Bonus Chapter A – Working within the Legal Environment
Bonus Chapter A-41
Multiple Choice Questions
163. The branch of the government responsible for overseeing the legal system is the:
A. judiciary.
B. executive.
C. legislative.
D. administrative.
164. __________ refers to rules, statutes, codes, and regulations established to provide a
legal framework within which business may be conducted.
A. Common law
B. Statutory law
C. Bankruptcy law
D. Business law
165. The regulation of marriages and payments for personal injuries is covered by:
A. civil law.
B. criminal law.
C. appellate law.
D. legislative law.
Bonus Chapter A-44
172. The Griggs v. Duke Power Company (1971) case established a precedent on the need
to use job-related tests in employment practices. Similar court cases have been decided
based on this decision. This is an example of:
A. common law.
B. statutory law.
C. administrative law.
D. criminal law.
Feedback: Common law is the body of law that comes from decisions handed down by
judges, i.e., precedents.
173. Chicago’s mayor has just signed legislation requiring fire sprinklers in every public
school. This is an example of:
A. common law.
B. statutory law.
C. administrative law.
D. unwritten law.
Feedback: Statutory law includes written legislation by local, state, and federal governments.
Bonus Chapter A-45
174. In 2011, a popular British newspaper, “News of the World,” owned by media mogul
Rupert Murdoch (whose empire is headquartered in the U.S.) was shut down due to
accusations that the newspaper’s journalists were illegally “phone hacking” in order to
gather information for their stories. Due to the connection with a U.S.-based company,
the U.S. District Attorney also opened an investigation. This type of investigation is
handled under ______________.
A. criminal law.
B. statutory law.
C. administrative law.
D. civil law.
Feedback: Criminal law defines any situation where a crime has been committed. Phone
hacking is illegal and considered a crime. Civil law defines noncriminal acts such as
marriage or divorce.
175. Which of the following holds a company liable for negligence in the production,
design, sale, or use of products the firm markets?
A. breach of contract
B. price discrimination
C. promotional responsibility
D. product liability
176.
Bonus Chapter A – Working within the Legal Environment
Which of the following holds a company liable for damages caused by a defective product
even if the firm was unaware of the defect at the time of sale?
A. network responsibility
B. managerial liability
C. patent infringement
D. strict product liability
177. A(n) __________ tort is a willful act that results in injury.
A. negligent
B. intentional
C. common
D. statutory
178. When a person’s or company’s behavior causes unintentional harm or injury to others
they are said to be __________ in tort law.
A. out-of-control
B. liable
C. negligent
D. purposeful
Bonus Chapter A-47
179. The remedy for a tort is:
A. imprisonment.
B. a breach of contract.
C. bankruptcy.
D. monetary compensation.
Feedback: Victims of wrongful conduct that results in injury (a tort) are often awarded
monetary compensation.
180. When McDonald’s lost a lawsuit to a person severely burned by hot coffee
McDonald’s was found to be guilty of:
A. negligence.
B. liable.
C. intentional tort violation.
D. packaging liability.
Feedback: McDonald’s lost a lawsuit to a person severely burned by hot coffee she bought at
a drive-through window. The jury felt McDonald’s failed to provide an adequate warning on
the cup. McDonald’s was found guilty of negligence or behavior that caused unintentional
harm or injury.
181.
Bonus Chapter A – Working within the Legal Environment
Bonus Chapter A-48
Under the doctrine of strict product liability, a manufacturer can be held liable:
A. even if when the product was introduced everyone agreed it was safe.
B. only if the firm knowingly sold a hazardous product.
C. only if the firm purposefully was negligent in the design or production of the product.
D. only if the firm intentionally introduced a defective product.
Feedback: The doctrine of strict product liability holds a firm responsible without regard to
fault.
182. Warren Tee was injured using a hair dryer manufactured by the Whoopee Electrical
Products Company. Warren has contacted a lawyer because he feels that Whoopee is
responsible for his injury based on the legal principle of:
A. restricted endorsement.
B. fault free obligations.
C. patent infringement.
D. strict product liability.
Feedback: Strict product liability laws hold businesses liable for damages without regard to
fault.
183.
Bonus Chapter A – Working within the Legal Environment
The City of New Orleans filed suit against certain gun manufacturers for financial
payments to cover the costs of police work and medical care as a result of gun violence.
This suit was based on the legal principle of:
A. unintentional torts.
B. statutory consideration.
C. strict product liability.
D. common law.
Feedback: Product liability holds businesses liable for harm that results from the production,
design, sale, or use of products they market. Many states have extended product liability to
the level of strict product liability—legally meaning liability without regard to fault.
184. In 1978, a 13-year-old boy was severely burned in a rear-end collision involving a
Ford Pinto. The case went to court and Ford was ordered to pay $125 million in punitive
damages based on the legal principle of:
A. product discrimination.
B. product liability.
C. breach of contract.
D. exclusive dealing.
Feedback: Product liability holds businesses liable for harm that results from the production,
design, sale, or use of products they market. Many states have extended product liability to
the level of strict product liability—legally meaning liability without regard to fault.
Bonus Chapter A-51
188.
Bonus Chapter A – Working within the Legal Environment
The Nike Swoosh and the Golden Arches of McDonald’s are examples of a:
190. Over __________ percent of patent applications are approved.
A. 30
B. 40
C. 50
D. 60
Bonus Chapter A – Working within the Legal Environment
194. The Pillsbury Doughboy is an example of a:
Bonus Chapter A – Working within the Legal Environment
196. Michael opened a new bakery. He had always admired the cute, friendly face of the
Pillsbury Doughboy so as a tribute to Pillsbury, he decided to use it as his company’s logo.
Not long after Pillsbury sued him for:
A. corporate liability.
B. trademark infringement.
C. profit minimization.
D. patent infringement.
Feedback: A trademark is a legally protected name, symbol, or design that identifies the
goods or services of one seller and distinguishes them from those of competitors. The
Pillsbury Doughboy is an example of a trademark. Michael was sued for using Pillsbury’s
trademark as his logo or for trademark infringement.
197. Which of the following was designed to simplify and standardize the laws affecting
businesses involved in interstate trade?
A. common law
B. statutory law
C. the standardized commerce rules
D. the Uniform Commercial Code
198. The warranty you receive in the box with your new DVD is a(n):
A. implied warranty.
B. express warranty.
C. uniform warranty.
D. commercial warranty.
Bonus Chapter A-58
204. A software development firm based in Florida and conducting business in Texas is
unsure about the differences in state laws regarding business transactions. What body of
laws standardizes interstate business regulations?
A. Uniform Commercial Code
B. Universal Business Regulations
C. National Commercial Rules
D. Unified Commercial Regulations
Feedback: All states have adopted the Uniform Commercial Code to standardize commercial
law. There are, however, sections of Louisiana that have not adopted the Uniform
Commercial Code.
205. One of the reasons you bought your mom a name-brand mixer for Mother’s Day was
that it came with a full warranty. This means that:
A. the mixer is guaranteed to last for 10 years with normal use.
B. the mixer will make wonderful baked goods as well as pasta.
C. the mixer will be repaired or replaced at no charge if it is defective.
D. only the motor is covered by the mixer manufacturer.
Feedback: Warranties offered by sellers can be either full or limited. A full warranty requires
a seller to replace or repair a product at no charge if the product is defective, whereas a
limited warranty typically limits the defects or mechanical problems that are covered.
206.
Bonus Chapter A – Working within the Legal Environment
Bonus Chapter A-59
Which of the following describes the requirement that both parties in a legally binding
contract must give something of value?
A. competent parties
B. mutual acceptance
C. consideration
D. legal purpose
207. Which of the following would cause a contract to be void?
A. consideration
B. mutual acceptance
C. competent parties
D. duress
208. A(n) __________ occurs when one party fails to follow the terms of a contract.
A. breach of contract
B. discharge of obligation
C. obligation failure of enforcement
D. infringement of contract
209.
Bonus Chapter A – Working within the Legal Environment
A __________ is a legally enforceable agreement between two or more parties.
A. warranty
B. negotiable instrument
C. contract
D. combination
210. Which of the following is a condition required for a legally binding contract?
A. discharge of obligation
B. warranty
C. mutual acceptance
D. duress
211. You and your neighbor have agreed to a contract where he will cut your grass every
other week for which you pay $30. However, for no apparent reason, he has not cut your
grass for a month. Your neighbor has committed a(n):
A. obligation violation.
B. breach of contract.
C. termination by association.
D. nonperformance endorsement.
Feedback: A breach of contract occurs when one party fails to follow the terms of the
contract.