Bonus Chapter A – Working within the Legal Environment
Bonus Chapter A-1
True / False Questions
1. The executive branch of the government is responsible for overseeing the legal system.
2. The U.S. court system is organized solely at the federal and state levels.
3. Trial courts hear cases involving criminal and civil law.
4. Criminal law defines crimes, establishes punishments, and includes payment for personal
injury.
5. Laws regulating marriage and the payment for personal injuries are part of our body of
civil law.
Bonus Chapter A-4
16. The language used in statutory law often requires interpretation by the courts.
17. Lower courts must abide by the precedents set by higher courts.
18. Administrative agencies actually have a greater impact on businesses than courts do.
19. Administrative agencies are given the power by Congress to pass rules and regulations
within a specific area of authority.
20.
Bonus Chapter A – Working within the Legal Environment
The Federal Trade Commission enforces laws and guidelines regarding unfair business
practices.
21. The Federal Trade Commission acts to stop false and deceptive advertising and
labeling.
22. Public utility commissions are federal agencies.
23. Congress is responsible for passing legislation that is enforced by the judiciary.
Feedback: The judiciary is the branch of our government chosen to oversee the legal system
through the court system.
24. Congress prohibited discrimination against people with physical disabilities when they
enacted the Americans with Disabilities Act. This is an example of common law.
Feedback: Common law is the body of law that comes from decisions handed down by
judges.
Bonus Chapter A-6
25. When John Dough was brought to court accused of robbing a bank, he was prosecuted
under civil law.
Feedback: Bank robbery is a crime and as such John Dough would be prosecuted under
criminal law.
26. Big Buxx National Bank has decided to change its advertising campaign. In the new
campaign it will announce that the bank has the lowest bank fees in the country even
though it has not done research to discover whether this is, in fact, true. Business law is
the framework within which a competitor could take Big Buxx to court in the event its
claims are not true.
Feedback: Business law refers to rules, statutes, codes, and regulations that are established to
provide a legal framework within which business may be conducted and that are enforceable
by court action.
27. Decisions made by judges in previous cases are an important part of common law.
Feedback: Common law is the body of law that comes from decisions handed down by
judges. Precedents, or decisions made by judges in previous cases guide judges in the
handling of new cases.
Bonus Chapter A-7
28. The Maricopa County Planning Commission is an example of a local administrative
agency. It oversees land-use proposals and other long-range issues in Maricopa County,
Arizona.
Feedback: An administrative agency is a government organization with delegated power to
create rules and regulations within their given area of authority.
29. The Federal Trade Commission issues and interprets rules and regulations regarding
business activities. The Federal Trade Commission is a governmental administrative
agency.
Feedback: An administrative agency is an institution created by Congress with delegated
power to pass rules and regulations within its mandated area of authority.
30. A public utility commission sets rates that can be charged by various public utilities to
prevent unfair pricing by regulated monopolies. These public utility commissions are
examples of state administrative agencies.
Feedback: An administrative agency is a federal or state institution created by Congress or
state legislatures with delegated power to create rules and regulations within their given area
of authority.
Bonus Chapter A-8
31. The recent lawsuits against the tobacco industry are examples of tort law.
32. Unintentional behavior that causes harm or injury is an example of a tort.
33. An intentional tort is a willful act that results in injury.
34.
Bonus Chapter A – Working within the Legal Environment
Tort law involves criminal acts where victims can be awarded compensation.
35. Tort law includes product liability cases.
36. Negligence, in tort law, deals with behavior that causes intentional harm or injury.
37. The rule of strict product liability holds a firm liable for a defective product only if the
firm knowingly placed a hazardous product on the market.
38. Companies that produced lead-based paint 30 years ago are still subject to the strict
product liability provisions of federal tort law.
Bonus Chapter A-11
43. If an automobile manufacturer unknowingly sells a defective product that causes an
injury, the manufacturer is protected from product liability lawsuits.
Feedback: Product liability is covered under tort law and holds a business liable for
negligence in the production, design, sale, or use of products it markets. A company could be
liable for damages caused by placing a product on the market with a defect, even if the
company did not know of the defect at the time of sale.
44. With today’s widespread use of water-based house paint, no paint manufacturer can be
sued for damages today that are caused by lead-based paint that may still remain on the
surface of some house and apartment walls.
Feedback: The rule of strict product liability, meaning liability without regard to fault,
indicates that companies that produced lead-based paint could also be subjected to expensive
legal cases even though lead paint has been banned in the U.S. for nearly three decades.
45. McDonald’s was the subject of a product liability suit charging that its food caused
obesity, diabetes, and other health problems in children.
Feedback: The initial lawsuit against McDonald’s was dismissed by a trial judge, but part of
the lawsuit was reinstated at the appellate court level.
46.
Bonus Chapter A – Working within the Legal Environment
A patent protects an inventor’s right to a product or process.
47. A patent gives inventors exclusive rights to their inventions for 20 years.
48. Patent owners are prohibited from selling or licensing their patent rights to others.
49. Submarine patents are primarily designed to generate large patent royalties for their
owners.
50. Recent legislation encourages the use of submarine patents.
Bonus Chapter A – Working within the Legal Environment
Bonus Chapter A-14
57. A trademark gives exclusive legal protection to a name, symbol, or design that
distinguishes the goods or services of one seller from those of competitors.
58. Unlike a patent, trademarks are not protected from infringement.
59. Trademarks generally belong to the owner forever, as long as they are properly
registered and renewed every 10 years.
60.
Bonus Chapter A-15
61. John Fielder is a renowned photographer of the Colorado Rocky Mountain region.
62. The Nike Swoosh and the McDonald’s Golden Arches are examples of corporate
trademarks.
Feedback: A trademark gives exclusive legal protection to a name, symbol, or design that
identifies the goods or services from one seller and distinguishes them from those of other
competitors.
63.
Bonus Chapter A – Working within the Legal Environment
The Uniform Commercial Code establishes a standardized set of regulations for business
transactions in all 50 states.
64. Regulations covering sales, checks, bank deposits and bills of lading are contained in
the Uniform Commercial Code.
65. The warranty you receive in the box with a DVD player is an implied warranty.
66. A warranty guarantees that the product sold will be acceptable for the purpose for
which the buyer intends to use it.
67. Batteries and tires sold with an express warranty provide the buyer with a guarantee
regarding the life of the product.
