miller--business law today, standard edition 9e

BLTS 9e-TB-Ch01.doc

20 Unit One: The legal Environment of BusinessChapter 1: The Legal Environment 21

Chapter 1

The Legal EnvironmentN.B.: TYPE indicates that a question is new, modified, or unchanged, as follows.

NA question new to this edition of the Test Bank.

+A question modified from the previous edition of the Test Bank,

=A question included in the previous edition of the Test Bank.

true/false questions1.The law establishes rights, duties, and privileges that are consistent with the values of society.

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NAT: AACSB Reflective

AICPA Critical Thinking2.Law includes enforceable rules governing relationships between individuals and their society.

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AICPA Legal3.A federal law that conflicts with the U.S. Constitution will be deemed unconstitutional.

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AICPA Legal4.Constitutional law includes only the U.S. Constitution.

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AICPA Legal5.A state law that conflicts with the U.S. Constitution will be deemed unconstitutional.

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AICPA Legal6.The U.S. Constitution is the supreme law of the United States.

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AICPA Legal7.Whether a law is constitutional depends on its source.

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AICPA Legal8.A state constitution is supreme within the states borders so long as it does not conflict with the U.S. Constitution or a federal law.

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AICPA Legal9.Uniform laws apply in all states, including those in which the laws have not been adopted.

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AICPA Legal10.Federal statutes apply to all states.

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AICPA Legal11.No state has adopted the Uniform Commercial Code in its entirety.

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AICPA Legal12.Federal administrative agencies specify the powers of Congress.

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AICPA Legal13.State agency regulations take precedence over conflicting federal agency regulations.

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AICPA Legal14.The basis for the U.S. legal system is the natural law school.

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NAT: AACSB Ethics

AICPA Critical Thinking15.Courts can rely on the common law as a guide to interpreting legislation.

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NAT: AACSB Analytic

AICPA Legal16.Common law is a term for the law that is known to most of us.

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AICPA Critical Thinking17.A decision on a given issue by a court is not binding on an inferior court.

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AICPA Legal18.Judges use precedent when deciding a case in a common law legal system.

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AICPA Legal19.Stare decisis is a doctrine obligating judges to help persons who have failed to protect their own rights.

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NAT: AACSB Analytic

AICPA Legal20.Courts do not depart from precedents.

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AICPA Critical Thinking21.A court may depart from a precedent if the court decides that the precedent should no longer be followed.

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AICPA Critical Thinking22.Equity is a branch of unwritten law that seeks to supply remedies of equal measure to the parties in a legal dispute.

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NAT: AACSB Analytic

AICPA Legal23.A defendant is a person against whom a lawsuit is brought.

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AICPA Legal24.A plaintiff is a person against whom a lawsuit is brought.

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AICPA Legal25.Monetary damages is a remedy at law.

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AICPA Legal26.In most states, the courts no longer grant equitable remedies.

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AICPA Legal27.A courts direction to a party to do or to refrain from doing a particular act is a rescission.

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AICPA Legal28.Equitable remedies include injunctions.

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AICPA Legal29.How judges apply the law to specific disputes may depend in part on their personal philosophical views.

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AICPA Critical Thinking30.A substantive law creates or defines legal rights and obligations.

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AICPA Legal31.Criminal law focuses on duties that exist between persons.

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AICPA Legal32.International law is the law of a foreign nation and varies from country to country.

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AICPA Legal33.A reference to 28 U.S.C. Section 1332 means that a federal courts decision can be found on page 28 of section 1332 of the United States Cases.

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NAT: AACSB Analytic

AICPA Research34.Rules and regulations adopted by federal administrative agencies are compiled in the Code of Federal Regulations.

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AICPA Research35.Most state trial court decisions are not published.

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AICPA ResearchMULTIPLE-CHOICE questions1.Krystal is a federal judge. Krystals judicial decisions are part of case law. This law includes interpretations of primary sources of law. These sources include

a.administrative regulations.

b.articles in law reviews and other legal journals.

c.compilations summarizing court decisions on particular topics.

d.legal encyclopedias.

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AICPA Legal2.Lewis is a state court judge. Like other judges, Lewis often refers to secondary sources of law for guidance. These sources include

a.official comments to statutes.

b.other states statutes.

c.state constitutions.

d.the U.S. Constitution.

ANSWER:APAGE:4

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AICPA Legal3.Under Ohios state constitution, the Ohio Environmental Protection Agency issues a new rule, the Polk County Commission approves a new property tax measure, and the professors and students at Ohio Law School publish the results of their most recent legal research. Sources of law do not include

a.the measures approved by local governing bodies.

b.the results of legal scholars research.

c.the rules issued by state administrative agencies.

d.the states constitutions.

ANSWER:BPAGE:4type:N


AICPA Legal4.In Nebraska, the highest-ranking (superior) law is

a.a case decided by the Nebraska Supreme Court.

b.a provision in the Nebraska constitution.

c.a rule created by a Nebraska state administrative agency.

d.a statute enacted by the Nebraska legislature.

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AICPA Legal5.Hawaii enacts a state law that violates the U.S. Constitution. This law can be enforced by

a.no one.

b.the federal government only.

c.the state of Hawaii only.

d.the United States Supreme Court only.

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AICPA Legal6.The legislature of the state of Missouri enacts a new statute that sets standards for the liability of businesses selling defective products. This statute applies

a.only in Missouri.

b.only in Missouri and its border states.

c.in all states.

d.in all states but only to matters not covered by other states laws.

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type:N


AICPA Legal7.The River City Council, the Santa Clara County Board, the Texas state legislature, and the U.S. Congress enact laws. These laws constitute

a.administrative law.

b.case law.

c.stare decisis.

d.statutory law.

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AICPA Critical Thinking8.The U.S. Congress enacts a new federal statute that imposes liability on businesses emitting significant amounts of a certain pollutant into the environment. This statute applies

a.only to matters not covered by state law.

b.only to those states that adopt the statute.

c.to all of the states.

d.to none of the states.

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AICPA Legal9.The Federal Trade Commission (FTC) is a government agency that issues rules, orders, and decisions. The Georgia state legislature enacts statutes. The Jackson County Board and the Peach City Council enacts ordinances. Administrative law includes

a.all law that affects a businesss operation.

b.the rules, orders, and decisions of the Federal Trade Commission.

c.statutes enacted by the Georgia state legislature.

d.ordinances created by the Jackson County Board and the city council of Peach City, Georgia.

ANSWER:BPAGE:7

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AICPA Legal10.Crater Tools Company is subject to regulations issued by the Occupational Safety and Health Administration (OSHA). Like other federal administrative agencies, the OSHA was created by

a.Congress, through enabling legislation.

b.the Federal Trade Commission, through the rulemaking process.

c.the president, through an executive order.

d.the U.S. Department of Labor, through a final order.

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AICPA Legal11.The Securities Exchange Commission is an administrative agency. The chief purpose of such agencies is to

a.act as liaisons between federal and state governments.

b.impose uniform laws on the states.

c.perform specific government functions.

d.standardize laws for the executive and judicial branches.

ANSWER:CPAGE:7type:N


AICPA Legal12.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.

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AICPA Legal13.As a judge, Potter applies common law rules. These rules develop from

a.administrative regulations.

b.court decisions.

c.federal and state statutes.

d.proposed uniform laws.

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AICPA Legal14.Jill is an appellate court judge. In this capacity, Jill establishes a rule of law. Under the doctrine of stare decisis, the principle must be adhered to by

a.all courts.

b.courts of lower rank only.

c.that court and courts of lower rank.

d.that court only.

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AICPA Legal15.In Ben v. City Car Dealership, a state supreme court held that a minor could cancel a contract for the sale of a car. Now a trial court in the same state is deciding Daphne v. Even Steven Auto Deals, Inc.,, a case with similar facts. Under the doctrine of stare decisis, the trial court is likely to

a.allow the minor the Daphne case to cancel the contract.

b.disregard the Ben case.

c.order the minor in the Daphne case to cancel the contract.

d.require the minor in the Daphne case to fulfill the contract.

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AICPA Critical Thinking16.Sam is a judge hearing the case of Local Co. v. National Corp. Applying the relevant rule of law to the facts of the case requires Sam to find previously decided cases that, in relation to the case under consideration, are

a.as different as possible.

b.as similar as possible.

c.at odds.

d.exactly identical.

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AICPA Critical Thinking17.In Sales Distribution Corp. v. Consumer Products Co., the court decides that a precedent is incorrect or inapplicable. The court

a.may rule contrary to the precedent.

b.must apply the precedent.

c.must ask a higher court to rule on the case.

d.must refuse to decide the case.

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AICPA Legal18.Network Corporation files a suit against Omega, Inc., alleging that Omega breached a contract to sell Network a computer system. Network isa.the appellant.

b.the appellee.

c.the defendant.

d.the plaintiff.

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AICPA Legal19.A state trial court has before it Eagle Manufacturing Co. v. Four Feathers Products Corp., a case with no binding authority. The court can

a.not refuse to decide the Eagle case.

b.postpone deciding Eagle indefinitely.

c.postpone deciding Eagle until there is binding authority.

d.refuse to decide Eagle.

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AICPA Legal20.In an action against Elin, Frank obtains a remedy. This is

a.an administrative agencys enforcement of its rule.

b.a principle of the law derived from earlier court cases.

c.a statute enacted by a state legislature or Congress.

d.the legal means to recover a right or to redress a wrong.

ANSWER:DPAGE:11type:N


AICPA Legal21.In Export Co. v. Imports, Inc., there is no precedent on which the court can base a decision. The court can consider

a.neither public policy nor social customs and values.

b.public policy only.

c.public policy or social customs and values.

d.social customs and values only.

ANSWER:CPAGE:11

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AICPA Critical Thinking22.MaxiMart, Inc., is a discount retailer. MaxiMarts customer service employees are on strike. Sixty of the workers block the entrances to one of MaxiMarts stores. To get them away from the doors, MaxiMart should seek

a.an injunction.

b.damages.

c.rescission.

d.specific performance.

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AICPA Decision Modeling23.In a suit against Sandy, Taylor obtains a remedy. In the U.S. legal system, this remedy will most likely be

a.an injunction.

b.damages.

c.rescission.




AICPA Critical Thinking24.In a suit against Clem, Dona obtains the cancellation of a contract. This is

a.an injunction.

b.damages.

c.rescission.


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AICPA Legal25.In a suit against Owen, Phil obtains specific performance. This is

a.an order to do or to refrain from doing a particular act.

b.an order to perform what was promised.

c.a payment of money or property as compensation.

d.the cancellation of a contract.

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AICPA Legal26.Grady is a judge. In his court, Grady may bar a suit if it is not filed within a proper time according to

a.a statute of limitations.

b.the doctrine of stare decisis.

c.the chancellors discretion.

d.the kings conscience.

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NAT: AACSB Analytic

AICPA Legal27.To Cody, the written law of a particular society at a particular time is most significant. Cody is

a.a legal positivist.

b.a legal rationalist.

c.a legal realist.

d.a person who adheres to the natural law school.

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NAT: AACSB Analytic

AICPA Critical Thinking28.Beth is a victim of Carls violation of a criminal law. Criminal law is concerned with

a.the prosecution of private individuals by other private individuals.

b.the prosecution of public officials by private individuals.

c.the relief available when a persons rights are violated.

d.wrongs committed against the public as a whole.

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AICPA Legal29.When Overseas Exports, Inc., based in New York, does business internationally, the firm may be subject to international law. The sources of this law include

a.the laws of individual nations only.

b.treaties and international organizations only.

c.the laws of individual nations, and treaties and international organizations.

d.none of the choices.

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AICPA Legal30.The title of a case appears as Duck Sales Corp. v. Egret Supply Co. The party in whose favor the case was decided

a.could be either party.

b.must be neither party.

c.must be Duck.

d.must be Egret.

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NAT: AACSB Analytic

AICPA ResearchFact Pattern 1-1 (Questions 3133 apply)

The Texas Supreme Court decides the case of Livewire Co. v. Power Corp. Of nine justices, six believe the judgment should be in Livewires favor. Justice Bellamy, one of the six, writes a separate opinion. The four justices who believe the judgment should be in Powers favor join in a third separate opinion.

31.Refer to Fact Pattern 1-1. These opinions are collected and published in volumes called

a.citations.

b.codes.

c.regulations.

d.reporters.

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NAT: AACSB Analytic

AICPA Research32.Refer to Fact Pattern 1-1. Bellamys opinion is

a.a concurring opinion.

b.a dissenting opinion.

c.a majority opinion.

d.a per curiam opinion.

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NAT: AACSB Analytic

AICPA Research33.Refer to Fact Pattern 1-1. The opinion joined by the four justices who favor Power is known as

a.a concurring opinion.

b.a dissenting opinion.

c.a majority opinion.

d.a per curiam opinion.


NAT: AACSB Analytic

AICPA Research34.Florida public policy is to protect consumers from unfair and deceptive business practices. A state statute declares unenforceable any waiver of its provisions, which include a provision for consumer class actions. WISP Inc. requires its customers to sign an agreement that designates South Dakota courts and law to govern all disputes. In a suit by a group of Florida consumers against WISP, the court is most likely to rule that the agreement is, under the principles discussed in A Sample Court Case, Doe 1 v. AOL LLCa.enforceable because there is no reason not to enforce it.

b.enforceable because the parties had equal bargaining power.

c.unenforceable as a violation of Florida policy and law.

d.unenforceable as a violation of South Dakota policy and law.

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AICPA Legal35.Standard Business Company appeals a decision against it, in favor of Top Flight Corporation, from a lower court to a higher court. Standard is

a.the appellant.

b.the appellee.

c.the defendant.

d.the plaintiff.

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AICPA LegalESSAY questions1.In a lawsuit between Digital Hardware Corporation and Software Engineering Associates, Inc., the court applies the doctrine of stare decisis. What is this doctrine? What does this doctrine have to do with the American legal system?

ANSWER:In a common law legal system, past judicial decisions are binding in current disputes with similar facts. This feature of the common law, which is the basis of the American legal system, is unique because, unlike the law in other legal systems, it is judge-made law. Within the common law system, when possible, judges attempt to be consistent and to base their decisions on the principles suggested by earlier cases. The body of principles and doctrines that form the common law emerged over time as judges applied the principles announced in earlier cases to subsequent legal controversies. The practice of deciding cases with reference to former decisions, or precedentsthe cornerstone of the American legal systemis called the doctrine of stare decisis. Under this doctrine, judges are obligated to follow the precedents established within their jurisdictions. This helps courts to be more efficient, and makes the law more stable and predictable.

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AICPA Legal2.Blizzard Entertainment, Inc., one of the owners of the World of Warcraft (WoW) computer game, is involved in a lawsuit with MDY Industries, LLC, the owner of Glider, a software program that plays WoW for its players while they are away from their keyboards. Blizzard asks the court to direct MDY to stop selling and distributing Glider. The courts opinion in the case is at MDY Industries, LLC v. Blizzard Entertainment, Inc., 616 F.Supp.2d 958 (D.Ariz. 2009). What is the name for the remedy that Blizzard is seeking? What type of remedy is it? What court decided this case? Specifically where can the courts opinion be found?

ANSWER:The remedy that Blizzard asks the court to provide is an injunctiondefined as an order to do or to refrain from doing a particular act. An injunction is an equitable remedy. The U.S. District Court for the District of Arizona decided this case in 2009. The opinion of the court in this caseMDY Industries, LLC v. Blizzard Entertainment, Inc., 616 F.Supp.2d 958 (D.Ariz. 2009)can be found in its entirety in volume 616 of the Federal Supplement, Second Series, on page 958.

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TYPE:N


AICPA Legal1

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