True/False
Indicate whether the statement is true or false. Mark "1" for TRUE or "2" for FALSE.

1. Law is a body of enforceable rules governing relationships among individuals and between individuals and their society.
2. Common law is a term for law that is common throughout the world.
3. Remedies in equity include injunctions and decrees of specific performance.
4. Courts do not depart from precedents.
5. A judge's function is to make the law.
6. The courts can decide whether the other branches of government have acted within the scope of their constitutional authority.
7. Minimum contacts with a jurisdiction can be sufficient to support jurisdiction over a nonresident defendant.
8. Federal courts have jurisdiction over any case involving citizens of different states regardless of the amount in controversy.
9. Venue is the term for the subject matter of a case.
10. A trial commences with the plaintiff's attorney's direct examination of the first witness.
11. All courts require arbitration before a case goes to trial.
12. Alternative dispute resolution methods are generally less expensive and time consuming than actual litigation.
13. An arbitrator can render only a legally binding decision.
14. Whether a law is constitutional depends on its source.
15. Damages is a remedy at law.
16. Criminal law focuses on duties that exist between persons.
17. A court cannot exercise jurisdiction over an out-of-state defendant who has only done business in the state over the Internet.
18. Generally, lawyers are required to represent people in small claims courts.
19. Federal cases typically originate in appellate courts.
20. At every stage of a trial, either party can file a motion to dismiss the case.
21. Hearsay evidence is testimony about a statement made by someone who was not under oath at the time.
22. A motion for a directed verdict is also known as a motion for judgment as a matter of law.

Multiple Choice
Identify the choice that best completes the statement or answers the question.

23. The legislature of the state of Mississippi enacts a new statute that sets standards for the liability of businesses selling defective products. This statute applies
a. in all states.
b. only in Mississippi.
c. in all states but only to matters not covered by other states' laws.
d. only in Mississippi and its border states.

24. Hawaii enacts a state law that violates the U.S. Constitution. This law can be enforced by
a. the state of Hawaii only.
b. the federal government only.
c. no one.
d. the United States Supreme Court only.

25. In a suit against Sandy, Tippy obtains damages. In the U.S. legal system, this remedy at law is
a. normal.
b. unusual.
c. unlikely.
d. equitable.

26. As a judge, Diane applies common law rules. These rules develop from
a. decisions of the courts in legal disputes.
b. statutes enacted by Congress and the state legislatures.
c. regulations issued by administrative agencies.
d. uniform laws drafted by legal scholars.

27. In Ben V. City Car Dealership, a state supreme court held that a minor could cancel a contract for the sale of a car. Now a trial court in the same state is deciding Daphne V. Even Steven Auto Deals, Inc., a case with similar facts. Under the doctrine of stare decisis, the trial court is likely to
a. require the minor to fulfill the contract.
b. allow the minor to cancel the contract.
c. disregard the previous case.
d. order the minor to cancel the contract.

28. Ginger wants to file a suit against Fred. For a court to hear the case
a. the parties must own property.
b. Fred must agree.
c. the parties must have no minimum contact with each other.
d. the court must have jurisdiction.

29. Rolf, a citizen of New Mexico, wants to file a suit against Sandy, a citizen of Texas, relating to a motorcycle accident in which Rolf's injuries resulted in medical costs of more than $75,000. Their diversity of citizenship may be a basis for
a. a state court to exercise appellate jurisdiction.
b. the United States Supreme Court to refuse jurisdiction.
c. a federal court to exercise original jurisdiction.
d. no court to exercise jurisdiction.

30. Drummond wants to make a federal case out of his dispute with Elena. Federal cases originate in
a. state trial courts.
b. federal district courts.
c. federal courts of appeals.
d. the United States Supreme Court.

31. Ulrica wants to initiate a suit against Valley Farms by filing a complaint. The complaint should include
a. an explanation to refute any defense the defendant might assert.
b. the facts establishing Ulrica's basis for relief.
c. a motion to dismiss.
d. a motion for summary judgment.

32. During a trial in Gene's suit against Homer over the use of Gene's lakeside cabin, Gene's attorney asks questions of the plaintiff's witness Illya. This is
a. an interrogatory.
b. a deposition.
c. a direct examination.
d. a cross-examination.

33. Shelly and Tom disagree over the amount of money due under their contract. To avoid involving any third party in a resolution of the dispute, Shelly and Tom might prefer to use the alternative dispute resolution method of
a. litigation.
b. mediation.
c. arbitration.
d. negotiation.

34. Chelsea and Dion agree to arbitrate their dispute over the terms for, and the performance of, a delivery of eggs. The arbitrator's decision is called
a. an award.
b. a conclusion of law.
c. a verdict.
d. a finding of fact.

35. Faraway Sales Corporation, a U.S. firm, and Globe Transport, a Dutch firm, enter into a contract that includes an arbitration clause. This clause must provide that the arbitrator will be
a. the International Chamber of Commerce.
b. the American Arbitration Association.
c. the United Nations.
d. any third party.

36. The Federal Trade Commission 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
a. the rules, orders, and decisions of the Federal Trade Commission.
b. statutes enacted by the Georgia state legislature.
c. ordinances created by the Jackson County Board and the city council of Peach City, Georgia.
d. all law that affects a business's operation.

37. In a suit against Corbin, Donatella obtains damages. This is
a. an order to do or to refrain from doing a particular act.
b. an order to perform what was promised.
c. a payment of money or property as compensation.
d. the cancellation of a contract.

38. In a suit against Evan, Floyd obtains an injunction. This is
a. an order to do or to refrain from doing a particular act.
b. a payment of money or property as compensation.
c. an order to perform what was promised.
d. the cancellation of a contract.

39. A federal statute regulates an employment practice. To resolve a dispute concerning the practice, Paula, a judge, will most likely apply
a. Paula's personal philosophy of law.
b. a common law doctrine that applies to other, different practices.
c. the statute.
d. a common law doctrine that applied before the statute was enacted.

40. The Ohio state legislature passes a law to regulate local delivery services. The final authority regarding the constitutionality of this law is
a. the governor of Ohio.
b. the U.S. Congress.
c. the president of the United States.
d. the judicial system.

41. The case of Max V. National Credit Co. is heard in a trial court. The case of O! Boy! Ice Cream Co. V. Pickled Peppers, Inc., is heard in an appellate court. The difference between a trial and an appellate court is whether
a. the parties question how the law applies to their dispute.
b. the subject matter of the case involves complex facts.
c. the court is appealing.
d. a trial is being held.

42. Liu files a suit against Macro Sales, Inc., in a New Jersey state court based on a Web site through which New Jersey residents can do business with Macro. The court will most likely exercise jurisdiction over Macro if the interactivity of the site is seen as
a. a "substantial enough" connection with the state.
b. not connected with the state.
c. "uploading" to the state.
d. "downloading" from the state.

43. Gaudy Ornaments, Inc., sells decorative ware. Hank, who has never bought a Gaudy product, files a suit against the firm, alleging that its products are defective. The firm's best ground for dismissal of the suit is that Hank does not have
a. jurisdiction.
b. venue.
c. sufficient minimum contacts.
d. standing.

44. Mariah wins her suit against Natural Products Company. Natural's best ground for appeal is the trial court's interpretation of
a. the law that applied to the issues in the case.
b. the conduct of the witnesses during the trial.
c. the dealings between the parties before the suit.
d. the credibility of the evidence that Mariah presented.

45. Boyd files a suit in a federal district court against Cathy. Cathy loses the suit, appeals to the U.S. Court of Appeals for the Second Circuit, and loses again. Cathy asks the United States Supreme Court to hear the case. The Court is
a. required to hear the case because Cathy lost in a lower court.
b. not required to hear the case.
c. required to hear the case because Cathy lost in a federal court.
d. required to hear the case because it is an appeal.

True/False
Indicate whether the statement is true or false. Mark "1" for TRUE or "2" for FALSE.

1. The legality of an action is always clear.
2. Business ethics is consistent only with short-run profit maximization.
3. The state governments retain all powers not specifically delegated to the federal government.
4. National legislation governs nearly every major business activity, including conduct that has nothing to do with commerce.
5. The checks and balances in the U.S. Constitution prevent any one branch of government from exercising too much power.
6. Procedural due process requires that any government decision to take a person's property must be made fairly.
7. There is a specific guarantee of a right to privacy in the Constitution.
8. Federal administrative agencies can regulate beyond the powers granted by enabling legislation.
9. A party can challenge an administrative regulation as so irrational as to be arbitrary and capricious.
10. In most instances, an agency is not required to obtain a search warrant before a physical search for evidence is conducted.
11. Frequently, disputes over violations of administrative rules are resolved through informal adjudication proceedings.
12. Every portion of every meeting of a federal administrative agency does not have to be open to public observation.
13. Under their police powers, states can regulate only public activities, such as political demonstrations.
14. The Constitution expressly excludes state regulation of commerce.
15. When there is a direct conflict between a federal and a state law, the state law is rendered invalid.
16. Some constitutional protections apply to business entities.
17. The First Amendment does not protect corporate political speech.
18. Like statutory law, administrative law is created by legislatures.
19. The period for persons to comment on a proposed administrative rule must be at least thirty days.
20. There are no limits to the information that an administrative agency can demand from an individual or organization.
21. The federal government must disclose certain records to any person or entity on written request only if there is a rational reason for the request.
22. A person who commits larceny can be sued under tort law.
23. A kickback for a special favor or service is not considered a bribe.
24. A defendant may be relieved of liability by showing that a criminal act was necessary to prevent an even
25. A suspect cannot be tried twice in the same court for the same crime.
26. The purpose of the exclusionary rule is to encourage criminals to provide exclusive evidence of their crimes.
27. A cyberterrorist might target a government agency, but not a business.

Multiple Choice
Identify the choice that best completes the statement or answers the question.

28. John is sales manager for Kleen "N Brite Products, Inc. Compared to John's personal activities, his business activities most likely involve
a. no ethical issues.
b. the same ethical issues.
c. simpler ethical issues.
d. more complex ethical issues.

29. Mariah works in the public relations department of New Trends Sales Company. Her job includes portraying New Trends's activities in their best light. In this context, ethics consist of
a. a different set of principles from those that apply to other activities.
b. the same moral principles that apply to non-business activities.
c. those principles that produce the most favorable financial outcome.
d. whatever saves New Trends's "face."

30. Enterprising Markets Coalition (EMC), a political lobbying group, wants a certain policy enacted into law. If EMC's policy conflicts with the U.S. Constitution, a law embodying it can be imposed by
a. a federal court.
b. Congress.
c. a state legislature.
d. none of the choices.

31. The Financial Institutions Association would like a certain law enacted, administered, interpreted, and enforced in the best interest of its members, which include banks. Under the Constitution, Congress
a. administers the laws.
b. makes the laws.
c. enforces the laws.
d. interprets the laws.

32. Ulrich, a citizen of Virginia, wants to enforce in the state of Washington certain rights that he has under a contract with Xtreme SnoBoards Inc. A Washington state court is most likely to enforce such rights under
a. the full faith and credit clause.
b. no provision in the U.S. Constitution.
c. the commerce clause.
d. the privileges and immunities clause.

33. Tami's Tasty Tacos, a mobile vendor, files a suit against the state of Utah, claiming that a Utah state law violates the commerce clause. The court will agree if the statute imposes a substantial burden on
a. the state.
b. noneconomic activity.
c. a local government.
d. interstate commerce.

34. Mike, an advocate of a certain religion, publishes an article in New Times magazine insisting that Congress base all federal law on his religion's principles. The First Amendment guarantees Mike's freedom of
a. the press, speech, and religion.
b. the press only.
c. speech only.
d. religion only.

35. Boxy's Packaging Materials Company is subject to regulations issued by the Occupational Safety and Health Administration (OSHA). Like other federal administrative agencies, the OSHA was created by
a. the president, through an executive order.
b. the Federal Trade Commission, through the rulemaking process.
c. Congress, through enabling legislation.
d. the U.S. Department of Labor, through a final order.

36. Pure Water Company is subject to a decision by the Environmental Protection Agency. Pure Water appeals the decision, arguing that it is arbitrary and capricious. This could mean that the decision
a. was accompanied by a rational explanation.
b. was plainly warranted by the evidence.
c. changed the agency's prior policy without justification.
d. followed a consideration of all relevant factors.

37. To notify the public of a proposed rule, the Food Safety and Inspection Service, like other federal agencies, publishes the proposal in
a. the news media.
b. an office memo that employees are free to take home.
c. a trade journal available to members of the industry.
d. the Federal Register.

38. The Securities and Exchange Commission decides to create a new rule relating to the dissemination of material nonpublic information through corporate blogs, tweets, and Web sites. The first step is to
a. publish a notice of the proposed rulemaking.
b. solicit public comment.
c. compile the rule with others in the Code of Federal Regulations.
d. conduct an on-site inspection.

39. Before adopting new regulations to govern Internet-based phone services, the Federal Communications Commission may not
a. hold hearings to acquire facts pertinent to the proposed rules.
b. ignore the Administrative Procedure Act to streamline proceedings.
c. solicit testimony from interest groups and consumers.
d. order manufacturers to provide certain documents.

40. The state of New York regulates private activities to protect or promote the public order, health, safety, and general welfare under its
a. supremacy powers.
b. spending powers.
c. taxing powers.
d. police powers.

41. The Constitution sets out the authority and the limits of the branches of the government. The term checks and balances means that
a. the president "checks" the courts, which "balance" the laws.
b. Congress writes checks and the other branches balance the budget.
c. the courts balance their authority to the other branches' checklists.
d. each branch has some power to limit the actions of the others.

42. Beachside City enacts an ordinance that bans the distribution of all printed materials on city streets. Carl opposes the city's latest "revenue-enhancing" measure and wants to protest by distributing handbills. In his suit against the city, a court would likely hold the printed-materials ban to be
a. constitutional under the First Amendment.
b. unconstitutional under the commerce clause.
c. unconstitutional under the First Amendment.
d. not subject to the U.S. Constitution.

43. Minnesota enacts a statute to ban advertising in "bad taste.' This statute would likely be held by a court to be
a. an unconstitutional restriction of speech.
b. justified by the need to protect individual rights.
c. necessary to protect state interests.
d. constitutional under the First Amendment.

44. The police obtain a search warrant and search Errol's apartment. After yelling obscenities at the officers, Errol confesses to a crime and implicates his friends. The Constitution protects against
a. unreasonable searches.
b. implication of others.
c. obscene speech.
d. none of the choices.

45. The U.S. Fish and Wildlife Service uses notice-and-comment rulemaking. This involves a period during which
a. the administrators "notice" a problem and "comment" on it.
b. the public is asked to comment on a proposed rule.
c. potential violators of a proposed rule are notified and publicized.
d. judges, legislators, and the president are asked about a proposed rule.

46. The Federal Trade Commission (FTC) orders GR8 Steaks Company to reveal certain information. GR8 Steaks complains to a court, arguing that the order is an abuse of the FTC's discretion. Like other agencies, the FTC can use a subpoena to
a. pressure a party to settle an unrelated matter.
b. reveal violations of the law.
c. compel a party to testify, but not to obtain documents.
d. obtain any information except what a party refuses to reveal.

47. Gail is a "payday" lender charged with filing false claims in bankruptcy proceedings against her debtors. The standard of proof to find a defendant who has been charged with a crime guilty is
a. clear and convincing evidence.
b. beyond all doubt.
c. beyond a reasonable doubt.
d a prenonderance of the evidence

48. Domino causes a disturbance at El Nino Cafe. He is arrested and charged with disorderly conduct, a misdemeanor. A misdemeanor is a crime punishable by
a. imprisonment up to one year.
b. a fine only.
c. imprisonment up to ten days.
d. imprisonment up to six months.

49. Sven receives an MP3 player stolen from Tomas. To be criminally liable, Sven must know
a. what an MP3 player is.
b. the player is stolen.
c. how to operate an MP3 player.
d. Tomas is the true owner.

50. Mona offers Ned, a building inspector, money to overlook the violations in her new warehouse. Ned accepts the money and overlooks the violations. Mona is charged with the crime of bribery. The crime occurred when
a. Mona offered the bribe.
b. Ned overlooked the violations.
c. Mona decided to offer the bribe.
d. Ned accepted the bribe.

51. Davis points a gun at Eton, threatening to shoot him if he does not steal from his employer, Freddy's Convenience Store, and give the stolen funds to Davis. Charged with theft, Eton can successfully claim, as a
defense
a. nothing.
b. duress.
c. entrapment.
d. self-defense.

52. Ollie, an employee of Payroll Management Corporation, is arrested at work. A grand jury issues a formal charge against Ollie for larceny. This charge is
a. an arraignment.
b. an information.
c. an indictment.
d. an inquisition.

True/False Indicate whether the statement is true or false. Mark &...