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Chapter 1
Law and Legal Reasoning
N.B.: TYPE indicates that a question is new, modified, or unchanged, as follows.
N A 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 QUESTIONS
B1. Laws and government regulations affect almost all business activities.
B2. The U.S. Constitution is the basis of all law in the United States.
B3. The U.S. Constitution reserves to the federal government all powers not
granted to the states.
B4. The Uniform Commercial Code has been adopted in all fifty states.
B5. Federal agency regulations take precedence over conflicting state agency
regulations.
2 TEST BANK B—UNIT ONE: THE LEGAL ENVIRONMENT OF BUSINESS
B6. Common law is a term for the laws that are familiar to most of us.
B7. Decisions by higher courts are not binding on lower courts.
B8. Stare decisis is a doctrine obligating judges to help persons who have failed to
protect their own rights.
B9. Courts are not obligated to follow precedents.
B10. In most legal controversies, there is one single correct result.
B11. Although cases may be similar, no two cases are ever identical in all respects.
B12. Each judge had his or her personal beliefs and philosophy, which shape the
legal reasoning process.
B13. Clearly, a judge’s function is to make the laws.
CHAPTER 1: LAW AND LEGAL REASONING 3
B14. The courts, in interpreting statutory law, often rely on the common law as a
guide to what the legislators intended.
B15. A jury’s good sense and careful consideration of consequences is known as
jurisprudence.
B16. Procedural law consists of all laws that outline the methods of enforcing rights.
B17. A citation identifies the publication in which a legal authority can be found.
B18. The decisions made by the courts establish the boundaries of the law as it
applies to almost all business relationships.
B19. The party against whom a lawsuit is brought is the plaintiff or petitioner.
B20. When all the judges (or justices) agree on a decision, a majority opinion is
written for the entire court.
MULTIPLE-CHOICE QUESTIONS
B1. Data Analytics, Inc., is a corporation engaged in the business of compiling,
analyzing, and marketing data. To accomplish its purposes, Data Analytics
4 TEST BANK B—UNIT ONE: THE LEGAL ENVIRONMENT OF BUSINESS
obtains financing, and hires and fires employees. Laws and government
regulations affect such business activities as
a. hiring and firing decisions.
b. the manufacturing and marketing of products.
c. business financing.
d. all of the choices.
B2. The U.S. Congress enacts a new federal statute that imposes liability on
businesses hiring employees without verifying their citizenship status. This
statute applies
a. only to businesses not covered by state law.
b. only to those states that consent to apply it.
c. to all of the states.
d. to none of the states.
B3. A provision in the California state constitution conflicts with a provision in the
U.S. Constitution. If challenged
a. neither provision will be enforced.
b. the provisions will be balanced to reach a compromise.
c. the state provision, not the U.S. Constitution, will be enforced.
d. the U.S. Constitution, not the state provision, will be enforced.
B4. The Pennsylvania legislature 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 Pennsylvania only.
d. the United States Supreme Court only.
CHAPTER 1: LAW AND LEGAL REASONING 5
B5. The Bay City Planning Department, the Coastal County Zoning Commission,
the Delaware Environmental Quality Agency, and the U.S. Bureau of Land
Management issue regulations. These rules constitute
a. administrative law.
b. case law.
c. stare decisis.
d. statutory law.
B6. Charles is a federal judge whose judicial decisions are part of case law, which
does not include interpretations of
a. regulations created by administrative agencies.
b. constitutional provisions.
c. statutes enacted by legislatures.
d. sound bites in the media.
B7. Much of American law is based on
a. the English legal system.
b. the French legal system.
c. Greek civil law.
d. ancient Chinese law.
B8. Bob’s Big Burgers n’ Shakes Restaurant brings a suit, seeking a remedy at law.
A remedy at law is
a. monetary damages.
b. a decree of specific performance.
c. a judicial proceeding for the resolution of a dispute.
d. an injunction.
B9. Larry enters into a contract with Motivational Education Services to host a
panel discussion at a sales conference. When the conference is postponed
6 TEST BANK B—UNIT ONE: THE LEGAL ENVIRONMENT OF BUSINESS
indefinitely, Larry asks a court to cancel the contract and return the parties to
the positions that they held before its formation. This request involves
a. specific performance.
b. an injunction.
c. rescission.
d. an action that the court cannot order.
B10. Maggie and Nate enter into a contract for the sale of a car, but Nate later
refuses to deliver the car. Maggie asks a court to order Nate to perform as
promised. Ordering a party to perform what was promised is
a. specific performance.
b. damages.
c. rescission.
d. beyond the court’s authority.
B11. Jane enters into a contract with Jill to provide 100 roses for a dinner party. Jill
fails to deliver the roses. Jane initiates a suit against Jill, asking the court to
order Jill to refund Jane’s payment. Jane is
a. the plaintiff.
b. the defendant.
c. the binding authority.
d. the persuasive authority.
B12. Sara believes that she has a strong case against Tom for the breach of an
employment contract. Despite this belief, Sara cannot file a suit against Tom
after the expiration of the time allowed for the filing under
a. a statute of limitations.
b. the doctrine of laches.
c. an equitable maxim.
d. the remedy at law.
CHAPTER 1: LAW AND LEGAL REASONING 7
B13. In the case of Retail Sales Corp. v. Trucking Delivery Co., the court may rule
contrary to a precedent if the court decides that the precedent
a. is incorrect or inapplicable.
b. is not in line with the judge’s personal values.
c. would lead to unintended consequences.
d. would not bring about the result the judge prefers.
B14. Karen is a judge hearing the case of Local Dispatch Co. v. National Transport
Corp. Applying the relevant rule of law to the facts of the case requires Karen
to find cases on point—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.
B15. Juan is a judge. How Juan and the judges in other courts interpret a particular
statute determines
a. how that statute will be applied.
b. how the law needs to be changed.
c. how the common law should be codified.
d. nothing.
B16. To Sam, the written law of a particular society at a particular time is most
significant. Sam is a
a. legal positivist.
b. person who adheres to the historical school of legal thought.
c. legal realist.
d. person who adheres to the natural law tradition.
8 TEST BANK B—UNIT ONE: THE LEGAL ENVIRONMENT OF BUSINESS
B17. Dave and Ellen enter into a contract via e-mail. When a dispute arises over the
performance of the deal, Dave files a suit against Ellen. The emerging body of
law that governs transactions conducted via the Internet is referred to by the
term
a. cyberlaw.
b. civil law.
c. equitable maxims.
d. IRAC.
B18. Beth is a victim of Carl’s 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 person’s rights are violated.
d. wrongs committed against the public as a whole.
B19. The Nebraska Supreme Court issues an opinion that can be found at 285 Neb.
88, 825 N.W.2d 429. “285” is
a. the number of the volume in the official reports of the court’s decisions.
b. the number of the volume in Thomson Reuter’s unofficial publication of
the court’s decisions.
c. a page number in the appropriate volume.
d. the number of the case in the sequence decided by the state’s highest
court.
B20. Operational Processes, Inc., appeals a decision against it, in favor of Precision
Manufacturing Corporation, from a lower court to a higher court. Operational
Processes is
a. the appellant.
b. the appellee.
CHAPTER 1: LAW AND LEGAL REASONING 9
c. the defendant.
d. the respondent.
ESSAY QUESTIONS
B1. In a lawsuit between Cloud Computing Corporation and Digital Enterprises,
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?
B2. For a business law class, Sierra reads and briefs several court opinions using
the IRAC method of legal reasoning. What do the letters I, R, A, and C
abbreviate? What are the steps in the IRAC method?
10 TEST BANK B—UNIT ONE: THE LEGAL ENVIRONMENT OF BUSINESS
