The theory of legal realism is based on which of the following?
- Interpretation and enforcement
The theory of legal positivism is based on which of the following?
- The social construction of laws
The theory of natural law is based on which of the following?
- Discovered moral truths
Knowledge of the __ Act minimizes a business’ liability exposure
when making advertising decisions.
- Federal Trade Commission
Which of the following laws or agencies protects the public from
discriminatory hiring practices?
- Title VII
Which of the following laws or agencies protects the public from the
consequences of risky accounting practices?
- Sarbanes-Oxley Act
Law that has been established by the courts over time is known as
__.
- common law
In which area of law are state and federal jurisdiction most likely to overlap?
- Environmental regulations
Which of the following is true of criminal law?
-Possible remedies include jail time.
Select the true statement about substantive law in the U.S.
- It specifies the legal rights and duties of citizens.
Select the true statement about procedural law in the U.S.
- It is upheld to ensure fairness in applying the law.
Select the true statement about public law in the U.S.
1
- It applies to everyone within a jurisdiction.
Within the federalist system, federal law is __ state law.
- supreme over
The Bill of Rights in the U.S. Constitution __.
- protects certain business entities in addition to citizens
If the U.S. Constitution does not give the federal government explicit
jurisdiction over an area of law, the jurisdiction falls to __.
- the states
Common law is created __.
- by the judiciary
Administrative law is created __.
- as a result of delegation from the legislative branch
Statutory law is created by __.
the legislative branch
Unit 1, Challenge 2
Which of the following is a consideration when choosing a form of business
organization?
The degree of personal liability a business owner wishes to be exposed to
Which of the following is a consideration when choosing a form of business
organization?
How much control a business owner wants to retain
Which of the following is a consideration when choosing a form of business
organization?
The level of legal complexity the founder of a business is willing to take on
Which of the following describes a limited partnership?
A business with a partner who shares in the profits, but is not liable for
debts outside of his or her initial financial contribution
2
Which of the following describes a sole proprietorship?
A business with a single owner who is responsible for all debts, but
individually controls all profits
Which of the following describes a general partnership?
An agreement between two or more persons to operate a business and share
profits and losses
Which of the following is true of the limited liability of corporations?
It can be revoked in certain circumstances.
Why are corporations sometimes preferred over sole proprietorships and
partnerships?
They are less risky, because they better protect the personal assets of
shareholders.
Why is incorporation an attractive form of business organization for many
new companies?
Because it allows parties to invest in the company without taking on
significant risk
Which of the following individuals would benefit most from an LLC?
Colin wants to start a business with five of his friends, but they want their
business to be a separate entity that protects them from personal liability. They also
do not want to deal with burdensome obligations like annual meetings.
Which of the following individuals would benefit most from an LLC?
Geoff is starting a small business and wants to be sure that his risk
exposure is minimized, but – as a small business – it doesn’t make sense to have a
board of directors or officers
Which of the following individuals would benefit most from an LLC?
Hector is thinking of starting a business and wants a form of organization
that gives him flexibility and adaptability when it comes to taxes.
3
Unit 1, Challenge 3
Which case would the federal courts be permitted to hear under their
diversity of citizenship jurisdiction?
An Idaho resident sues the owner of a company located in Montana for
breach of contract, seeking damages in the amount of $450,000.
Which case would the federal courts be permitted to hear under their
diversity of citizenship jurisdiction?
A citizen of North Carolina initiates a tort claim against a citizen of
California from whom she recently bought a car. The car’s brake system failed,
resulting in an accident, and damages are being sought in the amount of $85,000.
Which case would the federal courts be permitted to hear under their
diversity of citizenship jurisdiction?
A citizen of Connecticut is suing a newspaper owned and operated in
Massachusetts for defamation. She is seeking damages in the amount of
$2,000,000.
Which level of state court would most likely decide a case related to smallscale shoplifting?
Limited jurisdiction court
Which level of state court would most likely decide a case related to murder?
General jurisdiction court
Which level of state court would most likely decide a case related to child
custody?
General jurisdiction court
A federal felony criminal trial would be presided over by which level of the
federal court system?
District Court judge
If a criminal defendant is dissatisfied with the outcome of a trial, where would
he or she file an appeal?
U.S. Circuit Court
Select the correct order of progress for a civil trial through the federal court
system.
4
U.S. District Court, U.S. Circuit Court, U.S. Supreme Court
Which of the following cases falls under the exclusive subject matter
jurisdiction of the federal courts?
A patent case
Which of the following cases falls under the exclusive subject matter
jurisdiction of the federal courts?
A bankruptcy proceeding
Which of the following cases falls under the subject matter jurisdiction of a
state court?
A robbery
Select the example where the court has established personal jurisdiction over
the defendant.
Shawn is suing a journalist for defamation in the state of Vermont, which is
Shawn’s state of residence. The journalist writes for a large newspaper in Vermont,
but she lives in the neighboring state of New York. The journalist received a copy
of the complaint and summons at her office at the newspaper.
Select the example where the court has established personal jurisdiction over
the defendant.
Maria is a resident of and business owner in the state of California, but she
is being sued in Oregon by her former employee. Maria was personally served a
summons three weeks ago. Although she has no substantive connections to
Oregon, she has since responded to the summons, appeared in the action, and filed
an answer to the complaint.
Select the example where the court has established personal jurisdiction over
the defendant.
Adrienne is being sued by a tenant in the apartment building she owns.
Both Adrienne and her tenant are residents of Florida. Adrienne is currently
vacationing in Italy, but her husband received a copy of the complaint and a
summons at their home in Florida.
A corporation is tried for discriminatory hiring practices. After the judgement
against it, the corporation appeals the decision.
What is the purpose of considering the appeal of the trial court’s decision?
5
To ensure a reasonably fair trial was provided by the trial judge
An insurance company is sued for breach of contract. At the end of the trial, the
trial judge issues a judgement n.o.v. (notwithstanding the verdict).
What does this mean?
The trial judge issues the final verdict, because the judge believes the jury
has failed to apply the law as instructed.
A 28-year-old woman is accused of credit card fraud and the case goes to trial.
The trial judge ultimately issues a directed verdict.
Why might this have occurred?
The judge believed the plaintiff did not provide enough evidence for a jury
to possibly decide in his or her favor.
Unlike the results of a mediation, an arbitration award __.
is generally final and cannot be appealed by either party
What is a disadvantage of mediation compared to arbitration?
It is possible that mediation will fail to result in resolution.
In mediation, unlike arbitration, the mediator __. assists the parties in finding a mutually acceptable resolution to a dispute
Unit 1, Challenge 4
Select the true statement about the relationship between law, ethics, and
business. Legal and ethical compliance in business provides value and builds support
for future profits.
Select the true statement about the relationship between law, ethics, and
business. A law-abiding business is considered to be acting ethically to some degree
but could do more outside of the legal requirements.
