Chapter 4 Business Law Practice Test

Java Cafes, Inc., and Kaffe Import Corporation dispute a term in their contract. The least expensive method to resolve the dispute between Java and Kaffe may be:

negotiation because no third parties are needed.

Mack and Nancy engage in a business transaction from which a dispute arises. Mack initiates a lawsuit against Nancy by filing a complaint. If Nancy responds to Mack's complaint by filing a counterclaim:

Mack will be given time to file a response

Nancy's counterclaim asserts that Mack is at fault. Therefore, he must file a response (usually called a reply) within a specified number of days.

The Texas legislature passes a law making it illegal to criticize the governor of Texas. Which body of government could render a decision that this statute violates the U.S. Constitution?

The courts

Concurrent jurisdiction exists in lawsuits involving:

diversity of citizenship.

Sophia is an attorney representing Emma in a bankruptcy case. Sophia keeps up-to-date with Emma's case by viewing court documents on her computer using what system?

PACER.

Sid files a suit against Tina. Before going to trial, the parties, with their attorneys, meet to try to resolve their dispute. A third party helps them to reach an agreement. This is:

mediation.

Don files a suit in a Florida state court against an out-of-state business, Eagle Sales, Inc., based on a Web site through which Florida residents can do business with Eagle. The court will likely exercise jurisdiction over Eagle if the interactivity of the site is seen as:

a "substantial" connection with the state.

Federal cases typically originate in:

U.S. district courts.

The U.S. Constitution expressly gives the power of judicial review to the legislative branch of government.

False

A motion for a judgment notwithstanding the verdict seeks to set aside a verdict and enter a judgment in favor of the non-prevailing party.

True

Appellate court decisions are never posted online.

False

Bankruptcy courts are an example of a federal court with original, but special (or limited), jurisdiction.

True

Bankruptcy courts have special (or limited) jurisdiction. In contrast, federal district courts have general jurisdiction. Both bankruptcy courts and federal district courts have original jurisdiction, meaning a case begins in that court.

A court can exercise jurisdiction over all of the property located within the boundaries of the court's geographic area.

True

This is called in rem jurisdiction

In Ed's suit against First National Bank, the discovery phase would include all of the following except:

Ed's complaint.

The complaint is a pleading and is not part of discovery.

The number of justices on the United States Supreme Court is:

nine.

The process by which a court decides on the constitutionality of legislative enactments and actions of the executive branch is called:

judicial review.

A counterclaim is raised by a plaintiff against a defendant's response to a complaint.

False

A counterclaim is a defendant’s claim against a plaintiff

Harry, a resident of Indiana, has an accident with Jane, a resident of Kentucky, while driving through that state. Jane files a suit against Harry in Kentucky. Regarding Harry, Kentucky has:

in personam jurisdiction.

Diversity is a type of subject matter jurisdiction. This question is asking about jurisdiction over person or property; specifically jurisdiction over Harry.

Unless otherwise agreed, the result of an online dispute resolution proceeding may not be appealed to a court.

False

ODR is appealable.

Abigail sues Zeke for defamation. At trial, Abigail and Zeke disagree over whether Zeke made a false factual statement about Abigail's business. The court rules in favor of Abigail's version of events. On appeal, the appellate court will:

challenge the trial court's finding of fact if it is clearly erroneous.

Appellate courts normally defer (yield or give weight) to a trial court's findings on questions of fact, because the trial court judge and jury are in a better position to evaluate testimony.

For purposes of diversity of citizenship, a corporation is a citizen only of the state in which it is incorporated.

False

When analyzing whether diversity subject matter jurisdiction exists, a corporation is considered a citizen of (a) the state where it is incorporated and (b) the state where its principal place of business is located.

Molly files a suit against Nick. They meet, and each party's attorney argues the party's case before a judge and jury. The jury presents an advisory verdict, after which the parties take part in mandatory negotiations. This is:

a summary jury trial.

In arbitration, an arbitrator (or panel of arbitrators) issues an award, deciding the case.

Jan and Sarah entered into a contract, but then fell into a dispute, so the contract was not completed. Jan would like to settle the matter amicably, but Sarah refuses to talk to her. Since they cannot settle the matter themselves, and neither wants to go to court, their best option might be:

an arbitration.

Negotiation would require Jan and Sarah to reach a resolution on their own, which is unlikely as Sarah will not talk to Jan. Resolution of a dispute by a neutral third party is called arbitration.

Someday, litigants may be able to use cyber courts, in which judicial proceedings may take place through:

email.

online chat rooms.

online videoconferencing.

The CM/ECF system allows attorneys to:

electronically file litigation-related documents in the federal court system.

A major nonprofit provider of ADR services is the:

AAA.

(American Arbitration Association).

The case of Able, Inc. v. Baker is heard in a Connecticut court with original jurisdiction. The case of Charlie v. Delta, Inc. is heard in a Connecticut court with appellate jurisdiction. The difference between original and appellate jurisdiction is whether:

a case is being heard for the first time.

Inferior Company sells products that are poorly made. Jack, who has never bought or used an Inferior product, files a suit against Inferior, alleging that its products are defective. The firm's best ground for dismissal of the suit is that Jack does not have:

standing.

The courts can decide whether the other branches of government have acted within the scope of their constitutional authority.

True

Kelly files a suit against Lewis in a state court. The case proceeds to trial, after which the court renders a verdict. The case is appealed to an appellate court. After its review of Kelly v. Lewis, the appellate court can:

affirm, reverse, or remand all or part of the lower court's decision.

An arbitrator can never render a legally binding decision.

False

A justiciable controversy is a case in which the court's decision—the "justice" that will be served—will be controversial.

False

Ilsa files a suit against Jack. The document that sets out the ground for the court's jurisdiction, the basis of Ilsa's case, and the relief that Ilsa seeks is:

the complaint.

Mack and Nancy engage in a business transaction from which a dispute arises. Mack initiates a lawsuit against Nancy by filing a complaint. If Nancy files a motion to dismiss, and the court grants it:

Mack will be given more time to file an amended complaint.

A judge instructs a jury as to the law that applies in a case.

True

Appellate courts generally focus on questions of fact, not of law.

False

In all courts, parties must electronically file all copies of litigation-related documents.

False

The essential role of the judiciary is:

to interpret and apply the law.

A function of the courts is to interpret and apply the law.

True

The doctrine of judicial review allows:

the judicial branch to decide whether laws or actions of the other branches of government are constitutional.

Mack and Nancy engage in a business transaction from which a dispute arises. Mack initiates a lawsuit against Nancy by filing a complaint. If Nancy files a motion to dismiss, she is asserting that:

Mack did not state a claim for which relief can be granted.

Joe and Krista have a dispute concerning a contract. They decide to try to settle the problem themselves, without the help of a third party. This type of ADR is known as:

negotiation.

In a lawsuit, an issue that must be decided by the judge involving the application or interpretation of a law is referred to as a:

question of law.

While Congress was not meeting, the president appointed two members to the National Labor Relations Board. A party adverse to the NLRB asserts that the president's appointment of the two members violated the Recess Appointments Clause of the U.S. Constitution. Which branch of government has authority to decide whether the president's action was constitutional or unconstitutional?

The judicial branch

A state court can exercise jurisdiction over a nonresident by showing that he or she had minimum contacts with the state.

True

A worldwide organization used by many businesses and law firms which resolve many disputes, often with experts in the industry of the dispute is the:

American Arbitration Association.

To view federal court records, which were filed through the CM/ECF system, a person may use another system called:

PACER.

The body of American law includes:

federal and state constitutions, statutes, administrative laws, and case decisions.

No courts have developed electronic courtrooms.

False

A federal court judge is an elected official.

False

To have standing to sue, a party must have been harmed or have been threatened with harm by the action about which he or she complains.

True

A deposition involves written questions for which written answers are prepared and signed under oath.

False

Sam, a citizen of New Mexico, wants to file a suit against Tanya, a citizen of Texas. Their diversity of citizenship may be a basis for:

a federal district court to exercise original jurisdiction.

A long arm statute permits a court to exercise jurisdiction over an out-of-state defendant.

True

Venue refers to the:

most appropriate location for a trial.

A lawsuit involving a federal question can originate in a federal court.

True

Some court clerks post online the schedule of cases to be heard by the court. This schedule is called the:

docket.

Juan took his tuxedo to the dry cleaner to be cleaned before his wedding, but the dry cleaner destroyed the tux, and Juan had to buy a new one for the wedding. If Juan wants to sue the dry cleaners for the loss of his tux, he would most likely file suit in this kind of court, which handles claims for a limited dollar amount, usually $5,000 or less.

Small claims court

A long arm statute allows a court to exercise jurisdiction over:

a nonresident defendant who has minimum contacts with the state in which the court is located.

No court requires mediation before a case goes to trial.

False

When both federal and state courts have the power to hear a case, these courts have:

concurrent jurisdiction.

The Ohio state legislature passes a law to regulate local delivery services. The final authority regarding the constitutionality of this law is:

the courts.

Service of process is the process of obtaining information from an opposing party before trial.

False

Which of the following normally is not available in online dispute resolution?

The service provider makes findings of fact and recommends how a court should proceed.

The authority of a court to hear and decide a specific case is referred to as:

jurisdiction.

The U.S. Constitution expressly gives the power of judicial review to the executive branch of government.

False

Voir dire is a process for presenting evidence in a case.

False

The process of obtaining information from an opposing party prior to going to trial is known as:

discovery.

In Fancy Frills Corporation's suit against Glamour Stores, Inc., the jury returns a verdict in Fancy's favor. Glamour files a motion asking the judge to set aside the verdict and begin new proceedings. This is a motion for:

a new trial.

After a decision is rendered in a case, no party can file an appeal.

False

Dick submits his claim against EZ Sales Corporation to FairSettle.com, a private, online dispute resolution forum. At any time, an appeal of the dispute to a court may be made by:

Dick or EZ.

Karl sells Jason his house. After moving in, Jason learns that Karl failed to disclose serious defects in the house. Jason sues Karl. After the pretrial procedures are completed, the case enters the trial phase. The attorneys begin the process of voir dire. During voir dire:

jurors are picked from a jury pool.

The U.S. Constitution does not mention the power of judicial review.

True

Appellate court decisions are often posted online.

True

The U.S. Supreme Court has its own official Web site.

True

Minimum contacts with a jurisdiction are never enough to support jurisdiction over a nonresident defendant.

False

Possible benefits of cyber courts and cyber proceedings include:

greater efficiency and lower costs.

A writ of certiorari issued by the U.S. Supreme Court indicates that:

the Court will hear the case.

After Mason loses his negligence case at the federal trial court, he appeals to the U.S. court of appeals and loses again. Mason then appeals to the U.S. Supreme Court, which denies his petition for a writ of certiorari. The effect of this denial:

is not a decision on the merits of case.

Immediately after announcing its opinions, the U.S. Supreme Court publishes the full text of the opinions on its official Web site.

True

Jack and Jill, longtime friends, entered into a contract which could not be completed as anticipated, because of events beyond their control. They want to resolve their dispute without litigation and by agreement as they decide, but believe they need help from someone experienced at resolving such disputes. Which of the following dispute resolution mechanisms would work best for them?

Mediation

Mediation would be the best alternative for parties who wish to decide themselves by agreement, and without litigation.

In a lawsuit, an issue that involves only disputed facts, and not what the law is on a given point, is referred to as a:

question of fact.

The United States Supreme Court can review a decision by a state's highest court only if a question of federal law is involved.

True

Mack and Nancy engage in a business transaction from which a dispute arises. Mack initiates a lawsuit against Nancy by filing a complaint. The sheriff serves Nancy with a summons. If Nancy chooses to ignore it:

Mack will have a judgment entered in his favor.

Nathan, who was served with a complaint and summons, decided not to go to court, believing that if he just refused to go, nothing could happen. Instead, the judgment entered against him was:

default judgment.

An answer can admit to the allegations made in a complaint.

True

A federal case typically originates in a federal district court.

True

Jim files a suit against Kay. Before going to trial, the parties meet, with their attorneys to represent them, to present their dispute to a third party who is not a judge but who renders a legally binding decision. This is:

arbitration.

The federal court system does not include the:

U.S. Chamber of Commerce.

In all courts, parties must deliver paper copies of litigation-related documents.

False

Mandatory arbitration clauses in employment contracts are not enforceable.

False

Only a plaintiff may file a motion for judgment on the pleadings.

False

State courts are independent of federal courts.

True

There are 52 court systems in the U.S.: one for each state, one for the District of Columbia, and a federal system.

The Federal Rules of Civil Procedure authorize video-conferencing.

True

The U.S. Constitution expressly gives the courts the power of judicial review.

False

A function of the congress is to interpret and apply the law.

False

The electronic filing system for the federal court system is called:

CM/ECF.

Venue is the term for the subject matter of a case.

False