Legal Environment of Business Exam Bank
Course Introduction
The course "Legal Environment of Business" provides students with a fundamental knowledge of the legal concepts, principles, and regulations that impact businesses and their operations. It covers topics such as contract law, torts, agency, employment law, intellectual property, product liability, and government regulation. The course also examines the structure and function of the legal system, ethical considerations in business decision-making, and the implications of globalization on legal practices. Emphasis is placed on understanding how the law affects business strategy, risk management, and day-to-day corporate activities, preparing students to identify legal issues and make informed business decisions within a legal framework.
Recommended Textbook
The Legal and Regulatory Environment of Business 17th Edition by Marisa Anne Pagnattaro
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22 Chapters
2527 Verified Questions
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Page 2
Chapter 1: Law As a Foundation for Business
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Sample Questions
Q1) What are compensatory damages?
Answer: When one party to a contract fails to do what he or she agreed to do,a breach of contract occurs.The usual remedy for a breach is a suit for dollar damages.These damages,called compensatory damages,are awarded to make the victim of the breach "whole" in the economic sense.Such damages compensate the party for all losses that are the direct and foreseeable result of a breach of contract.The objective is that a party be in as good a position as he or she would have been in had the contract been performed.
Q2) Differentiate between substantive law and procedural law.
Answer: Substantive law defines the legal relationship of people with other people or between them and the state.Thus,the rules of law governing the creation or enforcement of a contractual promise are substantive in nature.Procedural law deals with the method and means by which substantive law is made and administered.The time allowed for one party to sue another and the rules of law governing the process of the lawsuit are examples of procedural laws.Thus,substantive rules of law define rights and duties,while procedural rules of law provide the machinery for enforcing those rights and duties.
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3
Chapter 2: The Role of Ethics in Decision Making
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Sample Questions
Q1) According to the Ethical Norms and Values for Marketers from the American Marketing Association,which of the following ethical values requires marketers to try to balance justly the needs of a buyer with the interests of a seller?
A) Honesty
B) Responsibility
C) Fairness
D) Openness
E) Respect
Answer: C
Q2) For businesses,merely to observe the law is sufficient as legal regulations are flexible and adequately informed to be the only social guide for business decision making.
A)True
B)False
Answer: False
Q3) For a consequentialist,lying itself is considered unethical.
A)True
B)False
Answer: False
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Chapter 3: The Court System
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Sample Questions
Q1) Many states have eliminated the requirement of unanimity in their courts in civil cases and two states have done so in criminal cases.
A)True
B)False
Answer: True
Q2) In diversity of citizenship cases,if a case involves multiple plaintiffs with separate and distinct claims,_____.
A) at least one of the claims must be approved by the Supreme Court
B) each claim has to qualify for a writ of certiorari
C) each claim must satisfy the jurisdictional amount
D) only one claim has to satisfy the jurisdictional amount
E) the sum total of all claims must be lower than the jurisdictional amount
Answer: C
Q3) The Patient Protection and Affordable Care Act is a defining legislative achievement of President Obama's presidency.
A)True
B)False
Answer: True
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Chapter 4: Litigation
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Sample Questions
Q1) In Batson v.Kentucky,the U.S.Supreme Court outlawed discrimination on the basis of _____ in jury selection.
A) gender
B) religious preference
C) race
D) political affiliation
E) intelligence
Q2) Why have federal courts begun developing higher standards for settlements in class-action suits?
Q3) The process of voir dire examination continues until all of the peremptory challenges are exhausted and a full jury panel is selected.
A)True
B)False
Q4) Briefly explain the function of jury instructions.
Q5) What are the two meanings of the term burden of proof?
Q6) Long-arm statutes do not authorize out-of-state service of process in all cases.
A)True
B)False
Q7) What is the purpose of discovery procedures?
Page 6
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Chapter 5: Alternative Dispute Resolution
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100 Verified Questions
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Sample Questions
Q1) Discuss the importance of arbitration in labor relations disputes.
Q2) Discuss the advantages of mediation over litigation and arbitration.
Q3) What are the advantages of using an expert rather than a judge as an arbitrator?
Q4) Judicial review of voluntary/contract-based arbitration requires a de novo review of the interpretation and application of the law by the arbitrators.
A)True
B)False
Q5) The effect of the Federal Arbitration Act on state laws is that state laws
A)see arbitration as a necessary prelude to litigation
B)always favor conciliation over arbitration
C)never consider an arbitrator's award as legally binding and enforceable
D)strictly nullify the right of the Equal Employment Opportunity Commission to litigate if an employee signed an arbitration clause
E)cannot prevent arbitration of disputes if the disputing parties are engaged in interstate commerce
Q6) What is arbitral misconduct? List five instances of arbitrator misconduct that would lead to the vacating of an arbitrator's award.
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Chapter 6: The Constitution
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Sample Questions
Q1) Article VI of the U.S.Constitution makes it clear that federal law is supreme over a state law or local ordinance.
A)True
B)False
Q2) List some of the cases that have applied the equal protection clause.
Q3) A conflict exists between a state law and a federal law if the state statute would prevent or interfere with the accomplishment and execution of the full purposes and objectives of Congress.
A)True
B)False
Q4) Which of the following statements is true of freedom of the press?
A) It is an absolute constitutional guarantee.
B) It refers to the right of the press to print anything it wants with liability.
C) Its preservation cannot be sought through constitutional protections.
D) It excludes communication and expression through electronic media.
E) It is usually construed to prohibit prior restraints on publications.
Q5) The establishment clause deals with freedom of speech.
A)True
B)False
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Chapter 7: The Property System
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Sample Questions
Q1) Mike gives Maria a life estate in one of the homes he owns.Maria lives there for a while and then accepts a job in another state,so she gives the property to her sister Jackie as it is permissible.Jackie owns the property until
A) Mike revokes the life estate.
B) Maria dies.
C) Mike dies.
D) the life estate is taken over by the government.
E) Maria returns to the life estate.
Q2) Ken has to go to work and cannot find his car keys.After searching for 20 minutes,he finds them in the pocket of the jeans he wore the previous day.In this scenario,the keys would have been considered lost until he found them.
A)True
B)False
Q3) What is attachment and perfection in secured transactions?
Q4) Property is the legal right to exclude others from resources that are originally possessed or are acquired without force,theft,or fraud.
A)True
B)False
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Page 9
Chapter 8: Contract Formation
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Sample Questions
Q1) According to the mailbox rule,a deposited acceptance creates a binding contract even if there is a revocation in the mail.
A)True
B)False
Q2) The doctrine of part performance creates an exception to the requirement that sales of interests in land must be in writing.
A)True
B)False
Q3) Prestige Contractors has agreed to build Yen's house for $25,000 in two years.However,six months after the work begins,Prestige Contractors demands an additional $5,000 from Yen to complete the work.Yen agrees,but when the work is completed,Yen pays Prestige Contractors only $20,000.Prestige decides to sue Yen.Analyze the case.
Q4) Allan promises to pay William $400 if he can steal the next day's test paper from their professor.That night,William steals the test paper and brings it to Allan.Allan,who is now worried about getting caught,tells William he does not want the test paper and refuses to pay him the $400.Has Allan breached the contract between him and William?
Q5) Explain the doctrine of promissory estoppel.
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Chapter 9: Contractual Performance and Breach
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Sample Questions
Q1) What is duty of performance? When is a party to a contract discharged?
Q2) Which of the following statements is true in cases where only one party drafts a contract that contains terms that appear vague and ambiguous to the other party?
A) The court will give the terms the meaning as per trade usage.
B) The court will reject the non-drafting party's attempt to reinterpret the terms after the contract has been signed.
C) The court will declare the drafting party's behavior as a tort due to intentional ambiguity of terms.
D) The court will interpret the terms as they mean in the common language.
E) The court will interpret the ambiguous and vague terms against the party that drafts them.
Q3) ______ is a legal term referring to the transfer of possession from the seller to the buyer.
A) Performance
B) Condition
C) Delivery
D) Waiver
E) Release
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Chapter 10: Torts Affecting Business
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Sample Questions
Q1) When does strict products liability arise?
Q2) When are punitive damages awarded by courts?
Q3) Jake borrowed Adam's book,but he lost the book before he could return it to Adam.In this case,Jake has committed a battery.
A)True
B)False
Q4) Purchasing,even innocently,something that has been stolen is considered conversion.
A)True
B)False
Q5) Briefly explain the tort of false imprisonment.
Q6) ______ is the wrongful exercise of dominion and control over the personal resources that belong to another.
A) Libel
B) Garnishment
C) Conversion
D) Rescission
E) Injunction
Q7) Briefly discuss how some torts are crimes,while some torts are not.
Q8) Briefly explain the tort of trespass with examples.
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Chapter 11: Intellectual Property
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Sample Questions
Q1) The Digital Millennium Copyright Act holds Internet service providers liable for illegal copies that pass temporarily through their systems.
A)True
B)False
Q2) Innocently acquiring a secret from another without knowledge of their theft is generally misappropriation.
A)True
B)False
Q3) Discuss "fair use" in the context of trademarks and copyrights.
Q4) In the context of trademarks,which of the following is otherwise known as recognizability?
A) distinctiveness
B) nonobviousness
C) novelty
D) utility
E) preemption
Q5) How does the law define misappropriation in case of trade secret violation?
Q6) What happens if an individual infringes a patent?
Q7) How is the nonobvious standard in an invention measured?
Page 13
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Chapter 12: International Law
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Sample Questions
Q1) The World Trade Organization was created by the ______.
A) General Agreement on Tariffs and Trade
B) North American Free Trade Agreement
C) Convention on the International Sale of Goods
D) World Bank
E) International Court of Justice
Q2) Corporations and other business entities that violate the Foreign Corrupt Practices Act are subject to a fine of up to ______.
A) $2,000,000
B) $5,000,000
C) $100,000
D) $500,000
E) $10,000,000
Q3) The World Trade Organization is the only global international trade organization dealing with the rules of trade between nations.
A)True
B)False
Q4) What is the purpose and application of the Alien Tort Statute and how is it applied?
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Page 14
Chapter 13: Criminal Law and Business
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Sample Questions
Q1) Which of the following best defines phishing?
A) It is rummaging through the trash looking for personal information.
B) It is pretending to be financial institutions or companies in order to get individuals to reveal their personal information.
C) It is stealing credit or debit card numbers by using a special storage device when processing a card.
D) It is diverting billing statements to other locations.
E) It is stealing wallets, purses, mail, credit cards, checks, tax information, and so forth.
Q2) A person in a private civil action found to have violated the Racketeer Influenced and Corrupt Organizations Act (RICO)is liable for treble,or triple,damages as well as for costs and attorneys' fees.
A)True
B)False
Q3) The protection against compulsory self-incrimination applies to corporations,including professional corporations and partnerships.
A)True
B)False
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Chapter 14: Business Organizations
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Sample Questions
Q1) A limited partner,even if he or she participates in management,cannot be held liable as a general partner.
A)True
B)False
Q2) Partnership is the most easily formed business organization compared to other forms of business organizations.
A)True
B)False
Q3) Briefly describe the steps involved in the creation of a corporation.
Q4) The ______,by which the corporate veil can be pierced,may also be used to impose personal liability upon corporate officers,directors,and stockholders.
A) alter-ego theory
B) negligent conduct theory
C) Med-Arb theory
D) corporate envelopment theory
E) corporate doppelganger theory
Q5) To what extent are partners in a general partnership liable for an organization's debts?
Q6) In the context of organizational forms,what is a partnership?
Page 16
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Chapter 15: The Regulatory Process
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Sample Questions
Q1) Which of the following is an order that an agency imposes on a violator to stop an objectionable activity and refrain the violator from any further violations?
A) consent order
B) cease and desist order
C) preliminary order
D) commission order
E) assignment order
Q2) What is a consent order?
Q3) What are the basic functions of administrative agencies?
Q4) How does the executive branch of a government influence the administrative process?
Q5) What is the role of the executive director in an administrative agency?
Q6) The courts will inquire into an agency's wisdom or effectiveness once the courts decide that an act of legislature is constitutional.
A)True
B)False
Q7) What are administrative agencies? What are the two types of administrative agencies?
Q8) Explain the responsibilities of a secretary in administrative agencies.
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Chapter 16: Regulating Competitionantitrust Laws
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Sample Questions
Q1) What are the basic provisions of the National Cooperative Production Amendment Act?
Q2) What must a plaintiff prove in a case concerning an attempt to monopolize?
Q3) The president of a bottling company agreed with a competitor to stop discounts to retailers,which earned him a jail sentence.Which of the following is indicated in this scenario?
A) variable pricing
B) product bundling
C) mixed-leader bundling
D) predatory conduct
E) horizontal price fixing
Q4) Parker v.Brown doctrine is based on the reasoning that
A) individuals cannot be fined for violations of the Sherman Act.
B) concerted efforts to lobby government officials are not anticompetitive.
C) the Sherman Act does not apply to state governments.
D) not all independent actions by a manufacturer is a per se violation of the Sherman Act.
E) only unreasonable attempts to monopolize a market were covered by the Sherman Act.
Q5) Briefly explain the rule of reason.
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Chapter 17: Financial and Securities Regulations
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Sample Questions
Q1) ______ are brief announcements identifying the security and stating its price,by whom orders will be executed,and from whom a prospectus may be obtained.
A) Tombstone ads
B) Institutional ads
C) Coupon ads
D) Adjunct ads
E) Overlay ads
Q2) The Securities and Exchange Commission (SEC)applies the misappropriation theory of insider trading to force executives who file or certify incorrect financial statements to return bonuses and additional compensation received.
A)True
B)False
Q3) The Sarbanes-Oxley Act provides protections for whistleblowers so that individuals are more willing to report the corruption that can lead to major scandals.
A)True
B)False
Q4) Explain the concept of fraud under Section 10(b)of the Securities Exchange Act of 1934.
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Chapter 18: Regulations Protecting Consumer Purchases, privacy,
and Financial Activities
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Sample Questions
Q1) The Fair Debt Collection Practices Act exempts attorneys who collect consumer debts on behalf of their clients.
A)True
B)False
Q2) The ______,passed by the European Parliament in 1995,mandates that companies may collect personal information only with consent,keep it only as long as necessary,and transfer to third parties only with permission.
A) Safe Harbor Directive
B) Encryption Networks Directive
C) Data Protection Directive
D) Information Transfer Safety Directive
E) Information Network Directive
Q3) Describe the warranty guidelines established for consumer product organizations in the Magnuson-Moss Warranty Act.
Q4) Which type of debts is nondischargeable in bankruptcy?
Q5) Among the costs frequently paid by debtors that are not included in the finance charge are recording fees and taxes.
A)True
B)False
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Chapter 19: Environmental Regulation
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Sample Questions
Q1) Airborne particles that fall on a plaintiff's property can constitute a trespass.
A)True
B)False
Q2) Opinion research indicates that the public's highest concern regarding regulation of industry is
A) expansion of industry into protected areas.
B) control of toxic and hazardous chemicals.
C) movement of industry to less-regulated countries.
D) land encroachment in national parks.
E) the transfer of toxic materials to developing countries.
Q3) What are the primary and secondary air quality standards according to the Clean Air Act?
Q4) The Environmental Protection Agency (EPA)regulates indoor air pollution under the Clean Air Act.
A)True
B)False
Q5) What is the greenhouse effect and what are the changing climatic patterns around the world?
Q6) What problem does the Kyoto Protocol address and what conclusions were reached?
Page 21
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Chapter 20: Discrimination in Employment
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Sample Questions
Q1) Equal Employment Opportunity Commission guidelines allow employers to classify jobs as male or female as well as to have male and female seniority lists.
A)True
B)False
Q2) What are some of the reasonable accommodations that employers can make for disabled employees?
Q3) Which of the following specifically prohibits the race norming of employment tests?
A) the Lilly Ledbetter Fair Pay Act amendments of 2009
B) the Equal Pay Act amendments of 1963
C) the Civil Rights Act amendments of 1991
D) the Americans with Disabilities Act amendments of 2008
E) the Rehabilitation Act amendments of 1973
Q4) What are the intentions of the final regulations implementing Title II of the Genetic Information Nondiscrimination Act (GINA)published by the Equal Employment Opportunity Commission?
Q5) What is the focus of Equal Pay Act cases?
Q6) What are the advantages of suing under Section 1981 instead of Title VII?
Q7) Briefly discuss the employer defenses to age discrimination.
Page 22
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Chapter 21: Employment Laws
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Sample Questions
Q1) What are the rewards received by the whistleblower as part of the Internal Revenue Service (IRS)Whistleblowers Rewards Program?
Q2) Public employees are protected from some drug testing by the ______ Amendment's prohibition against unreasonable searches.
A) First
B) Fifth
C) Fourth
D) Tenth
E) Seventeenth
Q3) The ______ states that an employee's sole remedy against an employer for workplace injury or illness shall be workers' compensation.
A) assumption of the risk rule
B) exclusive remedy rule
C) fellow-servant rule
D) contributory negligence rule
E) shelter rule
Q4) What is the exclusive remedy rule?
Q5) When can public employees be tested for drugs?
Q6) Describe a trading partnership and a nontrading partnership.
Page 23
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Chapter 22: Labormanagement Relationship
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Q1) During the National Labor Relations Board's (NLRB's)certification of a union as the bargaining agent for a group of employees,the general counsel of the NLRB needs to prove that the employees read or understood the cards.
A)True
B)False
Q2) What are compulsory bargaining issues? How are such issues classified?
Q3) The National Labor Relations Board conducts certification elections upon receipt of a petition signed by at least ______.
A) 40 percent of the employees
B) 60 percent of the employees
C) 30 percent of the employees
D) 70 percent of the employees
E) 10 percent of the employees
Q4) The National Labor Relations Board is responsible for conducting representation elections.
A)True
B)False
Q5) What does the general counsel of the National Labor Relations Board supervise?
Q6) What is a union? Are unions good as a concept?
Page 24
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