Test #1 -- Chapters 1-5

Study Guide - BUS 121 - Test date: 11 Sept – 15 Sept

Chapter 1

  1. Crimes are prosecuted by the government, not individuals.

True

Crimes are prosecuted not by individuals but by the state or federal government.

  1. Another name for case law is common law.

True

An alternative name for case law is common law.

  1. Case law interpretations are law unless they are revoked later by new statutory law.

True

Case law interpretations are law unless they are revoked later by new statutory law.

  1. Constitutions and statutes are complete in the sense of covering the detailed rules that affect government and business relations.

False

Constitutions and statutes are never complete in the sense of covering all the detailed rules that affect government and business relations.

  1. Presidents clam the power to issue executive orders on the basis of their Article II, Section 1, constitutional power to “take care that the laws be faithfully executed.”

True

Presidents claim the power to issue executive orders on the basis of their Article II, Section 1, constitutional power to “take care that the laws be faithfully executed.”

  1. Which of the following involves disputes between private individuals or groups and their government?

Public Law

Public law involves disputes between private individuals or groups and their government.

  1. Which of the following applies to situations in which someone commits an act against the public as a unit?

Criminal Law

Criminal law applies to situations in which someone commits an act against the public as a unit.

  1. Assume a businessperson who owns a computer equipment store is delinquent in paying rent to the landlord. The resulting dispute entails ______law.

Private Law

Private law involves disputes between private individuals or groups.

  1. A computer store dumps waste behind its building in violation of local, state, or federal environmental regulations, the results dispute focuses on ______law.

Public Law

Public law involves disputes between private individuals or groups and their government.

  1. Crimes committed under criminal laws are prosecuted by which of the following?

The state or federal government

Crimes are prosecuted not by individuals but by the state or federal government.

  1. Assume the Securities and Exchange Commission (SEC) prosecutes someone for insider trading. That prosecution is an example of ______law.

Criminal Law

One example of a criminal law is the prohibition against insider trading on the stock exchange.

  1. The ______is the supreme law of the land.

U.S. Constitution

The U.S. Constitution is the supreme law of the land, the foundation for all laws in the United States. Established in Article VI, Clause 2, known as the Supremacy Clause.

  1. The rules and regulations put forth by legislatures are referred to as ______law.

Statutory Law

The assortment of rules and regulations put forth by legislatures is what we call statutory law.

  1. Legislative acts passed by the U.S. Congress can be found in ______.

The U.S. Code

Legislative acts can be found in the United States Code when they are passed by Congress.

  1. Case law can be revoked by ______.

New statutes

Case law is law unless revoked later by new statutory law.

  1. The ______is a significant body of law to business activities including sales, banking and warranty.

Uniform Commercial Code (UCC)

The Uniform Commercial Code laws include sales laws and other regulations affecting commerce, such as bank deposits and collections, title documents and warranties.

  1. When courts rely on precedent, they are obeying ______.

Stare decisis

When courts rely on precedent, they are obeying stare decisis (“standing by their decision”).

  1. Assume an issue is decided by a state supreme court. On what cases is that decision binding?

The decision being appealed from and future cases in the state, but not past cases.

A state supreme court’s decision affects only the decision being appealed and any future cases brought in the state on that particular subject.

  1. Which of the following is true regarding administrative agencies?

Administrative agencies exist at the federal, state, and local level.

The federal government, as well as state and local governments, has dozens of administrative agencies, whose task is to perform a particular government function.

  1. Candy wants to start an Internet business. She is told by the Chinese government that certain items on her site are objectionable and illegal, and that if she wants to do business in China, she must remove the objectionable material. Which of the following is true?

If Candy wants to do business in China, she must abide by Chinese law.

Business managers need to be aware of various trade laws and restrictions in different countries so that they can act accordingly when they set out to do business in those countries.

Chapter 2

  1. A court must have several types of jurisdiction to decide any particular case.

True

A court must have several types of jurisdiction to decide any particular case.

  1. State courts have the power to hear all cases not within the exclusive jurisdiction of the federal court system.

True

State courts have the power to hear all cases not within the exclusive jurisdiction of the federal court system.

  1. The defendant responds to a complaint with an answer.

True

The defendant responds to the complaint with an answer.

  1. The term ADR refers to the resolution of legal disputes through methods other than litigation.

True

The term ADR refers to the resolution of legal disputes through methods other than litigation, such as mediation, arbitration, summary jury trials, minitrials, neutral case evaluations, and private trials.

  1. Early neutral case evaluation provides a binding ruling by a neutral.

False

With early neutral case evaluation, the parties select a neutral third party and explain their respective positions to this neutral, who then evaluates the strengths and weaknesses of the case. The parties use this evaluation to reach a settlement.

  1. A defendant in a lawsuit is to be provided by the plaintiff with a copy of the complaint. That process is called ______.

Service of process

Service of process is the procedure by which courts present these summons and complaint to defendants.

  1. Susan, a resident of Illinois, ran a traffic light while traveling in Michigan and did significant damage to Paul’s car. Paul obtains a judgment against her, but Susan has no insurance and no assets except for a farm in Alabama. Which of the following is true?

A court in Illinois can exercise quasi in rem jurisdiction over the farm and authorize its sale. Any excess over Paul’s amount of damages would go to Paul for his trouble.

Courts can gain quasi in rem jurisdiction, or attachment jurisdiction, over a defendant’s property unrelated to the plaintiff’s claim.

***This answer is given as correct by the McGraw-Hill website, but differs greatly from the example given in the book. ***

  1. Which of the following is needed for diversity-of-citizenship?

Both that the plaintiff and the defendant reside in different states and that the controversy concerns an amount in excess of $75,000.

A diversity-of-citizenship case must satisfy two conditions: (1) the plaintiff(s) does (do) not reside in the same state as the defendant(s), and (2) the controversy concerns an amount in excess of $75,000.

  1. How many circuits does the U.S. Courts of Appeal have?

12

The Unites States has 12 circuits, including a circuit for the District of Columbia.

  1. Which of the following are written questions that one party sends to another to answer under oath?

Interrogatories

Interrogatories are written questions that one party sends to another to answer under oath.

  1. At a[n] ______attorneys examine a witness under oath with a court reporter present.

Deposition

At a deposition, attorneys examine a witness under oath; and a court reporter (stenographer) records every word the witness and attorneys speak.

  1. Which of the following is a type of ADR?

Mediation

The term ADR refers to the resolution of legal disputes through methods other than litigation, such as negotiation, mediation, arbitration, summary jury trials, initials, neutral case evaluation, and private trials.

  1. The arbitrator typically provides a decision within ______days of an arbitration hearing.

30 days

The arbitrator typically provides a decision within 30 days of the arbitration hearing.

  1. Which of the following are reasons that an arbitration award may be set aside under the Federal Arbitration Act?

The arbitrator failed to make a final and definite award, the award was the basis of fraud, or the arbitrator displayed bias.

The Federal Arbitration Act (FAA), the federal law enacted to encourage the use of arbitration, explicitly lists four grounds on which an arbitrator's award may be set aside: (1) The award was the result of corruption, fraud, or other undue means; (2) the arbitrator displayed bias or corruption; (3) the arbitrator refused to postpone the hearing despite sufficient cause, refused to hear relevant evidence, or otherwise misbehaved to prejudice the rights of one of the parties; (4) the arbitrator exceeded his or her authority or failed to use that authority to make a mutual, final, and definite award.

  1. Which of the following is[are] positive about arbitration?

Arbitration is less expensive generally than litigation.

Arbitration may be preferable to litigation for several reasons. First, arbitration is more efficient and less expensive. Second, parties have more control over the process of dispute resolution through arbitration. They choose the arbitrator and determine how formal the process will be. Third, the parties can choose someone to serve as the arbitrator who has expertise in the specific subject matter. Fourth, the arbitrator has greater flexibility in decision making than a judge has. Unlike judges, who are bound by precedent, arbitrators generally do not have to offer reasons for their decisions.

  1. What type of dispute resolution process is med-arb?

A process in which the parties agree to start out in mediation and, if the mediation is unsuccessful on one or more points, to move to arbitration.

Med-arb is a dispute resolution process in which the parties agree to start out in mediation and, if the mediation is unsuccessful on one or more points, to move on to arbitration.

  1. In which of the following do parties select a neutral third party and explain their respective positions to the neutral, who then evaluates the strengths and weaknesses of the case?

Early neutral case evaluation

With early neutral case evaluation, the parties select a neutral third party and explain their respective positions to this neutral, who then evaluates the strengths and weaknesses of the case.

  1. Which of the following in an ADR method in which a referee is selected and paid by the disputing parties to offer a legally binding judgment in a dispute?

Private trials

Several states allow private trials, an ADR method in which a referee is selected and paid by the disputing parties to offer a legally binding judgment in a dispute.

  1. Which of the following is the supreme court of appeal in England?

The House of Lords

In England the House of Lords is the supreme court of appeal.

  1. Which of the following did the U.S. Supreme Court rule in Hertz Corp. v. Friend as the appropriate test for determining a corporation’s principal place of business for purposes of diversity jurisdiction?

The “nerve center” test

For purposes of federal-court diversity jurisdiction, a corporation’s “principal place of business” refers to the place, often called the “nerve center,” from which the corporation’s high level officers directed, controlled and coordinated corporation’s activities.

Chapter 3

  1. Administrative law consists of procedural, but not substantive, rules.

False

Administrative law consists of the substantive and procedural rules.

  1. There is no right to a jury in administrative agency disputes.

True

Matters are heard only by an ALJ (Administrative Law Judge), as there is no right to a jury trial in administrative process.

  1. There is no right of appeal from a decision of an administrative law judge.

False

An appeal to the full commission or the head of the agency may then be filed and that decision may be appealed to the circuit court of appeals.

  1. The Small Business Administration is an example of an executive agency.

True

The Small Business Administration is an executive agency, Exhibit 3-1.

  1. The primary type of rule making used by administrative agencies is informal rule making.

True

The primary type of rule making used by administrative agencies is informal rule making, or notice-and-comment rule making.

  1. Which of the following is generally defined as any body created by the legislative branch to carry out specific duties?

An administrative agency

An administrative agency is generally defined as any body created by the legislative branch (e.g., Congress, a state legislature, or a city council) to carry out specific duties.

  1. What types of powers do administrative agencies have?

Legislative, judicial, and executive

Agencies have three types of power: legislative, judicial, and executive.

  1. Federal administrative agencies are created by Congress through passage of ______legislation, which is a statute that specifies the name, functions, and specific powers of the administrative agency.

Enabling

Administrative agencies are created by Congress through passage of enabling legislation, which is a statue that specifies the name, functions, and specific powers of the administrative agency.

  1. What do the initials ALJ represent in the administrative law arena?

Administrative Law Judge

An administrative law judge is known as an ALJ.

  1. Which of the following is false regarding executive agencies at the federal level?

The administrative head of an executive agency is appointed by the president with the advice and consent of the U.S. House of Representatives.

The administrative head of an agency is appointed by the president with the advice and consent of the U.S. Senate. The Senate is constitutionally bound to offer “advice and consent” as stated in Article II, Section 2, Clause 2, called the “Advice and Consent Clause”.

  1. Which of the following is a term used to refer to agencies that do not clearly fall into either the classification of an executive agency or the classification of independent agency?

Hybrid

Some agencies do not fall clearly into one classification or the other. These agencies are typically referred to as hybrid agencies.

  1. Under which of the following does each concerned interest group and the agency send representatives to bargaining sessions lead by a mediator with any agreement forwarded to the agency?

Reg-neg

In regulated rule making, often referred to as reg-neg, each concerned interest group and the agency itself sends a representative to bargaining sessions lead by a mediator with any agreement forwarded to the agency.

  1. Which of the following is involved when an agency is referred to as a “captured” agency?

A belief that agency officials are unduly influenced by past ties to the industry regulated by the agency.

There is some concern that it will be difficult for regulators to ignore their past ties to industry and pass regulations that are in the public interest, especially when the regulations would increase costs to the industry or are opposed by the industry for other reasons. When people are discussing an agency in which they perceive this problem as existing, they often refer to the agency as being a "captured" agency.

  1. How many days, if any, does Congress have in which to review proposed agency rules?

60 days

In 1996 legislation was signed into law that gives Congress 60 days to review proposed agency rules.

  1. In order to be upheld in court, an agency’s fact finding must be supported by which of the following?

Substantial evidence

Courts typically defer to an agency’s fact finding, but the facts must be supported by substantial evidence.

  1. Which of the following are rules that explain how the agency views the meaning of the statutes for which the agency has administrative responsibility?

Interpretive

Interpretive rules are rules that explain how the agency views the meaning of the statutes for which the agency has administrative responsibility.

  1. Which of the following is an order issued by an agency to appear at a particular time and place and provide testimony?

A subpoena

A subpoena is an order to appear at a particular time and place and provide testimony.

  1. Parties in a dispute before an administrative law judge may reach a settlement via a[n]______.

Consent order

The ALJ will try to convince the parties to reach a settlement via a consent order.

  1. Agencies are classified as either ______or ______.

Executive; Independent

Agencies are classified as either executive or independent.

  1. Executive agencies are referred to as which of the following?

Cabinet-level agencies

Executive agencies are referred to as cabinet-level agencies.

Chapter 4

  1. Federal laws include laws passed by federal administrative agencies.

True

Federal laws include rules passed by federal administrative agencies.

  1. Congress can use its spending power to achieve social welfare goals.

True

As with its power to tax, Congress can use its spending power to achieve social welfare objectives.

  1. When can government agents obtain a search warrant?

When they establish probable cause.

Government officials can obtain search warrants only if they can show probably cause to believe that the search will uncover specific evidence of criminal activity.

  1. Which of the following are types of due process?

Procedural and substantive due process, but not independent due process.

The due process clause guarantees two types of due process: procedural and substantive.

  1. Which of the following is an example of the state’s exercise of its police power?

The enactment of criminal laws, building codes, zoning laws, sanitation standards for restaurants, and regulations for the practice of medicine.

Police power consists of the residual powers retained by each state to safeguard the health and welfare of its citizenry. Typical exercises of a state's police power include state criminal laws, building codes, zoning laws, sanitation standards for restaurants, and regulations for the practice of medicine.