Chapter 1

Law and Legal Reasoning

TRUE/FALSE QUESTIONS
1.

The stability and predictability of the law are essential to business activities.
ANSWER: T
BUSPROG: Analytic

2.

Law is a body of enforceable rules governing relationships among individuals

and between individuals and their society.
ANSWER: T
BUSPROG: Analytic

3.

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Constitutional law includes only the U.S. Constitution.

ANSWER: F
BUSPROG: Analytic

5.

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A key to avoiding business disputes is to go ahead without thinking ahead.

ANSWER: F
BUSPROG: Ethics

4.

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A state statute is constitutional only if it does not violate either the state
constitution or the U.S constitution.
ANSWER: T
BUSPROG: Analytic

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6.

A state constitution is supreme within the states borders.

ANSWER: T
BUSPROG: Analytic

7.

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Damages are a remedy at law.

ANSWER: T
BUSPROG: Analytic

13.

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The term common law refers to law that is common throughout the world.
ANSWER: F
BUSPROG: Analytic

12.

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

ANSWER: F
BUSPROG: Analytic

11.

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Uniform laws apply in all states, including those in which the laws have not
been adopted.
ANSWER: F
BUSPROG: Analytic

10.

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Statutory law does not include county ordinances.

ANSWER: F
BUSPROG: Analytic

9.

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A state law that conflicts with the U.S. Constitution will be deemed
unconstitutional.
ANSWER: T
BUSPROG: Analytic

8.

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Remedies in equity include injunctions and decrees of specific performance.

ANSWER: T
BUSPROG: Analytic

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14.

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

ANSWER: F
BUSPROG: Analytic

15.

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15 U.S.C. Section 1 is a citation to the United States Code, Section 1 of Title

15.
ANSWER: T
BUSPROG: Analytic

20.

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Criminal law focuses on duties that exist between persons.

ANSWER: F
BUSPROG: Analytic

19.

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A judges function is to make the law.

ANSWER: F
BUSPROG: Analytic

18.

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Courts do not depart from precedents.

ANSWER: F
BUSPROG: Reflective

17.

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

ANSWER: T
BUSPROG: Analytic

16.

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Most state trial court decisions are not published.

ANSWER: T
BUSPROG: Analytic

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TEST BANKUNIT ONE: THE LEGAL ENVIRONMENT OF BUSINESS

MULTIPLE-CHOICE QUESTIONS
1.

Helen is a state court judge. Like other judges, Helen often refers to secondary
sources of law for guidance. These sources include
a.
b.
c.
d.

legal encyclopedias.
other states statutes.
state constitutions.
the U.S. Constitution.

ANSWER: A
BUSPROG: Reflective
2.

The legislature of the state of Wyoming enacts a new statute that sets standards for the liability of businesses selling defective products. This statute
applies in
a.
b.
c.
d.

Wyoming only.
only Wyoming and its bordering states only.
all states.
all states but only to matters not covered by other states laws.

ANSWER: A
BUSPROG: Reflective
3.

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The Consumer Product Safety Commission is a government agency that

issues rules, orders, and decisions. The Colorado state legislature enacts
statutes. The Washington County Board and the Silver City Council enact ordinances. Administrative law includes
a.
b.
c.
d.

all laws that affect a businesss operation.

the rules, orders, and decisions of the Consumer Product Safety
Commission.
statutes enacted by the Colorado state legislature.
ordinances enacted by the Washington County Board and the Silver City
Council.

ANSWER: B
BUSPROG: Reflective
4.

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

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a.
b.
c.
d.

no one.
the federal government only.
the state of Arizona only.
the United States Supreme Court only.

ANSWER: A
BUSPROG: Reflective
5.

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The Occupational Safety and Health Commission is a federal administrative

agency. Oregon has a parallel state agency, the Oregon Occupational Safety
and Health Division. If Oregons administrative agency enacts regulations that
are in conflict with the federal regulations
a.
b.
c.
d.

state regulations take precedence.

federal and state regulations will both apply.
federal regulations take precedence.
neither the federal or state regulations will apply.

ANSWER: C
BUSPROG: Reflective
6.

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In a suit against Ethan, Francisco obtains an award of damages. This is

a.
b.
c.
d.

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

an order to perform what was promised.
a payment of money or property as compensation.
the cancellation of a contract.

ANSWER: C
BUSPROG: Reflective

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TEST BANKUNIT ONE: THE LEGAL ENVIRONMENT OF BUSINESS

7.

In an action against Gina, Haji obtains a remedy. This is

a.
b.
c.
d.

an administrative agencys enforcement of its rule.

a principle of the law derived from earlier court cases.
a statute enacted by a state legislature or Congress.
the legal means to recover a right or to redress a wrong.

ANSWER: D
BUSPROG: Reflective
8.

In a suit against Myron, Neva obtains damages. In the U.S. legal system, this
remedy at law is
a.
b.
c.
d.

equitable.
normal.
unlikely.
unusual.

ANSWER: B
BUSPROG: Reflective
9.

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In a suit against Ian, Jenna obtains an injunction. This is

a.
b.
c.
d.

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

an order to perform what was promised.
a payment of money or property as compensation.
the cancellation of a contract.

ANSWER: A
BUSPROG: Reflective
10.

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In a suit against Kavalier over the performance of a contract, Louann obtains

rescission. This is
a.
b.
c.
d.

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

an order to perform what was promised.
a payment of money or property as compensation.
the cancellation of the contract.

ANSWER: D
BUSPROG: Reflective

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11.

Obie and Peg enter into a contract for the sale of car, but Obie later refuses to
deliver the car. Peg asks a court to order Obie to perform as promised.
Ordering a party to perform what was promised is
a.
b.
c.
d.

an equitable remedy.
an unenforceable demand.
a remedy at law.
a type of harm.

ANSWER: A
BUSPROG: Reflective
12.

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Reba is a state court judge. In her court, as in most state courts, legal and
equitable remedies have merged. In these circumstances, distinguishing
between equitable and legal remedies is
a.
b.
c.
d.

no longer important because neither type of remedy can be granted

today.
no longer necessary.
still important to negotiate an enforceable business contract.
still important so that the proper remedy is requested.

ANSWER: D
BUSPROG: Reflective
13.

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In Bad Boyz Toyz v. Caleb, a state supreme court held that a minor could
cancel a contract for the sale of a motorcycle. Now a trial court in the same
state is deciding Dirks Dirt Bikes v. Eden, a case with similar facts. Under the
doctrine of stare decisis, the trial court is likely to
a.
b.
c.
d.

allow the minor to cancel the contract.

disregard the previous case.
order the minor to cancel the contract.
require the minor to fulfill the contract.

ANSWER: A
BUSPROG: Reflective

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TEST BANKUNIT ONE: THE LEGAL ENVIRONMENT OF BUSINESS

14.

As a judge, Qiana applies common law rules. These rules develop from
a.
b.
c.
d.

decisions of the courts in legal disputes.

regulations issued by administrative agencies.
statutes enacted by Congress and the state legislatures.
uniform laws drafted by legal scholars.

ANSWER: A
BUSPROG: Reflective
15.

There are no precedents on which the court deciding the case Standard
Resource Co. v. Topline Inventory, Inc., can base its decision. The court can
consider, among other things,
a.
b.
c.
d.

the opinions of the friends and relatives of the judge.

the results of a poll of those in the courtroom.
public policy or social values.
none of the choices.

ANSWER: C
BUSPROG: Reflective
16.

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A federal statute regulates a marketing practice. To resolve a dispute

concerning the practice, Sawyer, a judge, will most likely apply
a.
b.
c.
d.

a common law doctrine that applied before the statute was enacted.
a common law doctrine that applies to other, different practices.
Sawyers personal philosophy of law.
the statute.

ANSWER: D
BUSPROG: Reflective

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Fact Pattern 1-1 (Questions 1719 apply)

The Florida Supreme Court decides the case of Metro Convention Center, Inc. v.
Urban Sports Team LLC. Of the nine justices, six believe the judgment should be in
Metros favor. Justice Rubio, one of the six, writes a separate opinion. The three
justices who believe the judgment should be in Urbans favor join in a third separate
opinion.
17.

Refer to Fact Pattern 11. These opinions are collected and published in
volumes called
a.
b.
c.
d.

citations.
codes.
reporters.
reviews.

ANSWER: C
BUSPROG: Reflective
18.

Refer to Fact Pattern 11. Rubios opinion is known as a

a.
b.
c.
d.

concurring opinion.
dissenting opinion.
majority opinion.
per curiam opinion.

ANSWER: A
BUSPROG: Reflective
19.

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Refer to Fact Pattern 11. The opinion joined by the three justices who favor
Urban is known as a
a.
b.
c.
d.

concurring opinion.
dissenting opinion.
majority opinion.
per curiam opinion.

ANSWER: B
BUSPROG: Reflective

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10
20.

TEST BANKUNIT ONE: THE LEGAL ENVIRONMENT OF BUSINESS

In 2005, Facebook launched a social media site that allows its users to
designate certain other users as friends. Facetrak, a gaming site that allows
its users to play with designated friends, claims that Facebooks use of the
word constitutes false advertising and trademark infringement. Under the
principles discussed in A Sample Court Case, Apple, Inc. v. Amazon.com,
Inc., Facebooks use most likely
a.
b.
c.
d.

creates an impression of seamless integration with Facetraks friends.

implies something false about the quality of Facebooks friends.
makes no statement about the quality of Facetraks friends.
misleads gamers about the quality of Facebooks friends.

ANSWER: C
BUSPROG: Reflective

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ESSAY QUESTIONS
1.

National Rights Council, a nonprofit organization, files a suit against the U.S.
Department of Justice (DOJ), claiming that a certain federal statute the DOJ is
empowered to enforce conflicts with the U.S. Constitution and with a state
constitution. In each situation, which source of law has priority?
ANSWER: The U.S. Constitution is the supreme law of the land. A law in
violation of the Constitution, no matter what its source, will be declared
unconstitutional and will not be enforced. Thus, the federal statute does not
have priority over the Constitution. The federal statute would have priority over
the state constitution, however, because under the U.S. Constitution, when
there is a conflict between a federal law and a state law, the state law is
rendered invalid.
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2.

AICPA: BB-Decision Modeling

Pierre Domville was charged with certain crimes when he learned that the
prosecutor assigned to his case was a Facebook friend of the trial judge.
Domville filed a motion to disqualify the judge, alleging that he could not be fair
and impartial. The judge denied the motion, and Domville appealed. The
courts opinion in the case is at Domville v. State, 103 So.3d 184 (Fla.App. 4
Dist. 2013). What court decided this case? What type of court is this?
Specifically where can the courts opinion be found?

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11

ANSWER: The District Court of Appeal of Florida, Fourth District, decided

this case in 2013. This court is an appellate courta state intermediate
appellate court. The opinion of the court in this caseDomville v. State, 103
So.3d 184 (Fla.App. 4 Dist. 2013)can be found in its entirety in volume 103 of
the Southern Reporter, Third Series, on page 184.
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