Chapter 01 - Law as the Foundation of Business
Chapter 01
Law as the Foundation of Business
True / False Questions
1. The first known written set of laws was the Code of Hammurabi.
TrueFalse
2.Law and "rule of law" are synonymous terms.
TrueFalse
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.
TrueFalse
4.Louisiana is the only state that follows a complete civil law system.
TrueFalse
5.Civil law relies primarily on legislation, while common law relies on court decisions.
TrueFalse
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.
TrueFalse
7.Public law encompasses those legal problems and relationships that exist between individuals.
TrueFalse
8.Procedural law defines rights and duties for the parties.
TrueFalse
9.Legal realism goes past the word of law to examine how laws are enforced, interpreted and applied.
TrueFalse
10.Property laws include wills, trusts and estates.
TrueFalse
11.Proposed uniform acts are drafted by the American Commissions Conference on Uniform State Laws.
TrueFalse
12.Legislation enacted by Congress is called a statute while a law passed by a local government is usually called an ordinance.
TrueFalse
13.The most significant uniform law for business is the Uniform Commercial Code.
TrueFalse
14.The time allowed for one party to sue another party is considered a substantive law issue.
TrueFalse
15.Dicta is not precedent because it is a comment on a matter not necessary to the decision reached.
TrueFalse
16.Jurisprudence refers to the law itself and not to the philosophy of law.
TrueFalse
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.
TrueFalse
18.The Treaty on European Union states that the European Union is founded on the rule of law.
TrueFalse
19.By definition, a crime is a wrong against just the victim.
TrueFalse
20.Under the doctrine of Stare Decisis, courts are bound to follow the holdings and dicta of prior cases.
TrueFalse
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 proprietorships
B.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 AnswerKey
True / False Questions
1.(p.6) The first known written set of laws was the Code of Hammurabi.
TRUE
Level: Medium
Objective: 3
2.(p.6)Law and "rule of law" are synonymous terms.
FALSE
Level: Medium
Objective: 1, 3
3.(p.20)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
Level: Medium
Objective: 3
4.(p.13)Louisiana is the only state that follows a complete civil law system.
FALSE
Level: Hard
Objective: 3
5.(p.12)Civil law relies primarily on legislation, while common law relies on court decisions.
TRUE
Level: Medium
Objective: 1
6.(p.20)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
Level: Hard
Objective: 3
7.(p.13)Public law encompasses those legal problems and relationships that exist between individuals.
FALSE
Level: Medium
Objective: 1, 2, 3
8.(p.14)Procedural law defines rights and duties for the parties.
FALSE
Level: Hard
Objective: 1, 2, 3
9.(p.12)Legal realism goes past the word of law to examine how laws are enforced, interpreted and applied.
TRUE
Level: Medium
Objective: 1, 2, 3
10.(p.13)Property laws include wills, trusts and estates.
TRUE
Level: Hard
Objective: 2
11.(p.16)Proposed uniform acts are drafted by the American Commissions Conference on Uniform State Laws.
FALSE
Level: Hard
Objective: 3
12.(p.15)Legislation enacted by Congress is called a statute while a law passed by a local government is usually called an ordinance.
TRUE
Level: Easy
Objective: 3
13.(p.16)The most significant uniform law for business is the Uniform Commercial Code.
TRUE
Level: Easy
Objective: 3
14.(p.14)The time allowed for one party to sue another party is considered a substantive law issue.
FALSE
Level: Hard
Objective: 3
15.(p.18)Dicta is not precedent because it is a comment on a matter not necessary to the decision reached.
TRUE
Level: Medium
Objective: 4
16.(p.12)Jurisprudence refers to the law itself and not to the philosophy of law.
FALSE
Level: Medium
Objective: 3
17.(p.18)"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
Level: Medium
Objective: 1, 3
18.(p.6)The Treaty on European Union states that the European Union is founded on the rule of law.
TRUE
Level: Medium
Objective: 1, 2, 3
19.(p.14)By definition, a crime is a wrong against just the victim.
FALSE
Level: Easy
Objective: 2, 3
20.(p.17)Under the doctrine of Stare Decisis, courts are bound to follow the holdings and dicta of prior cases.
FALSE
Level: Medium
Objective: 3, 4
Multiple Choice Questions
21.(p.17-18)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.
Level: Hard
Objective: 3, 4
22.(p.17)______means to follow the case precedent.
A.Stare decisis.
B.Constitutional realism.
C.Statutory construction.
D.Constitutional relativism.
Level: Easy
Objective: 4
23.(p.12)The common law system originated in:
A.France.
B.The United States.
C.Spain.
D.England.
Level: Easy
Objective: 1, 3
24.(p.13)Louisiana partially follows a civil law system based on which country?
A.Spain.
B.England.
C.France.
D.Italy.
Level: Medium
Objective: 3
25.(p.13)What type of law describes the legal principles that apply to government agencies?
A.Administrative.
B.Constitutional.
C.Criminal.
D.Public.
Level: Easy
Objective: 3
26.(p.13)Which of the following is not a type of law dealing with property:
A.Leases.
B.Wills.
C.Trusts.
D.Sales of goods.
Level: Hard
Objective: 2, 3
27.(p.13)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.
Level: Hard
Objective: 2, 3
28.(p.4)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.
Level: Hard
Objective: 1, 2
29.(p.14)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.
Level: Medium
Objective: 3
30.(p.15)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.