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Law as the Foundation of Business
True / False Questions
1. The first known written set of laws was the Code of Hammurabi. True False
2. Law and "rule of law" are synonymous terms. True False
3. A decree of specific performance may be issued by a court to help an injured party in cases involving breach of contract and tortuous conduct but not when a statutory violation has occurred. True False
4. Louisiana is the only state that follows a complete civil law system. True False
5. Civil law relies primarily on legislation, while common law relies on court decisions. True False
6. Whether it's stated in the contract or not, when a breach of contract occurs, the injured party will usually recover her attorney fees as part of her compensatory damages. True False
7. Public law encompasses those legal problems and relationships that exist between individuals. True False
8. Procedural law defines rights and duties for the parties. True False
9. Legal realism goes past the word of law to examine how laws are enforced, interpreted and applied. True False
10. Property laws include wills, trusts and estates. True False
11. Proposed uniform acts are drafted by the American Commissions Conference on Uniform State Laws. True False
12. Legislation enacted by Congress is called a statute while a law passed by a local government is usually called an ordinance. True False
13. The most significant uniform law for business is the Uniform Commercial Code. True False
14. The time allowed for one party to sue another party is considered a substantive law issue. True False
15. Dicta is not precedent because it is a comment on a matter not necessary to the decision reached. True False
16. Jurisprudence refers to the law itself and not to the philosophy of law. True False
17. "Constitutional relativity" stands for the proposition that the meaning of the language found in the Constitution is relative to the time in which it is being interpreted. True False
18. The Treaty on European Union states that the European Union is founded on the rule of law. True False
19. By definition, a crime is a wrong against just the victim. True False
20. Under the doctrine of Stare Decisis, courts are bound to follow the holdings and dicta of prior cases. True False
Multiple Choice Questions
21. Which of the following is not an advantage of stare decisis applied to case law under common law principles? A. Stare decisis provides predictability in law.B. Stare decisis and case law helps specify, in detail, the boundaries of our property based legal system.C. Case law eliminates conflict of laws problems due to the large number of decisions being made.D. Case law decisions cannot be overturned once established as precedent so consistence is maintained and assured.
22. ________ means to follow the case precedent. A. Stare decisis.B. Constitutional realism.C. Statutory construction.D. Constitutional relativism.
23. The common law system originated in: A. France.B. The United States.C. Spain.D. England.
24. Louisiana partially follows a civil law system based on which country? A. Spain.B. England.C. France.D. Italy.
25. What type of law describes the legal principles that apply to government agencies? A. Administrative.B. Constitutional.C. Criminal.D. Public.
26. Which of the following is not a type of law dealing with property: A. Leases.B. Wills.C. Trusts.D. Sales of goods.
27. Mike has entered into a binding agreement to sell a car to Kathy. When Kathy shows up to complete the deal as per the agreement, Mike refuses to go through with the transaction. Which of the following best categorizes Mike and Kathy's issues with regard to classification of laws? A. This is a public law issue regarding contract law.B. This is a private law issue regarding contract law.C. This is a public law issue regarding property law.D. This is a private law issue regarding criminal law.
28. The prosperous nations exploit the resources and labor of poor nations through trade so the wealthy nations are prosperous because the poor nations are poor describes the: A. Wealth dissemination theory.B. Wealth determination theory.C. Dependency theory.D. Dominance theory.
29. Which statement is true?I. Substantive laws define rights and duties.II. Procedural rules provide the machinery to enforce rights and duties. A. I and II.B. I only.C. II only.D. Neither I nor II.
30. The City of Dover has passed a written law banning smoking in most restaurants and bars. Dover has enacted a/an: A. Statute.B. Act.C. Regulation.D. Ordinance.
31. ________ jurisprudence believes that law is simply the commands of the state backed up by force and punishment. A. Historical School.B. Sociological.C. Natural law.D. Positive law.
32. Exemplary damages are also called: A. Compensatory damages.B. Consequential damages.C. Punitive damages.D. Injunctive damages.
33. Which of the following is not an area of property law concern? A. Promises to exchange resources in the future.B. Patents and copyrights.C. Trademarks and trade secrets.D. All of the above are property law concerns.
34. Laws passed by Congress are usually referred to as: A. Statutes.B. Codes.C. Ordinances.D. Commandments.
35. The Uniform Commercial Code will not apply to: A. The purchase of a new computer.B. The purchase of a used car.C. The use of a check as payment for a transaction.D. The contract to hire a cleaning crew to clean your home or office.
36. Judge Alan has issued a decision in a mortgage foreclosure case. The issue involved a bank that granted a loan to a person who could not afford the payments. Judge Alan found for the bank, however, in his opinion said that the bank acted legally but unethically and that homeowners should have more protection from such unethical lending policies. He lamented that the current law forced him to find for the bank. When the judge opined about the unethical lending practices and said that he wished he could have helped the homeowner, his statements would be considered: A. Dicta.B. Precedent.C. Stare decisis.D. A judicial holding.
37. The Uniform Commercial Code applies to:I. Commercial transactions involving personal property.II. Real estate.III. Personal service contracts. A. I, II, III.B. I and III.C. II and III.D. I only.
38. ________ is what a court does when it interprets a statute to determine the intent of the legislature when the statute was enacted. A. Legislative history.B. Statutory construction.C. Judicial definition.D. Statutory resolution.
39. Sheila goes to the only car dealer in town to purchase a car. She tells the dealer that this will be her first car and that she needs it to travel to a distant city for a new job that starts in two days. After coming to an agreement, the dealer tells her the car will be ready at 9:00 am the next morning. He then asks her out to dinner for that night. Sheila says no. The dealer is very upset at her rejection so he refuses to provide to her the car the next morning breaching the contract. Sheila has no way to get to the new job and she is fired. A. Sheila can only sue for compensatory damages related to the breach of contract.B. Sheila can sue for exemplary damages because a tort has been committed.C. Sheila is entitled to consequential damages because the dealer knew that she needed the car for travel to the new job.D. Sheila is entitled to nothing because the dinner rejection gave the dealer just cause to breach the contract.
40. A federal statute has been enacted establishing a national minimum wage of $8.00 per hour. A. Minnesota may enact a state law making the minimum wage $8.25 within the state.B. Minnesota must keep their minimum wage at $8.00 per hour and may not go higher.C. Minnesota may enact a state law making the minimum wage $7.50 per hour within the state for private employers but must honor the $8.00 per hour rate for state and federal government employees within the state.D. Since the federal government has enacted minimum wage legislation, Minnesota may not make any laws in the area which is now reserved for federal enforcement.
41. Which of the following would be considered intangible: A. Oxygen.B. A house.C. Gasoline.D. Ownership of your books.
42. Administrative agencies can be empowered to:I. Investigate.II. Prosecute.III. Hold hearings. A. I, II, III.B. I and III.C. II and III.D. I and II.
43. All but which of the following is a disadvantage of stare decisis and the common law system: A. Time involved.B. Predictability.C. Conflicting precedent.D. Dicta.
44. Dicta is: A. The same thing as the decision.B. Like stare decisis.C. The comments from the court that accompanies the decision.D. The main thrust of the dissent.
45. Which of the following is false regarding uniform laws: A. The National Conference of Commissioners on Uniform Laws drafts uniform laws which become binding on the states upon approval by the National Conference.B. The National Conference of Commissioners on Uniform Laws drafts uniform laws which, upon approval by the National Conference, are recommended to state legislatures for approval.C. Uniform laws do not have to be adopted in every state.D. Uniform laws may be adopted by state legislatures in principle, but, changes may be made in some provisions to meet local needs.
46. An automobile accident occurs in Alabama, but the lawsuit is brought in Georgia. The judge will apply what law for the accident? A. Alabama.B. Georgia.C. Federal law.D. Either Alabama or Georgia law.
47. Which of the following is not a means of applying the exclusionary right of property? A. Private property.B. Common property.C. Personal.D. Public property.
48. Which of the following will be considered the lowest source of law and be voided or prevailed over by the others? A. A federal administrative regulation.B. A state constitution.C. A Congressional statute.D. An amendment to the U.S. Constitution.
49. Which of the following is not a typical legal sanction for criminal conduct? A. Payment of damages to the victim for her injuries.B. Possible disqualification of voting rights.C. Possible removal from political office.D. Fine paid to the government.
50. When judges write their decisions on legal issues they set out their reasoning in _______. A. Judgments.B. Verdicts.C. Opinions.D. Citations.
51. If the citation for a case is 115 N.W. 2d 338 (1950), where can it be found in the Northwestern Reporter? A. Volume 115, page 338.B. Volume 338, page 115.C. Volume 338, page 1950.D. Volume 115, page 1950.
52. Which of the following is not used as a punishment for a crime in the U.S. today? A. Death.B. Imprisonment.C. Fine.D. Public whipping.
53. Damages, awarded to make the victim of the breach of a contract "whole" in the economic sense, are called ________. A. Compensatory.B. Consequential.C. Punitive.D. Specific.
54. The fact that a search warrant must usually be obtained before entering and searching a citizen's home is based on: A. Substantive law.B. Property law.C. Administrative law.D. Procedural law.
55. A local zoning law is an example of: A. An ordinance.B. A statute.C. An order.D. A regulation.
56. Which of the following is not an intentional tort? A. Battery.B. False imprisonment.C. Assault.D. Negligence.
57. Punitive damages are frequently awarded in: A. Ordinary negligence cases.B. Intentional tort cases.C. Breach of contract cases.D. Criminal cases.
58. The Federal Communications Commission has just issued a ruling banning the word "friggin" on terrestrial radio and non-cable television determining it to be obscene. This ruling would be called a/an: A. Statute.B. Regulation.C. Ordinance.D. Order.
59. Which of the following would be considered private law? A. Administrative law.B. Criminal law.C. Contract law.D. Constitutional law.
60. Much, if not most, business in the United States is transacted through: A. Sole proprietorshipsB. Partnerships.C. Corporations.D. Administrative agencies.
Short Answer Questions
61. When Princeton graduate student Erica Field researched ownership in Peru, what effects did she find when the "average squatter family" was granted property ownership?
62. Define and distinguish common law and civil law.
63. What are the four basic sources of law?
64. Name at least four Internet law issues.
65. Congratulations, you have been appointed to the United States Supreme Court? Which "school" of jurisprudence will you follow as your primary legal philosophy? Explain the philosophy and your reasons for believing in it.
66. What are some of the main advantages of stare decisis and why might a judge not follow stare decisis in a particular case?
67. Why is there a need to have a uniformity of law in certain areas and what are the two ways in which uniformity of law can be attained?
68. When the former Soviet Union collapsed, many observers thought that the new private market would promptly improve Russia's economy. Why has the Soviet economy been slow to recover from the decline that it experienced?
69. What information can be obtained from the citation of a case?
70. The 14th amendment recognizes that law may be enforced by taking resources owned by a citizen. Name the instances in which someone's resources may be taken.
Chapter 01 Law as the Foundation of Business Answer Key
True / False Questions
1. The first known written set of laws was the Code of Hammurabi. TRUE
2. Law and "rule of law" are synonymous terms. FALSE
3. A decree of specific performance may be issued by a court to help an injured party in cases involving breach of contract and tortuous conduct but not when a statutory violation has occurred. FALSE
4. Louisiana is the only state that follows a complete civil law system. FALSE
5. Civil law relies primarily on legislation, while common law relies on court decisions. TRUE
6. Whether it's stated in the contract or not, when a breach of contract occurs, the injured party will usually recover her attorney fees as part of her compensatory damages. FALSE
7. Public law encompasses those legal problems and relationships that exist between individuals. FALSE
8. Procedural law defines rights and duties for the parties. FALSE
9. Legal realism goes past the word of law to examine how laws are enforced, interpreted and applied. TRUE
10. Property laws include wills, trusts and estates. TRUE
11. Proposed uniform acts are drafted by the American Commissions Conference on Uniform State Laws. FALSE
12. Legislation enacted by Congress is called a statute while a law passed by a local government is usually called an ordinance. TRUE
13. The most significant uniform law for business is the Uniform Commercial Code. TRUE
14. The time allowed for one party to sue another party is considered a substantive law issue. FALSE
15. Dicta is not precedent because it is a comment on a matter not necessary to the decision reached. TRUE
16. Jurisprudence refers to the law itself and not to the philosophy of law. FALSE
17. "Constitutional relativity" stands for the proposition that the meaning of the language found in the Constitution is relative to the time in which it is being interpreted. TRUE
18. The Treaty on European Union states that the European Union is founded on the rule of law. TRUE
19. By definition, a crime is a wrong against just the victim. FALSE
20. Under the doctrine of Stare Decisis, courts are bound to follow the holdings and dicta of prior cases. FALSE
Multiple Choice Questions
21. Which of the following is not an advantage of stare decisis applied to case law under common law principles? A. Stare decisis provides predictability in law.B. Stare decisis and case law helps specify, in detail, the boundaries of our property based legal system.C. Case law eliminates conflict of laws problems due to the large number of decisions being made.D. Case law decisions cannot be overturned once established as precedent so consistence is maintained and assured.
22. ________ means to follow the case precedent. A. Stare decisis.B. Constitutional realism.C. Statutory construction.D. Constitutional relativism.
23. The common law system originated in: A. France.B. The United States.C. Spain.D. England.
24. Louisiana partially follows a civil law system based on which country? A. Spain.B. England.C. France.D. Italy.
25. What type of law describes the legal principles that apply to government agencies? A. Administrative.B. Constitutional.C. Criminal.D. Public.
26. Which of the following is not a type of law dealing with property: A. Leases.B. Wills.C. Trusts.D. Sales of goods.
27. Mike has entered into a binding agreement to sell a car to Kathy. When Kathy shows up to complete the deal as per the agreement, Mike refuses to go through with the transaction. Which of the following best categorizes Mike and Kathy's issues with regard to classification of laws? A. This is a public law issue regarding contract law.B. This is a private law issue regarding contract law.C. This is a public law issue regarding property law.D. This is a private law issue regarding criminal law.
28. The prosperous nations exploit the resources and labor of poor nations through trade so the wealthy nations are prosperous because the poor nations are poor describes the: A. Wealth dissemination theory.B. Wealth determination theory.C. Dependency theory.D. Dominance theory.
29. Which statement is true?I. Substantive laws define rights and duties.II. Procedural rules provide the machinery to enforce rights and duties. A. I and II.B. I only.C. II only.D. Neither I nor II.
30. The City of Dover has passed a written law banning smoking in most restaurants and bars. Dover has enacted a/an: A. Statute.B. Act.C. Regulation.D. Ordinance.
31. ________ jurisprudence believes that law is simply the commands of the state backed up by force and punishment. A. Historical School.B. Sociological.C. Natural law.D. Positive law.
32. Exemplary damages are also called: A. Compensatory damages.B. Consequential damages.C. Punitive damages.D. Injunctive damages.
33. Which of the following is not an area of property law concern? A. Promises to exchange resources in the future.B. Patents and copyrights.C. Trademarks and trade secrets.D. All of the above are property law concerns.
34. Laws passed by Congress are usually referred to as: A. Statutes.B. Codes.C. Ordinances.D. Commandments.
35. The Uniform Commercial Code will not apply to: A. The purchase of a new computer.B. The purchase of a used car.C. The use of a check as payment for a transaction.D. The contract to hire a cleaning crew to clean your home or office.
36. Judge Alan has issued a decision in a mortgage foreclosure case. The issue involved a bank that granted a loan to a person who could not afford the payments. Judge Alan found for the bank, however, in his opinion said that the bank acted legally but unethically and that homeowners should have more protection from such unethical lending policies. He lamented that the current law forced him to find for the bank. When the judge opined about the unethical lending practices and said that he wished he could have helped the homeowner, his statements would be considered: A. Dicta.B. Precedent.C. Stare decisis.D. A judicial holding.
37. The Uniform Commercial Code applies to:I. Commercial transactions involving personal property.II. Real estate.III. Personal service contracts. A. I, II, III.B. I and III.C. II and III.D. I only.
38. ________ is what a court does when it interprets a statute to determine the intent of the legislature when the statute was enacted. A. Legislative history.B. Statutory construction.C. Judicial definition.D. Statutory resolution.
39. Sheila goes to the only car dealer in town to purchase a car. She tells the dealer that this will be her first car and that she needs it to travel to a distant city for a new job that starts in two days. After coming to an agreement, the dealer tells her the car will be ready at 9:00 am the next morning. He then asks her out to dinner for that night. Sheila says no. The dealer is very upset at her rejection so he refuses to provide to her the car the next morning breaching the contract. Sheila has no way to get to the new job and she is fired. A. Sheila can only sue for compensatory damages related to the breach of contract.B. Sheila can sue for exemplary damages because a tort has been committed.C. Sheila is entitled to consequential damages because the dealer knew that she needed the car for travel to the new job.D. Sheila is entitled to nothing because the dinner rejection gave the dealer just cause to breach the contract.
40. A federal statute has been enacted establishing a national minimum wage of $8.00 per hour. A. Minnesota may enact a state law making the minimum wage $8.25 within the state.B. Minnesota must keep their minimum wage at $8.00 per hour and may not go higher.C. Minnesota may enact a state law making the minimum wage $7.50 per hour within the state for private employers but must honor the $8.00 per hour rate for state and federal government employees within the state.D. Since the federal government has enacted minimum wage legislation, Minnesota may not make any laws in the area which is now reserved for federal enforcement.
41. Which of the following would be considered intangible: A. Oxygen.B. A house.C. Gasoline.D. Ownership of your books.
42. Administrative agencies can be empowered to:I. Investigate.II. Prosecute.III. Hold hearings. A. I, II, III.B. I and III.C. II and III.D. I and II.
43. All but which of the following is a disadvantage of stare decisis and the common law system: A. Time involved.B. Predictability.C. Conflicting precedent.D. Dicta.
44. Dicta is: A. The same thing as the decision.B. Like stare decisis.C. The comments from the court that accompanies the decision.D. The main thrust of the dissent.
45. Which of the following is false regarding uniform laws: A. The National Conference of Commissioners on Uniform Laws drafts uniform laws which become binding on the states upon approval by the National Conference.B. The National Conference of Commissioners on Uniform Laws drafts uniform laws which, upon approval by the National Conference, are recommended to state legislatures for approval.C. Uniform laws do not have to be adopted in every state.D. Uniform laws may be adopted by state legislatures in principle, but, changes may be made in some provisions to meet local needs.
46. An automobile accident occurs in Alabama, but the lawsuit is brought in Georgia. The judge will apply what law for the accident? A. Alabama.B. Georgia.C. Federal law.D. Either Alabama or Georgia law.
47. Which of the following is not a means of applying the exclusionary right of property? A. Private property.B. Common property.C. Personal.D. Public property.
48. Which of the following will be considered the lowest source of law and be voided or prevailed over by the others? A. A federal administrative regulation.B. A state constitution.C. A Congressional statute.D. An amendment to the U.S. Constitution.
49. Which of the following is not a typical legal sanction for criminal conduct? A. Payment of damages to the victim for her injuries.B. Possible disqualification of voting rights.C. Possible removal from political office.D. Fine paid to the government.
50. When judges write their decisions on legal issues they set out their reasoning in _______. A. Judgments.B. Verdicts.C. Opinions.D. Citations.
51. If the citation for a case is 115 N.W. 2d 338 (1950), where can it be found in the Northwestern Reporter? A. Volume 115, page 338.B. Volume 338, page 115.C. Volume 338, page 1950.D. Volume 115, page 1950.
52. Which of the following is not used as a punishment for a crime in the U.S. today? A. Death.B. Imprisonment.C. Fine.D. Public whipping.
53. Damages, awarded to make the victim of the breach of a contract "whole" in the economic sense, are called ________. A. Compensatory.B. Consequential.C. Punitive.D. Specific.
54. The fact that a search warrant must usually be obtained before entering and searching a citizen's home is based on: A. Substantive law.B. Property law.C. Administrative law.D. Procedural law.
55. A local zoning law is an example of: A. An ordinance.B. A statute.C. An order.D. A regulation.
56. Which of the following is not an intentional tort? A. Battery.B. False imprisonment.C. Assault.D. Negligence.
57. Punitive damages are frequently awarded in: A. Ordinary negligence cases.B. Intentional tort cases.C. Breach of contract cases.D. Criminal cases.
58. The Federal Communications Commission has just issued a ruling banning the word "friggin" on terrestrial radio and non-cable television determining it to be obscene. This ruling would be called a/an: A. Statute.B. Regulation.C. Ordinance.D. Order.
59. Which of the following would be considered private law? A. Administrative law.B. Criminal law.C. Contract law.D. Constitutional law.
60. Much, if not most, business in the United States is transacted through: A. Sole proprietorshipsB. Partnerships.C. Corporations.D. Administrative agencies.
Short Answer Questions
61. When Princeton graduate student Erica Field researched ownership in Peru, what effects did she find when the "average squatter family" was granted property ownership?
She found that the granting of the property rights was associated with a 17 percent total household work increase, a 47 percent increase in the probability of working outside of the home and a 28 percent decline in the likelihood of child labor in the family. The study concluded that formal ownership meant that the families did not have to spend as much time defending their homes and could engage in more productive work; making them less poor.
62. Define and distinguish common law and civil law.
Common law is based on case decisions from England and emphasizes the role of judges in determining the meaning of laws and how they apply. Civil law is based on legislation from non-common law countries, such as France. Civil courts decide facts but defer to the legislature for determinations of legal issues.
63. What are the four basic sources of law?
The four basic sources of law are constitutions (U.S. and state), legislation (federal and state), administrative law (rules, regulations, and decisions by administrative agencies), and judicial decisions.
64. Name at least four Internet law issues.
Issues in Internet Law include property interests (ex. software), the creation of legally binding contracts over the Internet, monitoring of email transmissions, regulating pornography transmitted over the Internet, copyright infringement, taxation of Internet purchases and liability of ISPs.
65. Congratulations, you have been appointed to the United States Supreme Court? Which "school" of jurisprudence will you follow as your primary legal philosophy? Explain the philosophy and your reasons for believing in it.
Student answers will vary; however, they should explain what the chosen philosophy believes in and why they believe in it.
66. What are some of the main advantages of stare decisis and why might a judge not follow stare decisis in a particular case?
The main advantages of stare decisis are the following: certainty, consistency, predictability, and expediency for participants in lawsuits. Stare decisis allows people to act with more certainty personally and in business. A judge may not follow a precedent if the legislature has changed the law, if the former ruling is erroneous or the conditions upon which the former ruling was based no longer exist. Also there may be a perceived change in the social climate requiring a change in the decision.
67. Why is there a need to have a uniformity of law in certain areas and what are the two ways in which uniformity of law can be attained?
Because Congress, the fifty states and local governments are all entitled to and do enact statutes and ordinances, there is often an overlap and inconsistency in the law when the laws conflict. Certainly, individual states and local governmental bodies may and should enact laws to govern their citizens, however, when citizens of two or more states are involved in a legal matter, the conflict of laws can be problematic. Furthermore, in areas such as commerce, the conflicting laws are often burdensome to interstate commerce. It is therefore to everyone's benefit to have some sort of uniformity in these matters. Uniformity can be achieved in two ways. First, Congress can pass a law which would then preempt any state or local laws. Second, the states can join together and adopt a single uniform law in the particular area.
68. When the former Soviet Union collapsed, many observers thought that the new private market would promptly improve Russia's economy. Why has the Soviet economy been slow to recover from the decline that it experienced?
One of the primary reasons is Russia's lack of the rule of law. The Russian governments still controls over half of the resources in the country. Fraud, bribery, force (duress) and corruption are prevalent and the courts cannot be depended upon to resolve issues justly and fairly.
69. What information can be obtained from the citation of a case?
The citation contains the volume, page number, name and edition of the reporter (book) and the date on which the case was decided.
70. The 14th amendment recognizes that law may be enforced by taking resources owned by a citizen. Name the instances in which someone's resources may be taken.
Resources owned by individuals may be taken (1) for the benefit of society as in the exercise of eminent domain; (2) to punish someone as in the payment of a fine; or (3) for the benefit of another person such as an award of damages.