Legal Environment of Business Exam Questions
Course Introduction
The Legal Environment of Business examines the complex framework of laws and regulations within which businesses operate. This course introduces students to key concepts in business law, including contract law, torts, agency relationships, employment law, and the structure of the court system. Emphasis is placed on the ethical and social responsibilities of business professionals, regulatory compliance, and risk management. Through real-world examples and case studies, students gain a practical understanding of how legal principles affect business decisions, operations, and strategies in both domestic and global contexts.
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) Which of the following is an example of the values represented in the Canadian legal system?
A) The system seeks to be partial and flexible.
B) The system strives to produce just outcomes.
C) The system seeks to limit fairness and equity.
D) The system demands fairness and subjectivity.
Answer: B
Q2) Canadian law provides that business owners may discriminate in hiring practices and may ignore the laws of other countries; however,they must comply with the health and safety regulations governing the workplace.
A)True
B)False
Answer: False
Q3) Litigation directly involves lawyers,judges,and the court system because it is the process one person or a business must use to sue another.
A)True
B)False
Answer: True
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3
Chapter 2: The Canadian Legal System
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Q1) Which of the following is an example of why monitoring government policy is important to business?
A) Rules and regulations are periodically revised.
B) It is the machinery that regulates government.
C) It provides rulings that resolve existing disputes.
D) It can be overwhelming and very technical.
Answer: A
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) There are no limits on the guarantees of rights and freedoms established by the Charter of Rights and Freedoms.
A)True
B)False
Answer: False
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Page 4
Chapter 3: Managing Legal Risks
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Q1) A staff member employed in the purchasing department has been experiencing a number of sexually harassing telephone calls from a sales representative of a new supplier.The matter has been referred to the legal risk management department for analysis.Which function of the business must be analyzed as a result of the referral?
A) business relations
B) human resources
C) employee relations
D) supplier relations
Answer: B
Q2) Law societies govern the activities of their lawyer members and certify the legal competence of each particular lawyer in their areas of specialization.
A)True
B)False
Answer: True
Q3) A legal risk management plan must be continually reviewed,reassessed,and revised.
A)True
B)False
Answer: True
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Chapter 4: Dispute Resolution
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Q1) Two mid-sized business enterprises are desirous of entering into a long-term commercial relationship.Both negotiating teams have been instructed to ensure that any disputes that may arise will proceed through the alternative dispute resolution governed by legislation.Which of the following actions would a lawyer most likely advise the negotiating teams to take in order to satisfy that requirement?
A) The parties must include a mutually agreeable arbitration clause in their agreement.
B) The parties must choose an acceptable adjudication clause in their contract.
C) The contract should include a mutually agreeable alternative dispute resolution clause.
D) The parties' contract should include an acceptable mediation clause.
Q2) Contrast the advantages and disadvantages of alternate dispute resolution.
Q3) A controversial development has been the awarding of legal costs against unsuccessful plaintiffs involved in class action suits.
A)True
B)False
Q4) How does a person who wins a case in civil court actually collect on the judgment? What limitations are there on his/her ability to collect?
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Chapter 5: An Introduction to Contracts
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Q1) In reaching his or her decision regarding a contractual dispute,a judge will always apply the objective standard test.
A)True
B)False
Q2) Contract law principles will be applied by a judge to resolve disputes based on a contract,whether the parties were aware of those principles or not.
A)True
B)False
Q3) Most contractual business relationships are initiated through an offer and acceptance of that offer.Acceptance is typically followed by communications to fill in the details of the arrangement.
A)True
B)False
Q4) The object of creating contractual obligations is to reduce the risk of uncertainty in the business relationship.
A)True
B)False
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Chapter 6: Forming Contractual Relationships
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Q1) On April 2,Tundra Outfitters Ltd.received an offer to purchase from Lakeview Resorts Inc.Lakeview sought 35 canoes for a May 30 delivery,at $300 per canoe.The offer specified acceptance was to be by fax,received by 4 o'clock on April 5.Tundra did not reply.Under these circumstances,why would a court consider that no agreement had come into existence?
A) The offer was rejected by the offeror.
B) The offeree took the offer off the table.
C) The offer was revoked prior to its acceptance.
D) The offer is missing because it is no longer alive.
Q2) Karl,Robin's champion male German shepherd,has been missing for two days.Robin posted an offer of a $1,000 reward for Karl's return throughout the two-kilometre radius surrounding his home.Which of the following correctly characterizes the legal term applied to the type of contract Robin has offered to enter into?
A) a bilateral contract
B) a unilateral contract
C) a unilingual contract
D) a multilateral contract
Q3) Explain the difference between offer and invitation to treat.Give an example of each.
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8
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) In law,which of the following is the term given to a provision that is necessary to give effect to the contractual intentions of the parties?
A) an applied term
B) an implied term
C) an exemplified term
D) an inferred term
Q3) Identify the terms that are required to be present in a commercial contract in order for it to be considered complete.Identify any additional clauses that could provide additional benefits through their inclusion.
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9
Chapter 8: Non-enforcement of Contracts
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Q1) Identify the circumstances where parties would be considered to have breached the requirement to disclose information without the need to be prompted to provide it during contractual negotiations.
Q2) 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.
Q3) Which of the following could you reasonably expect that a lawyer would advise his client is a definition of a "guarantee"?
A) a fair contract formed by one advantaged party over another
B) a pledge evidencing capacity to enter into legally binding contracts
C) a pledge to pay another's liability in the event of default of such duty
D) a contract made enforceable by performance over a period of time
Q4) When is a contract considered to be contrary to public policy? Give an example.
Q5) What must be proven in order to have a contract set aside for misrepresentation?
Q6) With respect to a contractual relationship,identify the types of remedies for mispresentation available to the affected parties and how they are applied.
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Page 10
Chapter 9: Termination and Enforcement of Contracts
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Q1) Briefly describe what is meant by an anticipatory breach.Explain why this type of breach is actionable and identify and briefly describe any distinguishing characteristic with respect to seeking a remedy.
Q2) Why did the Supreme Court of Canada grant leave to hear the case of London Drugs Limited v.Kuehne & Nagel International Ltd.(1992),97 D.L.R.(4th)261 (S.C.C.)?
A) to restrict employee liability relative to the doctrine of privity of contract
B) to ensure employee exclusion clauses are no longer recognized by the lower courts
C) to restrict employee liability relative to the doctrine of vicarious liability
D) to ensure employer exclusion clauses are no longer recognized by the lower courts
Q3) 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
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Chapter 10: Introduction to Tort Law
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Q1) Ruby's premeditated harmful act is characteristic of what form of tort?
A) intentional
B) battery
C) assault
D) negligence
Q2) In addition to monetary compensation for mental pain and economic suffering awarded for harms arising from another's tortuous act,which of the following would also qualify for monetary compensation under tort law?
A) enjoyment of life
B) recurring trespass
C) physical injury
D) slight economic harm
Q3) Provide a description of the factors to be considered by a court when making a determination with respect to a compensatory award for cost of future care.Briefly explain how a court will arrive at the amount of compensation that should properly awarded to the plaintiff for a cost of future care award.
Q4) The definition of the term "assault" is the same in tort law and criminal law.
A)True
B)False
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Chapter 11: The Tort of Negligence
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Q1) When determining a matter involving defective-product liability,what would you reasonably expect an EU state court to base its findings on?
A) limited liability
B) a fault-based standard
C) a no-fault standard
D) strict liability
Q2) In relation to the successful litigation of an action arising from a negligent tortuous act,which of the following would a business law professor most likely indicate to be an unnecessary element?
A) prima facie harmful act
B) a standard of care
C) calculated harmful act
D) reasonable care
Q3) With respect to the tort of negligence,the term "an indeterminate class" is synonymous with which of the following?
A) non-professional
B) thin skull principle
C) expert witnesses
D) third party
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Page 13
Chapter 12: Other Torts
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Q1) A contractual entrant is any person who has paid for the right to enter the premises.
A)True
B)False
Q2) A property owner is requesting that a group of people trespassing on his property leave immediately.In these circumstances,which of the following would a law professor most likely indicate to be a non-applicable common law principle?
A) the common humanity principle
B) the occupiers' liability principle
C) the neighbour principle
D) a common law duty of care
Q3) Any person who comes onto the property to provide the occupier with a benefit is legally described as a licensee.
A)True
B)False
Q4) Explain the common law duty to warn owed by an occupier to an invitee.Identify the common law tort that occupier's liability is most similar to in jurisdictions where statute law prevails.
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14
Chapter 13: The Agency Relationship
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Q1) An agent who has been given permission to "download responsibility for performance" is required to personally perform the obligations arising from the agency relationship.
A)True
B)False
Q2) Tom's photographs will be exhibited for two weeks in Natural WildLife Gallery Inc.,commencing May 1.The gallery is authorized to sell any of Tom's works,as long as they adhere to the agreed price list.In these circumstances,what is the nature of the relationship between these parties?
A) agency by commitment
B) employment agreement
C) agency by agreement
D) retainer agreement
Q3) Which of the following denotes the duties required of an agent?
A) reimburse the principal for out-of-pocket expenses
B) payment to the principal for services rendered
C) abide by the terms of the agency agreement
D) indemnify the principal for agency business losses
Q4) Identify each type of agency authority and describe what is required of the principal in each instance.
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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) Which of the following would pertain to provincial partnership legislation relating to the relationship between business partners and outsiders?
A) regulatory provisions
B) ostensible provisions
C) mandatory provisions
D) optional provisions
Q3) List at least six of the ten optional rules prescribed by the Partnership Act in each province with respect to the relations between partners.
Q4) Briefly discuss the liability of the partners for a breach of contract,including,among other things,the key point from this perspective.
Q5) Briefly discuss the significance of "going it alone" with respect to raising capital for a business.
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Page 16
Chapter 15: The Corporate Form: Organizational Matters
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Q1) Four years after the Canadian Securities Administrators introduced National Instrument 51-102-Continuous Disclosure Obligations requiring issuing corporations to fully disclose known and contingent environmental liabilities,provincial securities regulators admitted the continuing failure of industries to meet the requirements of this regulation.Based on this fact,which of the following would a securities law professor indicate to be the most accurate statement with respect to the Canadian Securities Administrators?
A) a national body that strictly enforces provision of adequate information to make informed decisions
B) a national body that strictly enforces both general securities law and traditional principals of jurisdiction
C) a national body of regulators engaged in the issuance of debt financing and trading of securities
D) a national body composed of 13 administrators from the provincial and territorial securities regulators
Q2) Briefly explain how a corporation can be financed,including the source of regulation with respect to public share issuance or debt offerings.
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17
Chapter 16: The Corporate Form: Operational Matters
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Q1) After the enactment of Bill C-45,an Act to Amend the Criminal Code (Criminal Liability of Organizations),which of the following would be considered an offence that requires intent on behalf of a directing mind of a corporation?
A) storage of firearms
B) flamboyant standard of care
C) fraud, theft, and bribery
D) safety of others
Q2) Which of the following is a business law professor most likely to indicate as being the reason for the codifying of the standard of care of a corporation's directors and officers?
A) The law required an objective standard to ensure fiduciaries strive for perfection.
B) The unduly low common law standard of care compromised the duty of competence.
C) Fiduciaries had to exhibit a greater degree of skill than could reasonably be expected.
D) Fiduciaries were held to an unreasonably exacting duty of competence.
Q3) Briefly discuss the oppression remedy.Identify the categories of conduct a court would usually find to be oppressive in nature.
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18
Chapter 17: Personal Property
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Q1) Tangible property is comprised of personal property,the value of which come from legal rights.
A)True
B)False
Q2) The burden placed on a common carrier to care for the goods of the bailor is determined by the concept of benefit of the relationship.If the bailment benefits the bailor exclusively,the common carrier is required to exercise slight care and is liable only for gross neglect.
A)True
B)False
Q3) Intangible property is comprised of personal property,the value of which come from its physical form.
A)True
B)False
Q4) Describe bailment and discuss its key issues.
Q5) Identify the issues typically addressed in a commercial chattel lease.
Q6) Explain what a court will be require in order to determine who is responsible for damaged goods and for how much.
Q7) Identify the elements that are applied to determine the liability of bailees.
Page 19
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Chapter 18: Intellectual Property
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Q1) Which of the following is distinguished by the absence of specific statutory protection and statutory definition?
A) confidential business information
B) P2P networks
C) uploader and downloader rights
D) trade secrets
Q2) Which of the following represents a commonality between a business name,trademark,or other identifier?
A) top-level domain
B) domain name
C) root identifier
D) second-level domain
Q3) 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
Q4) List the factors identified by the Supreme Court of Canada that must be considered with respect to a confusion created by similar trademarks.
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Chapter 19: Real Property
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Q1) The mortgagor is the party who lends the money and the mortgagee is the party who borrows the money and signs the mortgage promising to repay the loan.
A)True
B)False
Q2) Real property is largely governed by common law,which,by tradition,devotes its focus on protecting rights to property and,in particular,determining the rights of ownership to a piece of land.
A)True
B)False
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.
Q4) Briefly discuss joint tenancy.
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Page 21
Chapter 20: The Employment Relationship
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Q1) Marne's employment contract provides for her remuneration in return for the services she performs.
A)True
B)False
Q2) In Canada,matters such as criminal record,ancestry,and political beliefs are all examples of prohibited grounds of employment discrimination.Which of the following is the most likely source of these types of prohibited grounds?
A) all Canadian employment legislation
B) legislation in Ontario and Quebec
C) legislation in Manitoba and the Yukon
D) legislation in some jurisdictions
Q3) The process by which a union is recognized as a bargaining agent for a group of employees is legally described as which of the following?
A) union membership drive
B) collective bargaining
C) certification
D) collective agreement
Q4) Explain why the distinction between an employee and an independent contractor is important.
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Chapter 21: Terminating the Employment Relationship
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Q1) 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
Q2) During a meeting with in-house counsel,the human resource manager identified something as being easy to articulate but difficult to apply.Which of the following was the manager most likely referring to?
A) neglect of duty
B) willful disobedience
C) grounds for dismissal
D) prejudicial conduct
Q3) An employer who has dismissed an employee in bad faith may,in addition to damages for reasonable notice,also be vulnerable to an additional extension of damages legally known as the Wallace bump.
A)True
B)False
Q4) Identify the changes that are considered to be fundamental to the triggering of an action for constructive dismissal.
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Chapter 22: Professional Relationships
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Q1) In addition to relying on an accountant's fiduciary duty regarding elements of trust and confidence,which of the following would also be strongly supported by the professional's fiduciary duty?
A) reliance on skill, knowledge, and advice
B) fulfilling a public function.
C) reliance on honesty and integrity
D) reliance on professional-client privilege
Q2) Harold has practised commercial law for three years.If Harold is hired by Canuck Publishing Inc.as the senior manager responsible for the quality of the content of the business law texts,which of the following would be a likely result?
A) Cost-effectiveness is achieved by this arrangement.
B) The quality of his service must justify the fees he bills.
C) His legal and ethical obligations will be varied.
D) There is a need for Harold to specialize.
Q3) In very limited circumstances,a professional duty of confidentiality must be violated when a patient tells her doctor that she is going to either hurt herself or intends to cause harm another.
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) Why would a buyer be relieved of the implied statutory requirement to make its intended purpose of purchasing goods known to the seller of those goods?
A) The goods will be used in their ordinary purpose.
B) The buyer is reliant on inspection of goods.
C) The goods will be bought by description.
D) The seller's goods are being sold by description
Q2) A number of terms are automatically implied by the Sale of Goods Act into the contracts of parties,even though they may have expressly agreed to exclude the operation of this legislation with regard to their transaction.
A)True
B)False
Q3) The Latin phrase caveat emptor forms the foundation of common law's expectation of purchasers to be aware of what they are purchasing and make appropriate investigations before buying.
A)True
B)False
Q4) Identify the warranties that are implied in sales transactions by the Sale of Goods Act.
25
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Chapter 24: Sales and Marketing: Price, Distribution, and Risk Management
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Q1) Tied selling is reviewable provided that the action lessens competition substantially. A)True
B)False
Q2) While a business may strive for market dominance as a means of achieving economies of scale,such market dominance is typically intolerable to Canadians based on which of the following known results?
A) distribution practices that discriminate against customers
B) marketing plans to identify risks involving a business and its customers
C) corporate compliance programs that ensure consumers pay the lowest price
D) unfair and discriminatory higher consumer pricing practices
Q3) Which of the following would a lawyer most likely indicate as being a specialized form of conspiracy by producers/suppliers to manipulate a market through price that results in fine and/or imprisonment?
A) bid rigging
B) tied selling
C) abuse of dominant position
D) predatory pricing
Q4) Briefly discuss the regulation of door-to-door selling.
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Chapter 25: Business and Banking
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Q1) Describe Justice LaForest's comments with respect to what a banker is supposed to know,which formed a broader basis for the court's decision in Canadian Pacific Hotels Ltd.v.Bank of Montreal (1987),40 D.L.R.(4th)385 (S.C.C.),where the bank failed to detect forged signatures.
Q2) A written order to a person directing that a specific amount be paid to another individual is commonly described as a negotiable instrument.
A)True
B)False
Q3) The banks duty to honour cheques and repay deposits is an express obligation imposed by the federal Bank Act.
A)True
B)False
Q4) Describe the essence of the requirements that must be present for an instrument to become negotiable without the need to investigate its validity through reference to circumstances of the instrument's creation or to other documents.
Q5) A cheque is a written promise to pay a specified amount to another person.
A)True
B)False
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Page 27
Chapter 26: The Legal Aspects of Credit
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Q1) Which of the following would be applicable to every organization within Canada that collects,uses,or discloses personal information in the course of commercial activity?
A) PEPIDA
B) authority of provincial privacy commissioners
C) authority of the federal privacy commissioner
D) PIPEDA
Q2) Discuss the criteria that will be used to determine the length of reasonable notice required to be given to a debtor by a creditor that has decided to call in a loan.
Q3) A deficiency results when a creditor has been forced to sell assets because of borrower default and the price realized by the sale is less than the outstanding amount of the debt.
A)True
B)False
Q4) Credit bureaus provide a service to consumers by compiling personal credit history information created by an individual's lenders and then making the information available to that individual.
A)True
B)False
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28
Chapter 27: Bankruptcy and Insolvency
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Q1) What is a similarity between a proposal and an arrangement under the Companies' Creditors Arrangement Act?
A) Both enable the debtor to seek DIP financing.
B) Both severely limit creditor protection.
C) The goal of each is to reduce the amount recovered by creditors.
D) Each limits feasible debt recovery and creditor agreement.
Q2) How is it possible for a business to reduce and perhaps transfer the legal risks of bankruptcy associated with all aspects of financing its enterprise?
A) expert advice and careful review of financing contracts
B) file for creditor protection
C) transfer assets into family trusts
D) declare bankruptcy at the first sign of financial difficulty
Q3) Where a creditor has indicated that a debt is unworthy of the time it would take to collect,which of the following allows the debtor to seek remedies in order to bring closure to its obligations?
A) the Bankruptcy and Insolvency Act
B) the Bankruptcy Act
C) the Insolvency and Bankruptcy Act
D) the Insolvency Act
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Page 29
Chapter 28: Insurance
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Q1) Jasmine is discussing an alteration to her current business insurance coverage.Which of the following will her insurer most likely recommend to Jasmine for this purpose?
A) additional policy
B) rider
C) new policy
D) endorsement
Q2) Which of the following is required by provincial law to have insurance for liability arising from its ownership,use,and operation?
A) a laundromat
B) a car wash
C) an automobile owner
D) a product manufacturer
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) Briefly explain why the law places the duty of disclosure on the insured.
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