impracticable,the perfect tender rule no longer applies.
A)True
B)False
Q4) Delta Company makes and sells table saws,which are designed to be safe if used properly.Erin buys a Delta saw and lends it to her neighbor Frank.To reach a toolbox on a high shelf in his garage,Frank props the saw at an angle against a cabinet and climbs onto the saw.Frank loses his footing,slips off the saw,falls on the blade,and is injured.He files a product liability suit against Delta,on the ground of negligence.On what basis could Delta prevail
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Chapter 12: Creditor-Debtor Relations and Bankruptcy
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Sample Questions
Q1) Refer to Fact Pattern 12-1.The reason for the result in the previous question is that
A)Rico signed a "GUARANTY."
B)Tower Office Suites owns the property and can re-rent the premises.
C)the other tenants can equitably absorb a slight increase in rent.
D)Start-Up will likely move out when it stops paying the rent.
Q2) On the entry of an order for relief in a reorganization case,the creditors generally take over the operation of the debtor's business.
A)True
B)False
Q3) Creditors may contract with a debtor for discharge of the debtor's liquidated debts. A)True
B)False
Q4) An involuntary bankruptcy occurs when the debtor's credit does not cover all of his or her debts.
A)True
B)False
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Page 16
Chapter 13: Mortgages Foreclosures After the Recession
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Sample Questions
Q1) Foreclosure is the postponement,for a limited time,of part or all of the payments on a loan in jeopardy of repossession and sale.
A)True
B)False
Q2) Laurel borrows $150,000 from Marketplace Mortgage Loans to buy a home.The financing documents require Laurel to maintain the property,obtain homeowners' insurance,and pay all property taxes and other assessments through the lender.With respect to these terms,a court is most likely to
A)enforce them.
B)refuse to enforce them.
C)rescind them.
D)rewrite them.
Q3) Forbearance is a process that allows a lender to legally repossess and auction off the property securing a loan.
A)True
B)False
Q4) Home equity is the portion of a home's value that is "paid off."
A)True
B)False
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Chapter 14: Small Business Organizations
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Q1) Laws governing franchising are designed in part to prevent franchisors from terminating franchises without good cause.
A)True B)False
Q2) As with partnerships,a court can order a limited liability company to dissolve in certain circumstances.
A)True B)False
Q3) Guy and Hanna do business as G-H Associates.If G-H is a partnership,it is governed by the Uniform Partnership Act
A)in the absence of an express agreement.
B)in the absence of an implied agreement.
C)only in the presence of an express agreement.
D)under all circumstances.
Q4) The franchise relationship is defined by a contract.
A)True B)False
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Chapter 14: A: Landmark in the Legal Environment:
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Q1) First Editions,Inc.,a book dealer based in Texas,does business in all fifty states exclusively online.According to a decision of the United States Supreme Court,for an individual state to compel an out-of-state business to collect and remit state taxes,the business must have in that state
A)a substantial physical presence.
B)a potential marketing base.
C)an accessible Web site.
D)a party paid to solicit business for its products.
Q2) Farouk,Ltd.,employs Ghali.In the system of law applied in Middle Eastern countries,Farouk can be held liable for an act of Ghali under A)no legal theory.
B)the codification of Islamic law in the sharia.
C)the strict belief of individual responsibility.
D)the doctrine of respondeat superior.
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19
Chapter 15: Corporations
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Sample Questions
Q1) Officers hire the directors and other executive employees.
A)True
B)False
Q2) Niki owns O.K.Oil Corporation.Niki uses O.K.'s funds to pay her personal expenses,creates Pure Fuel Corporation to engage in the same business as O.K.,transfers O.K.'s assets to Pure Fuel,and petitions O.K.into bankruptcy.This most likely warrants
A)a bonus to Niki for financial maneuvers.
B)a discharge for O.K.in bankruptcy.
C)a pierce of O.K.'s corporate veil.
D)a review of Pure Fuel's articles of incorporation.
Q3) A director does not need to disclose any conflict of interest before voting on a proposed transaction.
A)True
B)False
Q4) An agreement between shareholders to restrict the transfer of a closely held corporation's stock is illegal.
A)True
B)False
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Chapter 16: Agency
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Q1) Brad is an employee of Custodial Service,Inc.In deciding whether Brad acts within the scope of his employment when he commits a tort against Didi,a court will not consider whether
A)Brad indicated that he was acting on behalf of Custodial.
B)Custodial authorized the act.
C)Custodial furnished the means by which the injury was inflicted.
D)the act is one commonly performed by employees for their employers.
Q2) An agency can terminate once its purpose is achieved.
A)True
B)False
Q3) KupaJava hires Lola to manage one of KupaJava's seven drive-through coffee stands.KupaJava agrees to pay Lola a salary,plus commission.KupaJava stipulates the standards that should be observed,the goals that should be attained,and the methods that should be used.Lola is most likely KupaJava's A)employee.
B)independent contractor.
C)principal.
D)work for hire.
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21
Chapter 17: Employment,immigration,and Labor Law
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Sample Questions
Q1) Generally,an employer's monitoring of electronic communications in the workplace does not violate employees' privacy rights.
A)True
B)False
Q2) Federal labor law protects employees' right to join labor unions.
A)True
B)False
Q3) Under federal law,only key employees who take temporary family or medical leave are entitled to job reinstatement.
A)True
B)False
Q4) An oral promise that an employer makes to employees regarding discharge policy may be considered part of an implied contract.
A)True
B)False
Q5) The employment-at-will doctrine is little used today.
A)True
B)False
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Chapter 18: Employment Discrimination
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Q1) Refer to Fact Pattern 18-2.Liability for Kit's conduct most likely rests with A)Long-Term Care male employees,who should have acted themselves.
B)Long-Term Care,which should have known,and Kit,who acted.
C)Nia,who did not cooperate.
D)no one,because no law was violated.
Q2) Refer to Fact Pattern 18-2.Kit's conduct is most likely a violation of A)no law.
B)the Age Discrimination in Employment Act.
C)the Americans with Disabilities Act.
D)Title VII of the Civil Rights Act.
Q3) Hu believes that he is a victim of a form of employment discrimination that falls under Title VII of the Civil Rights Act.Compliance with this statute is monitored by A)employees and job applicants,not an administrative agency.
B)employers and businesses,not an administrative agency.
C)the courts and Congress,not an administrative agency.
D)the Equal Employment Opportunities Commission.
Q4) A small difference in job content can justify higher pay for one gender.
A)True
B)False
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Chapter 19: Powers and Functions of Administrative Agencies
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Q1) The U.S.Mine Safety Administration conducts searches of certain businesses.This agency and other administrative agencies can conduct warrantless searches in A)all industries.
B)highly regulated industries.
C)no industries.
D)newly regulated industries only.
Q2) An administrative agency can issue a guidance document to advise the public on the agency's legal and policy position.
A)True
B)False
Q3) Plastix Produx Company is subject to a decision by the Consumer Product Safety Commission.Opposed to the decision,Plastix Produx wants a court to review it.First,however,the firm must use all of the potential administrative remedies.This is A)an actual controversy at issue.
B)standing to sue.
C)the exhaustion doctrine.
D)the ripeness doctrine.
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Page 24
Chapter 20: Consumer Protection
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Q1) In the ordinary course of business,Xtra Charge Company sells goods to Yvon and other consumers on credit under installment sales contracts that typically require at least one year of monthly payments.Xtra does not disclose all of the credit terms to its customers.This practice is most likely to result in
A)a cease-and-desist order.
B)a fine.
C)no sanctions.
D)rescission of the contracts.
Q2) Precise GPS Company's ad states that its product is "the finest that money can buy."
Because of this ad,the Federal Trade Commission is most likely to issue
A)a cease-and-desist order.
B)a counteradvertising order.
C)a multiple product order.
D)none of the choices.
Q3) Merchants must ship orders within the time promised in their ads.
A)True
B)False
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Chapter 21: Protecting the Environment
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Q1) There are no plans to develop national standards regulating the fuel economy and emissions for medium- and heavy-duty trucks.
A)True
B)False
Q2) Fried Food,Inc.,operates a commercial frying plant,discharging pollutants into the air.Greg reports the violations to the Environmental Protection Agency.Greg
A)is not entitled to a payment.
B)may be paid up to any amount.
C)may be paid up to $1,000.
D)may be paid up to $10,000.
Q3) Midwest Power Corporation wants to build a nuclear power plant on private land,for which a federal permit is required.For this action,an environmental impact statement is A)prohibited.
B)required.
C)unnecessary.
D)voluntary.
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Chapter 22: Real Property and Land-Use Control
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Q1) When a landlord sells leased premises to a third party,any existing leases terminate.
A)True
B)False
Q2) Jai owns an orchard behind Key's house and property.The only access to the orchard is Key's driveway,which Jai uses to get to her orchard.Jai sells the orchard to Laurentz.Can Laurentz use the right-of-way across Key's property
Q3) A quitclaim deed warrants more than any other deed.
A)True
B)False
Q4) Zoning laws encourage sustainable and organized development.
A)True
B)False
Q5) There are no exceptions to zoning laws.
A)True
B)False
Q6) Taking private property for public use requires the payment of "just compensation."
A)True
B)False
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Chapter 23: Antitrust Law and Promoting Competition
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Q1) Spa Selectiva Company makes and sells beauty salon supplies.By selling its product at prices substantially below the normal cost of production,Spa Selectiva hopes to drive its competitors from the market.This is
A)market power.
B)predatory pricing.
C)price discrimination.
D)price-fixing.
Q2) Gourmet Foods,Inc.,requires all distributors of its products to sell them at a specified minimum price.Under the Sherman Act,this is a violation
A)if the anticompetitive effects outweigh the competitive benefits.
B)if the competitive benefits outweigh the anticompetitive effects.
C)under any circumstances.
D)under no circumstances.
Q3) Insurance companies are exempt antitrust laws whenever state regulation exists.
A)True
B)False
Q4) Only private individuals can enforce the antitrust laws.
A)True
B)False
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Chapter 24: Investor Protection and Corporate Governance
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Q1) Hobie,the chief executive officer of Ideal Gamers,Inc.(IGI),intentionally understates the amount of IGI's debts in information provided to investors as part of an issue of IGI stock.Jaq buys the stock and suffers a loss.Hobie may be subject to
A)government prosecution and Jaq's suit.
B)neither government prosecution nor Jaq's suit.
C)only government prosecution.
D)only Jaq's suit.
Q2) Heavy Hauling,Inc.,is a public company whose shares are traded in the public securities markets.Under the Sarbanes-Oxley Act of 2002,to ensure that Heavy Hauling's financial results are accurate and timely,the firm's senior officers must set up and maintain
A)internal "disclosure controls and procedures."
B)external "release and reveal timetables."
C)personal "peruse and review liability policies."
D)public "information and discussion forums."
Q3) Private parties cannot sue violators of Section 10(b)and Rule 10b-5.
A)True
B)False
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