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Category > Law Posted 26 Oct 2020 My Price 20.00

Business Law Unit 1 Milestone Sophia

Business Law Unit 1 Milestone Sophia

In which scenario do the different court systems in the U.S. interact properly?



A Colorado man is a defendant in a personal injury lawsuit for an incident that occurred in New Mexico when he was under the influence of marijuana. When hearing the case, the New Mexico judge applies the laws of Colorado, where marijuana is legal, rather than New Mexico law, which criminalizes it.



A New Jersey resident is sued by an Iowa resident. After a trial in which the New Jersey resident vigorously defends himself, the Iowa state court finds in favor of the defendant. The Iowa resident then files the same claim in a New Jersey state court, which dismisses the case.



A convict on death row in Texas sues, claiming that the death penalty violates the prohibition in the Constitution of cruel and unusual punishment. The federal courts refuse to hear the case, because the complaint includes questions of Texas state law.



A West Virginia woman was driving across the country on vacation and caused a traffic accident in Nebraska that resulted in a personal injury tort claim. The case is tried in Nebraska, but the state court judge applies West Virginia law, since that's where the defendant is from.

The Courts and the Legal Process

Compared to traditional litigation, arbitration and mediation are both __________.



quicker and more cost-effective



rarely used as forms of dispute resolution



more formal and complex



not favored or supported by courts

Alternative Dispute Resolution

If a breach of contract case is filed in federal court, the court __________.



has no subject matter jurisdiction, but can hear the case at its own discretion



has subject matter jurisdiction if the claim is for less than $75,000 and no plaintiff lives in the same state as any defendant



has no subject matter jurisdiction and cannot hear the case



has subject matter jurisdiction if the claim is for more than $75,000 and no plaintiff lives in the same state as any defendant

Subject Matter Jurisdiction

Select the true statement about statutory law.



Congress may enact statutory law in any area it so chooses.



Statutes at the state level are binding on all states.



Statutes are formed by democratically elected legislative bodies, subject to a system of checks and balances.



At the federal level, the President has no power whatsoever over the creation of statutory law.

Legislation and Other Sources of Law

Which level of state court would reverse the decision of a lower court for procedural missteps?



District court



General jurisdiction court



Limited jurisdiction court



Intermediate appellate court

State Courts in the U.S.

Select the true statement about primary sources of law in the U.S.



Public law governs the citizenry, but not the lawmakers themselves.



Substantive laws are necessary to determine how procedural laws will be enforced.



Procedural laws govern the rights and obligations of people.



A contract between two parties is an example of private law.

Origins of Law

ABC Corporation is one of the largest energy companies in the United States, with over $50 million in publicly traded shares. The corporation's unusual accounting practices have disguised the fact that the company has accumulated significant losses over the past five years, making it appear far more profitable than it is. The CEO of ABC Corporation has decided to continue misleading investors by hiding its mounting debt in order to support the company's current market valuation.

How would a deontologist evaluate this decision?



ABC Corporation is acting unethically because it is not striving for truthfulness or high-mindedness.



ABC Corporation is acting unethically because the results of its dishonesty are likely to be negative for its employees, for its shareholders, and for society as a whole.



ABC Corporation is acting unethically because it sees the investors' interests as unequal to the interests of the CEO and the corporation.



ABC Corporation is acting unethically because it has certain rights as a corporation, and therefore has a corresponding duty to consider the public good.

Major Ethical Perspectives

The CEO of a multinational retail corporation has decided to raise the minimum wage for its U.S. employees to three times the current federal minimum wage. The CEO explains that the company needs to provide its employees a living wage, regardless of what the law requires.

According to Milton Friedman, did the corporation fulfill its duty?



No, because the CEO's salary is still hundreds of times what the corporation's employees will be paid.



Yes, because employees will now be able to afford to purchase more of the company's products.



No, because the wage hike will drastically increase the corporation's liabilities and likely harm its stock price.



Yes, because the corporation is going beyond what the government requires it to do, in order to advance the public good.

Corporate Governance

Select the example where the court has established personal jurisdiction over the defendant.



Aisha, a resident of New York, is visited by a process officer at her workplace in New York City and delivered a summons to appear in court in Maryland. The lawsuit against her relates to property damage that occurred in a home she rented in New Jersey, which is owned by a woman from Maryland.



Miguel is being sued by an acquaintance of his over unpaid debts. Both Miguel and the plaintiff are residents of Colorado. Miguel has not been personally visited by a process server with a summons to appear in court, but he did receive one in the mail at his home.



Frank, an accountant, is suing a client for unpaid bills. The client is located in Mississippi, and Frank lives and works in Virginia. Frank initiates his lawsuit in his home state, because he knows many of the state judges.



Drew is being sued by a man who claims that Drew committed slander by speaking ill of him. Drew lives in Oregon, but the man is from Texas. Drew has received a summons ordering him to appear in court in Texas to respond to the complaint.

Personal Jurisdiction

The CEO of Oil Company X is dismayed to learn that oil has been leaking from one of its off-shore rigs into the Gulf of Mexico for the last five years. In deciding how to proceed, the company identifies a range of stakeholders, considers how different courses of action would impact each stakeholder, and determines which core values each decision would satisfy.

According to the Josephson's core values model for ethical decision-making, what should Company X do next?



Decide which stakeholders are most important and whose needs should be prioritized.



Determine which course of action will be easiest to implement.



Choose the course of action that is most likely to promote the greatest number of core values.



Weigh the financial cost of each possible course of action against the core values that it promotes.

An Ethical Decision Model

Select the example in which a corporation is making use of a safe harbor provision.



A corporation that hosts user-uploaded videos online reports a copyright infringement to federal authorities and removes the copyrighted video from its website in order to reduce liability.



A corporation that manufactures commercial exercise equipment establishes a thorough inspection process to ensure compliance with safety standards to reduce liability.



A software corporation promotes a whistleblower who exposed patent violations within the company.



A corporation that operates a chain of restaurants establishes an ethics hotline so that employees can report legal or company policy violations to the corporate office to reduce liability.

Minimizing Corporate Criminal Liability

What is the purpose of the Bill of Rights in the U.S. Constitution?



To clearly organize the branches of government



To define the relationship between the states



To create and establish a basic foundation of individual liberties



To establish a division of power between the branches of government

U.S. Constitution as a Source of Law

Knowledge of the __________ Act minimizes a business's liability exposure when making decisions related to accounting practices.



Sarbanes-Oxley



Civil Rights



Truth in Lending



Federal Trade Commission

Law in Business

Which of the following accurately characterizes the function of the U.S. Supreme Court?



In some years, the Court does not hear any cases whatsoever.



The Court is required to hear all of the cases that are sent to it by the U.S. Circuit Courts.



The Court selects only a small number of cases to hear on an annual basis.



The Court only hears cases sent to it by the District Courts.

Federal Courts in the U.S.

Which of the following is true of LLCs and their members?



Each member of an LLC can choose how he or she wishes to be taxed.



An LLC should have at least two members to be effective.



The members of an LLC can only be persons, and not other business entities.



There is no requirement regarding how many members an LLC must have.

Limited Liability Entities

Which of the following is an example of a general partnership?



Jonathan and Craig's catering business is going through a rough patch wherein the debts exceed the income. Jonathan is worried because he is personally liable for the whole of the company's debts, but Craig is only liable for the initial $50,000 that he invested.



Ken and Paul start a graphic design business together. When Ken fails to deliver on a contract with a customer, Ken and Paul are held equally responsible when the customer sues for damages.



Yvonne opens her first business selling sporting goods. She hires a marketing manager, an accountant, and several sales staff to help her manage the demand for her goods. When she files her annual taxes, she claims 100% of the profits of the business on her individual tax return.



Stefanie's photography business has grown so quickly that she needs to invest in more equipment. She brings in a partner who provides the capital to purchase the new equipment, but who has no control over the day-to-day operations of the business.

Sole Proprietorships and Partnerships

The new CEO of a large coffee corporation makes fighting sexual harassment a cornerstone of the company's culture after a series of embarrassing incidents involving several of the company's managers are leaked to the media. The corporation drafts a new code of ethics with an expanded set of policies related to sexual harassment, creates a series of mandatory workshops for its workforce, and fires the managers involved in the incidents.

Consider what you have learned about the factors that impact corporate culture. What is the ethical strength of the corporation in the example?



Strong, because the corporation must show that it has an ongoing process to discourage wrongdoing in order to avoid legal action.



Weak, because the CEO should have cracked down on the employees who were leaking information to the media as well.



Strong, because the CEO is setting expectations for ethical behavior and holding violators accountable.



Weak, because this focus on matters of social justice has no place in capitalism.

Corporate Culture and Codes of Ethics

A 32-year-old woman accuses her business partner of embezzlement, and the case goes to trial. The trial results in a directed verdict.

When in the trial process did this occur?



Immediately following jury selection



Before the jury retired to deliberate the facts of the case



Before jury selection began



After the jury issued its unanimous verdict

The Trial

Select the true statement about the relationship between law, ethics, and business.



Ethical business practices and conduct have value only to the owners and managers of a business.



Ethical business practices and conduct are more important to the short-term success of a business than the long-term.



Ethical business practices and conduct generate goodwill that can be measured in the monetary value of a business.



Ethical business practices and conduct increase employee and customer satisfaction, but do not affect a business' bottom line.

What Is Ethics?

Although shareholders may receive profits from a corporation's business, __________.



they are only liable for the corporation's debts if they are also a member of the board of directors



they share responsibility for the corporation's debts with the directors and officers



they are generally not liable for the debts of the corporation



they are liable for corporate debts if the assets of the corporation are insufficient

Corporations

Which of the following do legal positivists believe?



All laws are good, provided they are made by legitimate authorities.



Law and ethics are intertwined, and one cannot be considered in isolation from the other.



The only human rights are those that have been created by human-made law.



It is legitimate to disobey a law that you disagree with, even if it comes from a valid source.

What Is Law?

Which of the following is true of civil law?



Possible remedies include monetary damages.



Defendants retain the right to remain silent.



Evidence of guilt beyond a reasonable doubt is necessary for conviction.



Cases are always prosecuted by the government.

U.S. Positive Law

Which of the following is a consideration when choosing a form of business organization?



Whether the business organization will turn a profit



Whether it is a service business or a manufacturing business



The level of difficulty and cost associated with establishing the business entity



The level of motivation among the founders for the business to succeed

In which scenario do the different court systems in the U.S. interact properly?



An Indiana court hears a case related to an auto accident that happened in the state between residents of Ohio and Illinois. When trying the case, the Indiana state court judge considers the laws of Indiana, since that's where the accident occurred.



When a waitress in Virginia sues her employer over unsafe working conditions, the state court judge applies the laws of Virginia, even though federal regulations governing workplace safety are more stringent than those of the state.



A Montana state court refuses to hear a civil lawsuit with a false imprisonment claim, because the complaint references both Montana law and federal law.



When a landlord tries to file a complaint against a tenant in Oregon after he loses in a Washington state court, the Oregon state court allows the second case to proceed.

The Courts and the Legal Process

If a breach of contract case is filed in federal court, the court __________.



has no subject matter jurisdiction, but can hear the case at its own discretion



has subject matter jurisdiction if the claim is for less than $75,000 and no plaintiff lives in the same state as any defendant



has no subject matter jurisdiction and cannot hear the case



has subject matter jurisdiction if the claim is for more than $75,000 and no plaintiff lives in the same state as any defendant

Subject Matter Jurisdiction

An energy corporation is worried about its exposure to criminal liability after a rival company is indicted for violating environmental laws.

Select the strategy that would be least effective in reducing the company's criminal liability.



Its leadership could establish a culture of respect for legal compliance through example.



It could hold annual training seminars on the current state of environmental law, using the investigation as an example.



It could cooperate with authorities in their investigation of the rival company.



It could develop an anonymous internal reporting system for employees who suspect illegal or unauthorized behavior.

Minimizing Corporate Criminal Liability

A 33-year-old business owner is put on trial for negligence.

When in his trial process does voir dire occur?



At the beginning, as part of jury selection



In the appeals stage



After the closing arguments



After a witness has given testimony, as part of the cross-examination

The Trial

Which level of state court would most likely decide a case related to running a red traffic light?



Intermediate appellate court



Supreme court



General jurisdiction court



Limited jurisdiction court

State Courts in the U.S.

How would a deontologist evaluate this decision?



ABC Corporation is acting unethically because it has certain rights as a corporation, and therefore has a corresponding duty to consider the public good.



ABC Corporation is acting unethically because it is not striving for truthfulness or high-mindedness.



ABC Corporation is acting unethically because the results of its dishonesty are likely to be negative for its employees, for its shareholders, and for society as a whole.



ABC Corporation is acting unethically because it sees the investors' interests as unequal to the interests of the CEO and the corporation.

Major Ethical Perspectives

According to Milton Friedman, did the corporation fulfill its duty?



No, because the wage hike will drastically increase the corporation's liabilities and likely harm its stock price.



Yes, because the corporation is going beyond what the government requires it to do, in order to advance the public good.



Yes, because employees will now be able to afford to purchase more of the company's products.



No, because the CEO's salary is still hundreds of times what the corporation's employees will be paid.

Corporate Governance

What is the purpose of the Bill of Rights in the U.S. Constitution?



To create and establish a basic foundation of individual liberties



To establish a division of power between the branches of government



To clearly organize the branches of government



To define the relationship between the states

U.S. Constitution as a Source of Law

Arbitration is a __________ form of alternative dispute resolution.



sometimes involuntary, non-binding



voluntary, non-binding



sometimes involuntary, binding



voluntary, binding

Alternative Dispute Resolution

Select the example where the court has established personal jurisdiction over the defendant.



Lillian, Min, and Carmen were once friends, but Min is now suing Lillian and Carmen for defamation. Min and Carmen live in Michigan, but Lillian lives in Iowa. Lillian receives a summons to appear in court in Michigan, since that's where both Min and Carmen live.



Oleg is being sued for failing to deliver goods sold to Abe. Oleg is a resident of Arizona, and Abe lives across the country in West Virginia. Abe has filed the lawsuit in West Virginia and a summons has been delivered to Oleg's home.



Betsy receives a summons at her home in Utah, informing her that she is a defendant in a lawsuit filed in Nevada. She is being sued by Frank, a resident of Nevada, for unpaid medical bills stemming from when Betsy hit his car while driving through Nevada.



Fatima is being sued by her former landlord who claims that Fatima owes three months of unpaid rent. Both Fatima and her former landlord are residents of Minnesota, but the court has not yet been able to find Fatima to deliver her a summons, and she has no forwarding address or known location.

Personal Jurisdiction

Knowledge of the __________ Act minimizes a business's liability exposure when making decisions related to accounting practices.



Civil Rights



Truth in Lending



Sarbanes-Oxley



Federal Trade Commission

Law in Business

Select the true statement about primary sources of law in the U.S.



Public law is typically only binding on specific parties.



Substantive laws specify the right of all citizens to due process.



Private law applies to everyone within a lawmaking body's jurisdiction.



Procedural laws must provide for efficiency, but not fairness.

Origins of Law

Which of the following is true of corporations and their shareholders?



State law determines how many shares a corporation can have.



A corporation can have as many shares as it wishes to sell.



The number of shareholders is limited to the number of corporate officers.



A corporation cannot have a single shareholder.

Corporations

According to the Josephson's core values model for ethical decision-making, what should Company X do next?



Decide which stakeholders are most important and whose needs should be prioritized.



Determine which course of action will be easiest to implement.



Weigh the financial cost of each possible course of action against the core values that it promotes.



Choose the course of action that is most likely to promote the greatest number of core values.

An Ethical Decision Model

Which of the following correctly pairs the levels of the federal court system with the types of cases each decides?



U.S. Circuit Court - appeals; U.S. District Court - trials



U.S. Supreme Court - trials; U.S. Circuit Court - appeals



U.S. Circuit Court - trials; U.S. District Court - trials



U.S. Supreme Court - appeals; U.S. Circuit Court - trials

Federal Courts in the U.S.

Select the true statement about statutory law.



Statutes at the state level are binding on all states.



Statutes are formed by democratically elected legislative bodies, subject to a system of checks and balances.



Congress may enact statutory law in any area it so chooses.



At the federal level, the President has no power whatsoever over the creation of statutory law.

Legislation and Other Sources of Law

Which of the following is an example of a sole proprietorship?



Issa and Raymond start a t-shirt printing company that earns a small profit in its first year of operation. They both invested capital in the business to get it up and running, so they are both glad to share in the small profit.



Gabrielle started a dog-walking company. She sometimes worries about the fact that she has no one to share the potential liabilities of the company with, but she does enjoy retaining 100% of the profits.



Matt and Carlene are both owners of a business that sells hand-crafted home goods via the Internet. Although they both own the business, Matt is solely responsible for the business operations.



Shawn is a partner in a successful downtown law firm. He has a number of clients that he is exclusively responsible for, so he works very hard to make sure they're happy with his services.

Sole Proprietorships and Partnerships

Which of the following is a belief held by the theory of natural law?



Humans require laws issued by sovereigns to distinguish right from wrong.



Laws must be enforced even if they are considered "bad."



There are rights that are intrinsic to humankind.



There is no higher law than human-made law.

What Is Law?

A corporation that manufactures home security systems has been doing well for several years, selling 30% more of such systems than its competitors. Unfortunately, a company sales representative brings it to the attention of upper management that sales teams have been lying to potential customers about the shortcomings of competitors’ products. The corporation fires the members of the dishonest sales teams after an internal investigation, and promotes the sales representative who called attention to the problem.

Consider what you have learned about the factors that impact corporate culture. What is the ethical strength of the corporation in the example?



Weak, because the company is not practicing conscious capitalism.



Strong, because the company is not just saying it supports employees who report legal or ethical violations, it is showing it.



Weak, because the dishonest sales tactics could never have happened in an ethically strong corporate culture.



Strong, because the corporation is "managing by the numbers."

Corporate Culture and Codes of Ethics

Which of the following is true of LLCs and their members?



Each member of an LLC can choose how he or she wishes to be taxed.



The members of an LLC can only be persons, and not other business entities.



There is no requirement regarding how many members an LLC must have.



An LLC should have at least two members to be effective.

Limited Liability Entities

Which of the following is true of U.S. positive law?



It includes common law and state statutory law, but not federal statutory law.



It includes statutory law, but not common law.



It includes common law, but not statutory law.



It includes common law, as well as federal and state statutory law.

U.S. Positive Law

Which of the following is a consideration when choosing a form of business organization?



The type of product manufactured by the business



The time of year that the business was established



The ease with which the founder of a business can transfer ownership to someone else



The degree of competition faced by the business

Business Organizations

Select the true statement about the relationship between law, ethics, and business.



The marketplace is generally unconcerned with whether or not businesses conduct themselves morally, since morality is difficult to define.



Each person has a different definition of what is moral or ethical, so it is not possible for businesses to know what qualifies as ethical conduct.



Since morals and ethics are not objective and cannot be specifically measured, the relationship between the value of a business and its ethical conduct is murky at best.



People generally have similar opinions on what actions or conduct are called moral, and the marketplace rewards businesses that conduct themselves in such a manner.

Why is an LLC an attractive form of business organization for many new companies?



Because neither LLCs nor their members must pay taxes on earnings



Because, although they are more complicated to manage than corporations, they provide greater protection from risk



Because it is a relatively simple way of establishing and operating a business while limiting the risk taken by its members



Because lenders are particularly willing to lend money to LLCs, since they are a very stable type of business

Limited Liability Entities

Compared to traditional litigation, arbitration and mediation are both __________.



more formal and complex



quicker and more cost-effective



rarely used as forms of dispute resolution



not favored or supported by courts

Alternative Dispute Resolution

Select the true statement about the relationship between law, ethics, and business.



Ethical business practices and conduct increase employee and customer satisfaction, but do not affect a business' bottom line.



Ethical business practices and conduct have value only to the owners and managers of a business.



Ethical business practices and conduct generate goodwill that can be measured in the monetary value of a business.



Ethical business practices and conduct are more important to the short-term success of a business than the long-term.

What Is Ethics?

Knowledge of the __________ Act minimizes a business's liability exposure when making decisions related to accounting practices.



Civil Rights



Truth in Lending



Sarbanes-Oxley



Federal Trade Commission

Law in Business

After several quarters of negative earnings, the CEO of a social media corporation decides to end the company's policy of providing paid parental leave in order to reduce labor expenses, among other cost-saving measures. As a result of the CEO's decisions, the company's stock price rises significantly.

According to Milton Friedman, did the corporation fulfill its duty?



No, because employees are stakeholders who rely on the company for their well-being.



Yes, because the shareholders' return on investment has risen.



No, because paid parental leave is an important social good that companies have a responsibility to support.



Yes, because the CEO feels no personal obligation to support his or her employees' decisions to have children.

Corporate Governance

Which of the following accurately characterizes the function of the U.S. Circuit Courts?



The Circuit Courts are responsible for overseeing all of the federal court system.



The Circuit Courts are responsible for reviewing cases decided by the Supreme Court.



The Circuit Courts are responsible for trying both criminal and civil cases.



The Circuit Courts are responsible for hearing appeals sent to them by the District Court system.

Federal Courts in the U.S.

A whistleblower informs a VP at an online retail company about the widespread practice of warehouse workers being asked to work extra hours without pay. The VP raises the issue with the CEO, who responds that the company can’t compete in the industry without its workers putting in some extra hours, and that paying them for these hours would negatively affect earnings. The CEO assures the VP that the company’s workforce is happy to work these extra hours, since no warehouse workers have complained directly to him.

Consider what you have learned about the factors that impact corporate culture. What is the ethical strength of the corporation in the example?



Weak, because the CEO is taking credit for the work of others.



Strong, because the CEO is protecting the financial strength of the company.



Weak, because the CEO is failing to provide top-down ethical leadership.



Strong, because the CEO is willing to meet with people in the organization who have ethical concerns.

Corporate Culture and Codes of Ethics

Which of the following is true of civil law?



Evidence of guilt beyond a reasonable doubt is necessary for conviction.



Defendants retain the right to remain silent.



Cases are always prosecuted by the government.



Possible remedies include monetary damages.

U.S. Positive Law

A successful computer software corporation has decided to launch a charitable giving program that provides tuition grants to young women planning to study computer programming in college. By doing so, the corporation hopes to increase diversity in the field.

How would a social contract theorist evaluate this decision?



The corporation is acting unethically because its primary duty is to its shareholders, and diverting funds to charitable giving will not increase profits.



The corporation is acting ethically because it is practicing the ideals of generosity and liberality.



The corporation is acting unethically because the total good it will do by providing grants to women is cancelled out by the total harm it will do to men who cannot receive the grants.



The corporation is acting ethically because, since the company benefits from the stability and security that the nation provides, it has a duty to support principles that the nation values, such as diversity.

Major Ethical Perspectives

Pharmaceutical Company Z received government approval for a medicine that lowers high blood pressure. Over time, however, the company realizes that the drug causes tremors in a small number of people who use it. In deciding how to proceed, the company identifies a range of stakeholders, including corporate shareholders, consumers, physicians, the government, and society as a whole, and comes up with several possible courses of action.

According to the Josephson's core values model for ethical decision-making, what should Company Z do next?



Evaluate which course of action will provide the greatest benefit to the corporate shareholders, to whom the company has the greatest obligation.



Try to determine which core values are most important to the company.



Try to determine which course of action will best protect the company in the short-term.



Evaluate the impact of each possible course of action on each of the various stakeholders.

An Ethical Decision Model

The theory of legal realism holds that __________.



a judge's personal perspective has no bearing on how law is applied



law should always be applied exactly as written



law should be interpreted based on social and economics considerations



law has nothing to do with the exercise of power

What Is Law?

Which of the following is true of corporations and their shareholders?



A corporation can have as many shares as it wishes to sell.



A corporation cannot have a single shareholder.



The number of shareholders is limited to the number of corporate officers.



State law determines how many shares a corporation can have.

Corporations

State governments have jurisdiction over __________.



the exact same areas of law as the federal government



any areas of law not specifically reserved to the federal government



individual rights, but not public law



only the areas of law explicitly given to them by the U.S. Constitution

U.S. Constitution as a Source of Law

Select the example where the court has established personal jurisdiction over the defendant.



Personal Jurisdiction

Select the case that is under the subject matter jurisdiction of a state court.



A case involving navigation in Puget Sound



A dispute over a copyright



A paternity suit



A suit between two states

Subject Matter Jurisdiction

Which of the following is a consideration when choosing a form of business organization?



The degree of competition faced by the business



The time of year that the business was established



The ease with which the founder of a business can transfer ownership to someone else



The type of product manufactured by the business

Business Organizations

Select the true statement about primary sources of law in the U.S.



Procedural laws must provide for efficiency, but not fairness.



Public law is typically only binding on specific parties.



Substantive laws specify the right of all citizens to due process.



Private law applies to everyone within a lawmaking body's jurisdiction.

Origins of Law

An energy corporation is worried about its exposure to criminal liability after a rival company is indicted for violating environmental laws.

Select the strategy that would be least effective in reducing the company's criminal liability.



It could develop an anonymous internal reporting system for employees who suspect illegal or unauthorized behavior.



It could hold annual training seminars on the current state of environmental law, using the investigation as an example.



Its leadership could establish a culture of respect for legal compliance through example.



It could cooperate with authorities in their investigation of the rival company.

Minimizing Corporate Criminal Liability

Select the true statement about administrative law.



The authority for administrative law at the federal level comes from Congress.



Administrative agencies create enabling legislation, which makes up the body of administrative law.



Administrative law can be vetoed by the President, which represents a "check" on the legislative branch.



It is produced by private individuals working at the request of the government to manage a social or business activity.

Legislation and Other Sources of Law

In which scenario do the different court systems in the U.S. interact properly?



The Courts and the Legal Process

Which of the following is an example of a general partnership?



Ken and Paul start a graphic design business together. When Ken fails to deliver on a contract with a customer, Ken and Paul are held equally responsible when the customer sues for damages.



Sole Proprietorships and Partnerships

Which level of state court would most likely decide a case related to running a red traffic light?



Limited jurisdiction court



Supreme court



Intermediate appellate court



General jurisdiction court

State Courts in the U.S.

A 33-year-old business owner is put on trial for negligence.

When in his trial process does voir dire occur?



After the closing arguments



At the beginning, as part of jury selection



In the appeals stage



After a witness has given testimony, as part of the cross-examination

Which of the following is an example of a limited partnership?



Anthony decides to turn his woodworking hobby into a business and is so successful that he soon employs ten people to help him manage the daily demands of his business. Anthony remains exclusively responsible for all of the company's decisions and for all of its debts.



Bethany and four of her friends open an interior design business when they graduate from college. Only Bethany meets directly with clients and opens new contracts, but all of the friends are fully liable for the contracts that Bethany signs.



Maria agrees to invest some of her college savings in her sister's natural skin care company, but she doesn't want to risk losing more than she invested. Maria and her sister sign a partnership agreement that protects Maria from further accountability.



Liam's father invites Liam to help him run the family HVAC business. They sign an agreement in which they agree to share all of the business' profits and losses.

Sole Proprietorships and Partnerships

Arbitration is a __________ form of alternative dispute resolution.



voluntary, binding



voluntary, non-binding



sometimes involuntary, non-binding



sometimes involuntary, binding

Alternative Dispute Resolution

Select the true statement about primary sources of law in the U.S.



Speed limits are an example of substantive law.



Banning cigarette sales to minors is an example of private law.



How a lawyer is required to file papers in a civil case is a concern of substantive law.



Racial discrimination in hiring is a concern of procedural law.

Origins of Law

A landlord sues a tenant for destruction of property. During the trial, the judge issues instructions to the jury to clarify what facts it must determine to issue a verdict.

When in the trial process does this occur?



Following jury selection



During cross-examination



Before the opening statements



After the closing arguments

The Trial

Which of the following correctly pairs the levels of the federal court system with the types of cases each decides?



U.S. Circuit Court - trials; U.S. District Court - trials



U.S. Circuit Court - appeals; U.S. District Court - trials



U.S. Supreme Court - trials; U.S. Circuit Court - appeals



U.S. Supreme Court - appeals; U.S. Circuit Court - trials

Federal Courts in the U.S.

Which level of state court would most likely decide a case related to running a red traffic light?



Supreme court



General jurisdiction court



Limited jurisdiction court



Intermediate appellate court

State Courts in the U.S.

Which of the following is true of corporations and their shareholders?



The number of shareholders is limited to the number of corporate officers.



A corporation can have as many shares as it wishes to sell.



State law determines how many shares a corporation can have.



A corporation cannot have a single shareholder.

Corporations

Select the case that is under the subject matter jurisdiction of a state court.



A dispute over a copyright



A case involving navigation in Puget Sound



A paternity suit



A suit between two states

Subject Matter Jurisdiction

An energy corporation is worried about its exposure to criminal liability after a rival company is indicted for violating environmental laws.

Select the strategy that would be least effective in reducing the company's criminal liability.



It could develop an anonymous internal reporting system for employees who suspect illegal or unauthorized behavior.



It could hold annual training seminars on the current state of environmental law, using the investigation as an example.



It could cooperate with authorities in their investigation of the rival company.



Its leadership could establish a culture of respect for legal compliance through example.

Minimizing Corporate Criminal Liability

Select the example where the court has established personal jurisdiction over the defendant.



Personal Jurisdiction

Why is an LLC an attractive form of business organization for many new companies?



Because, although they are more complicated to manage than corporations, they provide greater protection from risk



Because neither LLCs nor their members must pay taxes on earnings



Because it is a relatively simple way of establishing and operating a business while limiting the risk taken by its members



Because lenders are particularly willing to lend money to LLCs, since they are a very stable type of business

Limited Liability Entities

As part of its strategic planning, a fast food corporation considers the societal effects of using poultry treated with high levels of antibiotics in its supply chain. The Board of Directors ultimately instructs the officers to continue using the corporation's current poultry suppliers since the levels of antibiotics they use, while high, comply with the law and are very cheap.

According to stakeholder theory, did the corporation fulfill its duty?



Yes, because the corporation is not violating any laws.



Yes, because the corporation has a social contract to fulfill and must consider the impact of its actions on public health.



No, because the company is prioritizing profits over other social responsibilities.



No, because the officers of the corporation are failing to fulfill their fiduciary duty to the Board and the corporate shareholders.

Corporate Governance

Which of the following is true of U.S. positive law?



It includes common law and state statutory law, but not federal statutory law.



It includes statutory law, but not common law.



It includes common law, but not statutory law.



It includes common law, as well as federal and state statutory law.

U.S. Positive Law

According to the Josephson's core values model for ethical decision-making, what should Company Z do next?



Evaluate the impact of each possible course of action on each of the various stakeholders.



Try to determine which core values are most important to the company.



Evaluate which course of action will provide the greatest benefit to the corporate shareholders, to whom the company has the greatest obligation.



Try to determine which course of action will best protect the company in the short-term.

An Ethical Decision Model

Tim's lawncare company has decided to start using solar powered equipment, even though that means he has to raise prices and some clients might terminate their contracts. Tim wants to replace his use of gasoline with a clean energy source to help reduce pollution levels in his town and because he is concerned about global warming.

How would a utilitarian evaluate Tim's decision?



Tim is acting unethically because he is making his services more expensive, and some people will no longer be able to afford them.



Tim is acting ethically because he is supporting the value of gentleness by expressing a concern for others.



Tim is acting ethically because he is putting the greater good of society above his personal profits.



Tim is acting unethically because if everyone were to make the switch to solar energy, a lot of fuel companies would go out of business.

Major Ethical Perspectives

Consider what you have learned about the factors that impact corporate culture. What is the ethical strength of the corporation in the example?



Weak, because the CEO is failing to provide top-down ethical leadership.



Weak, because the CEO is taking credit for the work of others.



Strong, because the CEO is willing to meet with people in the organization who have ethical concerns.



Strong, because the CEO is protecting the financial strength of the company.

Corporate Culture and Codes of Ethics

The theory of legal realism holds that __________.



law should always be applied exactly as written



law has nothing to do with the exercise of power



law should be interpreted based on social and economics considerations



a judge's personal perspective has no bearing on how law is applied

What Is Law?

Select the true statement about common law.



Common law is highly malleable, because precedents are often overturned.



Common law is binding regardless of jurisdiction.



In a common-law system, attorneys do not need to use legal reasoning to argue their case.



Rules of law are shaped by the courts through the practice of stare decisis.

Legislation and Other Sources of Law

State governments have jurisdiction over __________.



any areas of law not specifically reserved to the federal government



individual rights, but not public law



the exact same areas of law as the federal government



only the areas of law explicitly given to them by the U.S. Constitution

U.S. Constitution as a Source of Law

In which scenario do the different court systems in the U.S. interact properly?



When an employee tries to file a discrimination complaint against her employer in Maine after she loses in a Vermont state court, the Maine state court agrees to hear the case.



When an employee in Colorado sues her employer for sexual harassment, the state court judge applies federal law relating to workplace harassment because it extends protections to employees beyond those provided by state law.



A federal judge refuses to hear a negligence case that includes a state-based claim in addition to a federal one. She cites the fact that federal courts can never have jurisdiction over cases that involve state laws.



An Arizona resident drove through New Mexico to visit his college roommate and is hit by a delivery truck. When the New Mexico state court hears the case, the judge only takes Arizona law into consideration, since that's where the plaintiff resides.

The Courts and the Legal Process

Which of the following is a consideration when choosing a form of business organization?



The short-term goals of the business founders



The location of the business



The earnings generated by the business in prior years



The tax burden that a business owner is willing to accept

Business Organizations

Select the true statement about the relationship between law, ethics, and business.



The law ensures ethical conduct in most areas of business.



What is ethical in business is not necessarily required by law.



It is impossible for a business to behave unethically if it follows the law.



Abiding by the law is sufficient for businesses to earn a moral reputation.

What Is Ethics?

Knowledge of the __________ minimizes a business's liability exposure when making employment decisions.



Federal Trade Commission



Civil Rights Act



Sarbanes-Oxley Act



Securities and Exchange Commission

Law in Business

X Corporation discovers that a product it manufactures has exposed its employees to asbestos for decades. It must decide what to do with this information. If it suppresses its discovery, the business will remain successful and the company's owners will continue to profit, but current and former employees will continue to endure negative health effects.

According to Josephson's core values model for ethical decision-making, what should X Corporation do next?



Evaluate whether the decision to suppress the information would satisfy any core values and contrast it to other possible decisions.



Evaluate how likely the corporation is to successfully suppress this information and determine the consequences of being caught.



Decide which core values are at stake in the decision to suppress the information and rank them in order of importance.



Determine if the benefits to the owners from suppressing the information outweigh the consequences to employees, or if the reverse is true.

Select the case that would clearly be under the exclusive subject matter jurisdiction of the federal courts.



Breach of contract



A tort claim for injuries



Treason



A child custody challenge

Mediation is a __________ form of alternative dispute resolution.



sometimes involuntary, non-binding



sometimes involuntary, binding



voluntary, binding



voluntary, non-binding

Alongside the states, the federal government increasingly governs which area of law?



Domestic matters



Environmental law



Contract law



Property law

Which statement accurately characterizes the constitutional relationship between the states and the federal government?



The U.S. Constitution gives the federal government jurisdiction over any areas that state constitutions do not expressly reserve to themselves.



State laws cannot conflict with federal laws or with the U.S. Constitution.



State laws must always be respected by the U.S. Congress.



The U.S. Constitution protects individual rights, whereas state constitutions do not.

A corporation is concerned about their exposure to criminal liability after the most recent election cycle placed a number of new legislators in Congress who campaigned against corporate corruption.

Select the strategy that would be least effective in reducing the company's criminal liability.



It could prioritize ethical leadership when making hiring decisions for management-level positions.



It could encourage reporting by establishing internal protections for whistleblowers beyond what is provided by Congressional law.



It could donate to the election campaigns of the new members of Congress to establish goodwill.



It could strengthen its code of ethics to reflect the current political mood.

Since corporations are separate legal entities from their shareholders, which of the following is true?



Shareholders are usually not financially accountable for the actions of the corporation, but neither do they own the assets of the corporation.



A corporation can only exist for as long as its original owners are present.



Shareholders do not need to pay taxes on dividend earnings since corporations are taxed independently.



Under no circumstances can the protection of limited liability be removed from shareholders.

Which level of state court has the right to select which cases it wishes to hear?



General jurisdiction court



Intermediate appellate court



Supreme court



Limited jurisdiction court

Why do LLCs often have problems borrowing funds for business growth?



Because members of the LLC cannot legally authorize the business to create debt or to borrow money



Because the partners and directors of the LLC do not share responsibility for the debts of the LLC



Because the members of the LLC are not personally liable for the debts and loans received by the LLC



Because an LLC can only issue stock certificates to members of the company

Which of the following laws or agencies protects the public from various forms of investment fraud?



Civil Rights Act



Federal Trade Commission



Securities and Exchange Commission



Truth in Lending Act

Select the example where the court has established personal jurisdiction over the defendant.



Caroline is served a summons to appear in court in Florida. She is accused of not paying a man in full after purchasing a car from him. Caroline lives in North Carolina, which is also where she purchased the car. However, the seller lives in Florida.



Daniel and Lee both live in Illinois. Daniel is personally delivered a summons at his home, ordering him to appear in court in Illinois to defend himself against a lawsuit filed by Lee alleging fraud.



Jorge receives a summons in the mail, notifying him that a complaint has been filed against him in Kansas. He is being sued by Julia, a resident of Kansas, in relation to a small traffic accident between the two in Colorado. Jorge is a resident of Oklahoma and has never been to Kansas.



Taylor is a resident of Wyoming and works in the state as well. Her employer is suing her for destruction of property in Montana, which is her employer's state of residence. Taylor has no substantive connections to Montana, and she has not responded to the summons that she received.

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