Chapter 1
Introduction to the Law
and Our Legal System
N.B.: TYPE indicates that a question is new, modified, or unchanged,
as follows.
N
A question new to this edition of the Test Bank.
+ A question modified from the previous edition of the Test
Bank,
= A question included in the previous edition of the Test Bank.
TRUE/FALSE QUESTIONS
1.
There is really no reason to be acquainted with business laws and
government regulations, except to pass this test.
ANSWER: F
NAT: AACSB Reflective
2.
2
TYPE:
AICPA Critical Thinking
=
Law consists of enforceable rules governing relationships among
individuals and between individuals and their society.
ANSWER: T
NAT: AACSB Analytic
3.
PAGE:
PAGE:
2
AICPA Legal
TYPE:
=
Businesspersons are expected to make decisions that are ethically
sound.
1
© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part.
2
UNIT ONE: THE LAW AND OUR LEGAL SYSTEM
ANSWER: T
NAT: AACSB Analytic
PAGE:
3
AICPA Legal
TYPE:
N
© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part.
FULL FILE AT HTTP://TESTBANKSSTORE.EU/TEST-BANK-FOR-BUSINESS-LAW-TEXT-ANDEXERCISES-6TH-EDITION-BY-MILLER
4.
Whether financial statements created by an accountant need to be
verified for accuracy is not a legal question.
ANSWER: F
NAT: AACSB Reflective
5.
N
PAGE:
4
TYPE:
AICPA Critical Thinking
N
PAGE:
5
AICPA Legal
TYPE:
=
PAGE:
5
AICPA Legal
TYPE:
=
A court may depart from a precedent if the precedent is no longer
valid.
ANSWER: T
NAT: AACSB Analytic
10.
4
TYPE:
AICPA Critical Thinking
Common law is a term for the laws that are familiar to most of us.
ANSWER: F
NAT: AACSB Analytic
9.
PAGE:
Common law is a term for law that is common throughout the world.
ANSWER: F
NAT: AACSB Analytic
8.
N
Choosing an appropriate business organizational form does not
involve legal questions.
ANSWER: F
NAT: AACSB Reflective
7.
4
TYPE:
AICPA Critical Thinking
Considering ways to raise capital so that a business can grow does
not involve legal questions.
ANSWER: F
NAT: AACSB Reflective
6.
PAGE:
PAGE:
5
TYPE:
AICPA Critical Thinking
+
Stare decisis is a doctrine obligating judges to help persons who
have failed to protect their own rights.
ANSWER: F
NAT: AACSB Analytic
PAGE:
5
AICPA Legal
TYPE:
N
© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part.
4
UNIT ONE: THE LAW AND OUR LEGAL SYSTEM
11.
Courts can rely on the common law as a guide to interpreting
legislation.
ANSWER: T
NAT: AACSB Analytic
PAGE:
5
AICPA Legal
TYPE:
=
© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part.
FULL FILE AT HTTP://TESTBANKSSTORE.EU/TEST-BANK-FOR-BUSINESS-LAW-TEXT-ANDEXERCISES-6TH-EDITION-BY-MILLER
12.
Damages is a remedy at law.
ANSWER: T
NAT: AACSB Analytic
13.
TYPE:
=
PAGE:
6
AICPA Legal
TYPE:
N
PAGE:
6
AICPA Legal
TYPE:
=
PAGE:
7
AICPA Legal
TYPE:
=
PAGE:
7
AICPA Legal
TYPE:
=
To determine whether a law is constitutional, a court will look at its
source.
ANSWER: F
NAT: AACSB Analytic
19.
6
AICPA Legal
The U.S. Constitution is the supreme law of the United States.
ANSWER: T
NAT: AACSB Analytic
18.
PAGE:
Constitutional law includes only the U.S. Constitution.
ANSWER: F
NAT: AACSB Analytic
17.
=
In most states, the courts no longer grant “legal” remedies.
ANSWER: F
NAT: AACSB Analytic
16.
TYPE:
Equity is a branch of unwritten law that seeks to supply remedies
equal measure to the parties in a legal dispute.
ANSWER: F
NAT: AACSB Analytic
15.
6
AICPA Legal
In most states, the courts no longer grant “equitable” remedies.
ANSWER: F
NAT: AACSB Analytic
14.
PAGE:
PAGE:
7
AICPA Legal
TYPE:
=
A state law that conflicts with the U.S. Constitution will be deemed
unconstitutional.
© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part.
6
UNIT ONE: THE LAW AND OUR LEGAL SYSTEM
ANSWER: T
NAT: AACSB Analytic
20.
TYPE:
=
PAGE:
7
AICPA Legal
TYPE:
=
PAGE:
7
TYPE:
AICPA Critical Thinking
=
PAGE:
7
AICPA Legal
TYPE:
=
PAGE:
7
AICPA Legal
TYPE:
=
The Federal Trade Commission developed the Uniform Commercial
Code.
ANSWER: F
NAT: AACSB Reflective
26.
7
AICPA Legal
Uniform laws apply in all states, including those in which the laws
have not been adopted.
ANSWER: F
NAT: AACSB Analytic
25.
PAGE:
How the courts interpret a particular statute determines how that
statute will be applied.
ANSWER: T
NAT: AACSB Analytic
24.
=
Statutory law includes only state statutes.
ANSWER: F
NAT: AACSB Analytic
23.
TYPE:
Congress can only pass legislation that falls within the limits set up
by the U.S. Constitution.
ANSWER: T
NAT: AACSB Analytic
22.
7
AICPA Legal
State constitutions are supreme within their respective borders.
ANSWER: T
NAT: AACSB Analytic
21.
PAGE:
PAGE:
8
AICPA Legal
TYPE:
=
Congress can charge an administrative agency with carrying out the
terms of particular laws.
© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part.
FULL FILE AT HTTP://TESTBANKSSTORE.EU/TEST-BANK-FOR-BUSINESS-LAW-TEXT-ANDEXERCISES-6TH-EDITION-BY-MILLER
ANSWER: T
NAT: AACSB Reflective
27.
PAGE:
8
AICPA Legal
TYPE:
N
No state has adopted the Uniform Commercial Code in its entirety.
ANSWER: F
NAT: AACSB Reflective
PAGE:
8
AICPA Legal
TYPE:
+
© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part.
8
UNIT ONE: THE LAW AND OUR LEGAL SYSTEM
28.
Every state has adopted some or all of the Uniform Commercial
Code.
ANSWER: T
NAT: AACSB Reflective
29.
=
PAGE:
8
TYPE:
AICPA Critical Thinking
=
PAGE:
8
AICPA Legal
TYPE:
=
PAGE:
8
TYPE:
AICPA Critical Thinking
=
PAGE:
8
TYPE:
AICPA Critical Thinking
=
Government authorities cannot enforce national law.
ANSWER: F
NAT: AACSB Analytic
35.
8
TYPE:
AICPA Critical Thinking
Legal systems around the world are generally divided into criminal
law and civil law systems.
ANSWER: F
NAT: AACSB Analytic
34.
PAGE:
Criminal law focuses on duties that exist between persons.
ANSWER: F
NAT: AACSB Analytic
33.
+
Common law and civil law systems are wholly distinct.
ANSWER: F
NAT: AACSB Analytic
32.
TYPE:
Administrative law includes only state regulations.
ANSWER: F
NAT: AACSB Analytic
31.
8
AICPA Legal
Administrative law includes only federal regulations.
ANSWER: F
NAT: AACSB Analytic
30.
PAGE:
PAGE:
9
AICPA Legal
TYPE:
=
International law is the law of a foreign nation and varies from
country to country.
© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part.
FULL FILE AT HTTP://TESTBANKSSTORE.EU/TEST-BANK-FOR-BUSINESS-LAW-TEXT-ANDEXERCISES-6TH-EDITION-BY-MILLER
ANSWER: F
NAT: AACSB Diversity
PAGE:
9
AICPA Legal
TYPE:
=
MULTIPLE CHOICE QUESTIONS
1.
Cato and Dolly are involved in a lawsuit. The best definition of a
lawsuit is
a.
b.
c.
d.
a criminal prosecution, not a civil proceeding.
a failure to perform a legal obligation.
a judicial proceeding for the resolution of a dispute.
an enactment of law by a legislative body.
ANSWER: C
NAT: AACSB Analytic
2.
3
AICPA Legal
TYPE:
+
Congress enacts a statute, the Federal Deposit Insurance
Corporation (an administrative agency) issues rules, the Southeast
Financial Institutions Association (a private organizations) issues
instructions, South Valley Bank posts a memo with orders for its
employees, and Tina tells her co-worker about a recent news story.
Sources of law include
a.
b.
c.
d.
the
the
the
the
instructions issued by private associations.
orders posted by employers.
rules issued by federal administrative agencies.
stories released by news agencies.
ANSWER: C
NAT: AACSB Reflective
3.
PAGE:
PAGE:
4
AICPA Legal
TYPE:
N
Under Ohio’s state constitution, the Ohio Environmental Protection
Agency issues a new rule, the Polk County Commission approves a
new property tax measure, and the professors and students at Ohio
Law School publish the results of their most recent legal research.
Sources of law do not include
a.
b.
the measures approved by local governing bodies.
the results of legal scholars’ research.
© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part.
10
UNIT ONE: THE LAW AND OUR LEGAL SYSTEM
c.
d.
the rules issued by state administrative agencies.
the states’ constitutions.
ANSWER: B
NAT: AACSB Reflective
PAGE:
4
AICPA Legal
TYPE:
N
© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part.
FULL FILE AT HTTP://TESTBANKSSTORE.EU/TEST-BANK-FOR-BUSINESS-LAW-TEXT-ANDEXERCISES-6TH-EDITION-BY-MILLER
4.
The “common law” is referred to as the common law because
a.
b.
c.
d.
it is the same in all states.
it was originally applied only to commoners.
it was more or less uniform throughout England.
the law was issued by courts of common pleas.
ANSWER: C
NAT: AACSB Analytic
5.
TYPE:
=
Ancient Greece.
continental European nations.
England.
predominantly Muslim countries.
ANSWER: C
NAT: AACSB Analytic
PAGE:
5
AICPA Legal
TYPE:
+
Karen is a judge hearing the case of Local Dispatch Co. v. National
Transport Corp. Applying the relevant rule of law to the facts of the
case requires Karen to find previously decided cases that, in relation
to the case under consideration, are
a.
b.
c.
d.
as different as possible.
as similar as possible.
at odds.
exactly identical.
ANSWER: B
NAT: AACSB Reflective
7.
5
AICPA Legal
The federal government and the state governments constitute the
U.S. legal system. This system is based on the legal system of
a.
b.
c.
d.
6.
PAGE:
PAGE:
5
TYPE:
AICPA Critical Thinking
=
As a judge, Bonnie applies common law rules. These rules develop
from
a.
b.
c.
administrative regulations.
court decisions.
federal and state statutes.
© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part.
12
UNIT ONE: THE LAW AND OUR LEGAL SYSTEM
d.
proposed uniform laws.
ANSWER: B
NAT: AACSB Analytic
PAGE:
5
AICPA Legal
TYPE:
=
© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part.
FULL FILE AT HTTP://TESTBANKSSTORE.EU/TEST-BANK-FOR-BUSINESS-LAW-TEXT-ANDEXERCISES-6TH-EDITION-BY-MILLER
8.
Miley and Otis are involved in a case. The best definition of a case is
a.
b.
c.
d.
a
a
a
a
criminal prosecution, not a civil proceeding.
failure to perform a legal obligation.
judicial proceeding for the resolution of a dispute.
type of regulation applied to a business.
ANSWER: C
NAT: AACSB Analytic
9.
TYPE:
+
may rule contrary to the precedent.
must apply the precedent.
must refuse to decide the Beneficial case.
must “stand on the decided case.”
ANSWER: A
NAT: AACSB Reflective
PAGE:
5
AICPA Legal
TYPE:
=
In Financial Investment Co. v. Goodhands Insurance, Inc., there is no
precedent on which the court can base a decision. The court can
consider
a.
b.
c.
d.
neither public policy nor social customs and values.
public policy only.
public policy or social customs and values.
social customs and values only.
ANSWER: C
NAT: AACSB Reflective
11.
5
AICPA Legal
In Beneficial Business Corp. v. City Distribution Co., the court decides
that a precedent is incorrect or inapplicable. With this in mind, the
court
a.
b.
c.
d.
10.
PAGE:
PAGE:
5
TYPE:
AICPA Critical Thinking
=
The United States has a common law system. The common law
began
a.
b.
in the Islamic courts of predominantly Muslim countries.
as part of Greek and Roman civil law.
© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part.
14
UNIT ONE: THE LAW AND OUR LEGAL SYSTEM
c.
d.
as a body of general rules applied in the courts throughout
England.
as a code of legal principles enacted by continental European
nations.
ANSWER: C
NAT: AACSB Analytic
PAGE:
5
AICPA Legal
TYPE:
=
© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part.
FULL FILE AT HTTP://TESTBANKSSTORE.EU/TEST-BANK-FOR-BUSINESS-LAW-TEXT-ANDEXERCISES-6TH-EDITION-BY-MILLER
12.
In Benny 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.
b.
c.
d.
allow the minor to cancel the contract.
disregard the Benny case.
order the minor to cancel the contract.
require the minor to fulfill the contract.
ANSWER: A
NAT: AACSB Reflective
13.
5
AICPA Legal
TYPE:
=
Beth and Celia are involved in an action. The best definition of an
action is
a.
b.
c.
d.
a
a
a
a
criminal prosecution, not a civil proceeding.
failure to perform a legal obligation.
judicial proceeding for the resolution of a dispute.
way to raise capital so that a business can grow.
ANSWER: C
NAT: AACSB Analytic
14.
PAGE:
PAGE:
5
AICPA Legal
TYPE:
+
Craig is a state court judge. In his court, as in most state courts,
legal and equitable remedies have merged. But it is important to
distinguish between equitable and legal remedies
a.
b.
c.
d.
because neither type of remedy can be granted today.
for no good reason.
to negotiate an enforceable business contract.
to request a proper remedy.
ANSWER: D
NAT: AACSB Analytic
PAGE:
5
AICPA Legal
TYPE:
N
© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part.
16
15.
UNIT ONE: THE LAW AND OUR LEGAL SYSTEM
As a judge, Nina decides cases that involve principles of
administrative law, case law, civil law, and statutory law. Common
law is
a.
b.
c.
d.
administrative law.
case law.
civil law.
statutory law.
ANSWER: B
NAT: AACSB Analytic
16.
TYPE:
=
a criminal prosecution, not a civil proceeding.
a failure to perform a legal obligation.
a judicial proceeding for the resolution of a dispute.
a situation giving a person a right to initiate a judicial
proceeding.
ANSWER: D
NAT: AACSB Analytic
PAGE:
6
AICPA Legal
TYPE:
+
Eliza is a state court judge. Flora appears in a case in Eliza’s court,
claiming that Glover breached a contract. As in most state courts,
Eliza may
a.
b.
c.
d.
award damages or cancel the contract.
award damages only.
cancel the contract only.
neither award damages nor cancel the contract.
ANSWER: A
NAT: AACSB Reflective
18.
6
AICPA Legal
Starlight Café has a cause of action, which is best defined as
a.
b.
c.
d.
17.
PAGE:
PAGE:
6
AICPA Legal
TYPE:
+
Diana is a state court judge. In her court, as in most state courts, she
may grant in a particular case
a.
b.
a legal remedy only.
an equitable remedy or a legal remedy but not both.
© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part.
FULL FILE AT HTTP://TESTBANKSSTORE.EU/TEST-BANK-FOR-BUSINESS-LAW-TEXT-ANDEXERCISES-6TH-EDITION-BY-MILLER
c.
d.
equitable and legal remedies.
neither an equitable nor a legal remedy.
ANSWER: C
NAT: AACSB Reflective
PAGE:
6
AICPA Legal
TYPE:
N
© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part.
18
19.
UNIT ONE: THE LAW AND OUR LEGAL SYSTEM
Maggie and Nate enter into a contract for the sale of car, but Nate
later refuses to deliver the goods. Maggie asks a court to order Nate
to perform as promised. Ordering a party to perform what was
promised is
a.
b.
c.
d.
an equitable remedy.
an unenforceable demand.
a remedy at law.
a type of harm.
ANSWER: A
NAT: AACSB Analytic
20.
6
AICPA Legal
TYPE:
N
Leona enters into a contract with Munchie Bakery to cater a sales
conference. When the conference is postponed indefinitely, Leona
asks a court to cancel the contract and return the parties to the
positions that they held before its formation. This request involves
a.
b.
c.
d.
an equitable remedy.
an unenforceable demand.
a remedy at law.
a type of harm.
ANSWER: A
NAT: AACSB Analytic
21.
PAGE:
PAGE:
6
AICPA Legal
TYPE:
N
Owen is a federal judge whose judicial decisions are part of case law,
which includes interpretations of
a.
b.
c.
d.
administrative regulations only.
constitutional provisions only.
statutes only.
administrative regulations, constitutional
statutes.
ANSWER: D
NAT: AACSB Reflective
PAGE:
6
AICPA Legal
provisions,
TYPE:
and
=
© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part.
FULL FILE AT HTTP://TESTBANKSSTORE.EU/TEST-BANK-FOR-BUSINESS-LAW-TEXT-ANDEXERCISES-6TH-EDITION-BY-MILLER
22.
Areas of the law not governed by statutory or administrative law are
a.
b.
c.
d.
governed by the common law.
open to each individual’s own interpretation.
regulated by the states under the U.S. Constitution.
subject to local ordinances.
ANSWER: A
NAT: AACSB Analytic
23.
TYPE:
=
neither provision applies.
the provisions are balanced to reach a compromise.
the state constitution takes precedence.
the U.S. Constitution takes precedence.
ANSWER: D
NAT: AACSB Reflective
PAGE:
7
AICPA Legal
TYPE:
=
The Pennsylvania legislature enacts a state law that violates the U.S.
Constitution. This law can be enforced by
a.
b.
c.
d.
no one.
the federal government only.
the state of Pennsylvania only.
the United States Supreme Court only.
ANSWER: A
NAT: AACSB Reflective
25.
6
AICPA Legal
If a provision in the California state constitution conflicts with a
provision in the U.S. Constitution
a.
b.
c.
d.
24.
PAGE:
PAGE:
7
AICPA Legal
TYPE:
=
Gold & Silver Exchange Company is a jewelry and gems dealer
subject to the laws of New York. In New York, the highest-ranking
(superior) law is
a.
b.
c.
d.
a
a
a
a
case decided by the New York Supreme Court.
provision in the New York constitution.
rule created by a New York state administrative agency.
statute enacted by the New York legislature.
© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part.
20
UNIT ONE: THE LAW AND OUR LEGAL SYSTEM
ANSWER: B
NAT: AACSB Reflective
26.
=
PAGE:
7
AICPA Legal
TYPE:
=
The Federal Trade Commission (FTC) is a government agency that
issues rules, orders, and decisions. The Georgia state legislature
enacts statutes. The Jackson County Board and the Peach City
Council enacts ordinances. Administrative law includes
a.
b.
c.
d.
all law that affects a business’s operation.
decisions, orders, and rules of the FTC.
ordinances enacted by county board and the city council.
statutes enacted by the state legislature.
ANSWER: B
NAT: AACSB Reflective
PAGE:
8
AICPA Legal
TYPE:
=
The Uniform Commercial Code has been adopted, at least in part, in
a.
b.
c.
d.
all states.
forty-five states.
thirty-five states.
no state.
ANSWER: A
NAT: AACSB Reflective
29.
TYPE:
administrative law.
case law.
stare decisis.
statutory law.
ANSWER: D
NAT: AACSB Reflective
28.
7
AICPA Legal
The River City Council, the Santa Clara County Board, the Texas state
legislature, and the U.S. Congress enact laws. These laws constitute
a.
b.
c.
d.
27.
PAGE:
PAGE:
8
AICPA Legal
TYPE:
+
The term civil law refers to
© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part.
FULL FILE AT HTTP://TESTBANKSSTORE.EU/TEST-BANK-FOR-BUSINESS-LAW-TEXT-ANDEXERCISES-6TH-EDITION-BY-MILLER
a.
b.
c.
d.
case law.
codified law.
federal law, as opposed to state law.
law that provides for societal order.
ANSWER: B
NAT: AACSB Analytic
PAGE:
8
AICPA Legal
TYPE:
=
© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part.
22
30.
UNIT ONE: THE LAW AND OUR LEGAL SYSTEM
The Securities Exchange Commission is an administrative agency.
The chief purpose of such agencies is to
a.
b.
c.
d.
act as liaisons between federal and state governments.
carry out the terms of particular laws.
impose uniform laws on the states.
standardize laws for the executive and judicial branches.
ANSWER: B
NAT: AACSB Reflective
31.
b.
c.
d.
TYPE:
N
the prosecution of private individuals by other private
individuals.
the prosecution of public officials by private individuals.
the relief available when a person’s rights are violated.
wrongs committed against the public as a whole.
ANSWER: D
NAT: AACSB Analytic
PAGE:
8
AICPA Legal
TYPE:
=
Civil law is concerned with disputes between persons and
a.
b.
c.
d.
other persons and between citizens and their governments.
other persons and between persons and the public as a whole.
other persons only.
the public as a whole only.
ANSWER: A
NAT: AACSB Analytic
33.
8
AICPA Legal
Rupert is a victim of Sara’s violation of a criminal law. Criminal law is
concerned with
a.
32.
PAGE:
PAGE:
8
AICPA Legal
TYPE:
=
In theory, in a civil law system, the courts
a.
b.
c.
d.
may not develop their own laws.
are obligated to follow the doctrine of stare decisis.
must create new rules of law.
must develop legal concepts by case law.
© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part.
FULL FILE AT HTTP://TESTBANKSSTORE.EU/TEST-BANK-FOR-BUSINESS-LAW-TEXT-ANDEXERCISES-6TH-EDITION-BY-MILLER
ANSWER: A
NAT: AACSB Reflective
34.
8
TYPE:
AICPA Critical Thinking
=
MadeRite Containers, Inc., based in the United States, does business
in China. International law governs
a.
b.
c.
d.
the acts of nations and individuals.
the acts of nations but not individuals.
the acts of individuals but not nations.
only international organizations.
ANSWER: A
NAT: AACSB Analytic
35.
PAGE:
PAGE:
9
AICPA Legal
TYPE:
=
National law is
a.
b.
c.
d.
law that pertains to a particular nation.
law that has an extraterritorial effect.
all law that is applied within a nation’s courts, including
international law and the law of another country.
federal law, as opposed to state law.
ANSWER: A
NAT: AACSB Analytic
PAGE:
9
AICPA Legal
TYPE:
=
ESSAY QUESTIONS
1.
Americans with a Better Cause (ABC), a nonprofit organization, files a
suit against the U.S. Department of Justice (DOJ), claiming that a certain federal statute the DOJ is empowered to enforce conflicts with
the U.S. Constitution and with a state constitution. In each situation,
which source of law has priority?
ANSWER:
The U.S. Constitution is the supreme law of the land. A
law in violation of the Constitution, no matter what its source, will be
declared unconstitutional and will not be enforced. Thus, the federal
statute does not have priority over the Constitution. The federal
statute would have priority over the state constitution, however,
because under the U.S. Constitution, when there is a conflict
© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part.
24
UNIT ONE: THE LAW AND OUR LEGAL SYSTEM
between a federal law and a state law, the state law is rendered
invalid.
PAGES:
4&7
NAT: AACSB Reflective
2.
TYPE:
=
AICPA Decision Modeling
In a dispute between Digital Hardware Corporation and Software
Engineering Associates, Inc., the court applies the doctrine of stare
decisis. What is this doctrine? What does this doctrine have to do
with the American legal system?
ANSWER: In a common law legal system, past judicial decisions are
binding in current disputes with similar facts. This feature of the
common law, which is the basis of the American legal system, is
unique because, unlike the law in other legal systems, it is judgemade law. Within the common law system, when possible, judges
attempt to be consistent and to base their decisions on the principles
suggested by earlier cases. The body of principles and doctrines
that form the common law emerged over time as judges applied the
principles announced in earlier cases to subsequent legal
controversies. The practice of deciding cases with reference to
former decisions, or precedents—the cornerstone of the American
legal system—is called the doctrine of stare decisis. Under this
doctrine, judges are obligated to follow the precedents established
within their jurisdictions. This helps courts to be more efficient, and
makes the law more stable and predictable.
PAGES:
5–6
NAT: AACSB Reflective
TYPE:
=
AICPA Decision Modeling
© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part.