Chapter 1 Business Law Practice Test

Vince, from Illinois, was attending a concert in Michigan. Vince's obnoxious behavior irritated Troy, who was from Indiana. Troy asked Vince to settle down. Vince responded with an obnoxious comment and Troy shoved Vince. Vince fell to the ground and broke his arm. Vince wants to sue Troy for the injuries that Vince suffered. Assume Troy's action constitutes the crime of battery. Vince may file a criminal suit against Troy.

False

Mark Trenchant owned a store in Alabama in which he sold guns. His store had been in operation for ten years and was located one block from Eastwood Elementary School. This year a federal statute was enacted that made it a crime to sell guns within one mile of any primary school. Both the Alabama common law and an Alabama state statute, enacted five years ago, gave Trenchant the right to sell guns at his current location. Trenchant continued to operate his store and was taken to court over the issue. The court will most likely find Trenchant:

guilty under the federal statute.

Hamilton House is engaged in the restaurant business. The company has operated successfully for over a decade, but economic pressures have impacted profits. To counter this, Hamilton fired some employees and required those that remained to take fewer breaks than required by the Occupational Safety and Health Administration (OSHA) rules. The most likely outcome for Hamilton will be:

investigation and enforcement by OSHA for violations of its rules.

If a provision in the Florida state constitution conflicts with a provision in the U.S. Constitution:

the U.S. Constitution takes precedence.

The U.S. Congress enacts a new federal statute that sets different standards for the liability of businesses selling defective products. This statute applies:

to all of the states.

A body of court decisions that applied throughout the English realm, and later became part of the heritage of all nations that were formerly British colonies (including the United States) is known as a/the:

common law.

Criminal defendants are prosecuted by:

public officials on behalf of the state.

Jay is a federal judge. Jay's judicial decisions are part of the case law. This law includes interpretations of:

administrative regulations, constitutional provisions, and statutes.

International law sources include:

the laws of individual nations, and treaties and international organizations.

In most states, a court can grant legal remedies or equitable remedies but not both in the same case.

False

The Securities Exchange Commission (SEC) is an administrative agency. The chief purpose of such agencies is to:

perform specific government functions.

In Nebraska, the highest-ranking (superior) law is:

a provision in the Nebraska constitution.

Voters in North Carolina approve a new state constitution after which the Ocean City Council passes new ordinances, the North Carolina Department of Parks and Recreation issues new rules, and the Ocean City Chamber of Commerce sends out new instructions. Sources of law do not include:

instructions issued by the Ocean City Chamber of Commerce.

The U.S. Constitution is the supreme law of the United States.

True

A federal law that conflicts with the U.S. Constitution will be deemed unconstitutional.

True

Vince, from Illinois, was attending a concert in Michigan. Vince's obnoxious behavior irritated Troy, who was from Indiana. Troy asked Vince to settle down. Vince responded with an obnoxious comment and Troy shoved Vince. Vince fell to the ground and broke his arm. Vince wants to sue Troy for the injuries that Vince suffered. Vince wants to determine in which state, Illinois, Indiana, or Michigan, he should sue Troy. The appropriate state(s) for Vince to file his lawsuit is an issue of:

procedural law.

Scott Jensen owned two hundred acres of farmland in California. A creek flowed through the land, and Jensen used water from the creek to irrigate his crops. The water was adequate for his needs. Wesley Sarvis purchased farmland upstream from Jensen's property and began using water from the creek to irrigate. Claiming that he had exclusive rights to the water, Jensen filed a lawsuit in a California state court against Sarvis for using the water. The court held that Jensen and Sarvis had to divide their water use equally and that each of them was entitled to use the water every other week. Fifty years later, a similar dispute arose between two more California farmers. Bo Ellis lived upstream from Faye Deason. Deason claimed that she had exclusive rights to the water and filed a lawsuit in a California state court against Ellis for his use of the water. In the second case, Deason v. Ellis, the court will most likely:

apply stare decisis and divide the water rights because the facts of the two cases are similar.

Civil law can best be described as:

the law that governs relations between persons, and between persons and the government.

Equitable remedies include injunctions and decrees of specific performance.

True

Specific performance is:

an equitable remedy only.

In a suit against Owen, Phil obtains specific performance. This is:

an order to perform what was promised.

The Federal Trade Commission (FTC) is a government agency that issues rules, orders, and decisions. The Georgia state legislature enacts statutes. The Jackson County Board and the Peach City Council enacts ordinances. Administrative law includes:

decisions, orders, and rules of the FTC.

When Overseas Exports, Inc., based in New York, does business internationally, the firm may be subject to international law. The sources of this law include:

the laws of individual nations, and treaties and international organizations.

States must adopt the Uniform Commercial Code (UCC) in its entirety without any changes.

False

In Sales Distribution Corp. v. Consumer Products Co., the court decides that a precedent is incorrect or inapplicable. The court:

may rule contrary to the precedent.

Constitutional law includes only the U.S. Constitution.

False

This school of legal thought adheres to the belief that the written law of a particular society at a particular time is most significant.

Legal positivism.

The legislature of the state of Missouri enacts a new statute that sets standards for the liability of businesses selling defective products. This statute applies:

only in Missouri.

One of the major functions of all administrative agencies is:

rulemaking.

Sandra was injured when her car was struck by a car driven by David. As a result, Sandra has the right to file a lawsuit against David. This is an example of:

substantive law.

Criminal law focuses on duties that exist between persons.

False

Monetary damages is a remedy at law.

True

Pursuant to the doctrine of stare decisis, if an appellate court establishes a rule of law, the principle must be adhered to by:

that court and courts of lower rank.

In a suit against Kathy, Lon obtains specific performance. This is:

an equitable remedy only.

Primary sources of law include:

federal and state statutes, administrative regulations, constitutions, and court cases.

While Samantha was driving to school, she stopped at a stoplight and was struck from behind by Nathan's car. Samantha was injured, and her car was damaged, and she filed a lawsuit against Nathan to recover for her losses. This case is an application of:

civil law.

A court's direction to a party to do or to refrain from doing a particular act is a rescission.

False

Administrative agencies are created to:

perform a specific government function.

Courts do not depart from precedents.

False

Vince, from Illinois, was attending a concert in Michigan. Vince's obnoxious behavior irritated Troy, who was from Indiana. Troy asked Vince to settle down. Vince responded with an obnoxious comment and Troy shoved Vince. Vince fell to the ground and broke his arm. Vince wants to sue Troy for the injuries that Vince suffered. Whether Vince will be successful against Troy is an issue of:

substantive law.

Judges use precedent when deciding a case in a common law legal system.

True

Stare decisis is a doctrine obligating judges to follow precedents established within their jurisdictions.

True

A regulation enacted by a city or county legislative body that becomes part of that state's statutory law is:

an ordinance.

Which of the following is not a primary source of law?

A legal encyclopedia

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

no one.

The National Conference of Commissioners on Uniform State Laws:

drafts uniform laws for adoption by the states.

Federal statutes apply to all states.

True

A court may depart from its precedent if the court decides that the precedent should no longer be followed.

True

In early England, common law rules developed from the:

principles underlying judges' decisions in actual legal controversies.

A state constitution is supreme within the state's borders so long as it does not conflict with the U.S. Constitution or a federal law.

True

Lewis is a state court judge. Like other judges, Lewis often refers to secondary sources of law for guidance. These sources include:

official comments to statutes.

State agency regulations take precedence over conflicting federal agency regulations.

False

In a suit against Charles, Diana obtains the cancellation of a contract, which is:

rescission.

A law enacted by the Wyoming state legislature requires that all drivers over the age of seventy-five pass a driving test to ensure that they are competent to operate a motor vehicle. If a driver fails to take or pass the test, the driver's license is automatically suspended. Ron Plakke is a seventy-seven-year-old Wyoming resident whose license was revoked for failing to take the test. Police later stopped Plakke for driving erratically and issued him a traffic citation for driving with a suspended license. The court most likely will find Plakke:

guilty under the state statute.