Business Law Midterm Guide

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The stability and predictability of the law is essential to business activities.

TRUE

Law is a body of enforceable rules governing relationships among individuals and between individuals and their society.

TRUE

A breach of a contract is a failure to perform it.

TRUE

Constitutional law includes only the U.S. Constitution

FALSE

A state constitution is supreme within the state's borders.

TRUE

Whether a law is constitutional depends on its source.

FALSE

Uniform laws apply in all states, including those in which the laws have not been adopted.

FALSE

A state law that conflicts with the U.S. Constitution will be deemed unconstitutional.

TRUE

Statutory law does not include county ordinances.

FALSE

No state has adopted the Uniform Commercial Code in its entirety.

FALSE

Common law is a term for law that is common throughout the world

FALSE

Damages is a remedy at law.

TRUE

Remedies in equity include injunctions and decrees of specific performance

TRUE

In most states, the courts no longer grant "equitable" remedies.

FALSE

A defendant is a person against whom a lawsuit is brought

TRUE

Courts do not depart from precedents

FALSE

A judge's function is to make the law

FALSE

Criminal law focuses on duties that exist between persons

FALSE

A reference to "28 U.S.C. Section 1332" means that a statute can be found in section 1332 of title 28 of the United States Code

TRUE

Most state trial court decisions are not published

TRUE

The legislature of the state of Mississippi enacts a new statute that sets stan-dards for the liability of businesses selling defective products. This statute applies

only in Mississippi

Lewis is a state court judge. Like other judges, Lewis often refers to secondary sources of law for guidance. These sources include

official comments to statute

Hawaii enacts a state law that violates the U.S. Constitution. This law can be enforced by

no one

The Federal Trade Commission is a government agency that issues rules, orders, and decisions. The Georgia state legislature enacts stat¬utes. The Jackson County Board and the Peach City Council enacts or¬dinances. Administrative law includes

the rules, orders, and decisions of the Federal Trade Commission

The Securities Exchange Commission is an administrative agency. The chief purpose of such agencies is to

perform specific government functions.

In a suit against Corbin, Donatella obtains damages. This is

a payment of money or property as compensation

In an action against Elin, Frank obtains a remedy. This is

the legal means to recover a right or to redress a wrong.

In a suit against Evan, Floyd obtains an injunction. This is

an order to do or to refrain from doing a particular act

In a suit against Vladimir over the performance of a contract, Wyler obtains rescission. This is

the cancellation of a contract

In a suit against Sandy, Tippy obtains damages. In the U.S. legal system, this remedy at law is

normal.

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

an equitable remedy

As a judge, Diane applies common law rules. These rules develop from

decisions of the courts in legal disputes

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

to request a proper remedy

In Ben v. City Car Dealership, a state supreme court held that a minor could cancel a con¬tract for the sale of a car. Now a trial court in the same state is decid¬ing Daphne v. Even Steven Auto Deals, Inc.,, a case with similar facts. Under the doctrine of stare de¬cisis, the trial court is likely to

allow the minor to cancel the contract

In Export Co. v. Imports, Inc., there is no precedent on which the court can base a decision. The court can consider, among other things,

public policy or social values

A federal statute regulates an employment practice. To resolve a dispute concerning the practice, Paula, a judge, will most likely apply

the statute

The Texas Supreme Court decides the case of Livewire Entertainment Co. v. Power Play Corp. Of nine justices, six believe the judgment should be in Livewire's fa¬vor. Justice Bellamy, one of the six, writes a separate opinion. The four justices who be¬lieve the judgment should be in Power's favor join in a third separate opinion
Refer to Fact Pattern 1-A1. These opinions are collected and published in volumes called

reporters

The Texas Supreme Court decides the case of Livewire Entertainment Co. v. Power Play Corp. Of nine justices, six believe the judgment should be in Livewire's fa¬vor. Justice Bellamy, one of the six, writes a separate opinion. The four justices who be¬lieve the judgment should be in Power's favor join in a third separate opinion
Refer to Fact Pattern 1-A1. Bellamy's opin¬ion is known as

a concurring opinion

The Texas Supreme Court decides the case of Livewire Entertainment Co. v. Power Play Corp. Of nine justices, six believe the judgment should be in Livewire's fa¬vor. Justice Bellamy, one of the six, writes a separate opinion. The four justices who be¬lieve the judgment should be in Power's favor join in a third separate opinion
Refer to Fact Pattern 1-A1. The opin¬ion joined by the four justices who favor Power is known as

a dissenting opinion

At a prison in Ohio, inmate Steve recruits other inmates to play Towers & Trolls, a potentially violent, fantasy, role-playing game. Ryan, the prison's warden, confiscates the game materials and bans its play at the prison. Under the principles discussed in "A Sample Court Case," Singer v. Raemisch, Ryan most likely acted

reasonably in the circumstances and under the law.

Congress can only pass legislation that falls within the limits set up by the U.S. Constitution

TRUE

The U.S. Constitution is the supreme law of the United States

TRUE

Each state has its own constitution

TRUE

Every state has adopted some or all of the Uniform Commercial Code

TRUE

State agency regulations take precedence over conflicting federal agency regulations

FALSE

Common law is a term for the laws that are familiar to most of us

FALSE

A decision on a given issue by a court is not binding on an inferior court

FALSE

Stare decisis is a doctrine obligating judges to help persons who have failed to protect their own rights

FALSE

A court may depart from a precedent if the precedent is no longer valid.

TRUE

There is one right answer to every legal question

FALSE

To reason by analogy is syllogistic reasoning because it employs a syllogism

FALSE

Linear reasoning proceeds from one point to another with the focal point being the conclusion

TRUE

Deductive reasoning involves a main premise, a minor premise, and a conclusion

TRUE

Common law is the best and only source of legal authority

FALSE

Courts often rely on the common law as a guide to interpreting legislation

TRUE

A jury's good sense and careful consideration of consequences is known as jurisprudence

FALSE

How judges apply the law to specific disputes may depend in part on their personal philosophical views

TRUE

A judge's view of the law is of little importance in a common law legal system.

FALSE

A substantive law creates or defines legal rights and obligations

TRUE

Rules and regulations adopted by federal administrative agencies are compiled in the Code of Federal Regulations

TRUE

The River City Council, the Santa Clara County Board, the Texas state legislature, and the U.S. Congress enact laws. These laws constitute

statutory law

The U.S. Congress enacts a new federal statute that imposes liability on businesses emitting significant amounts of a certain pollutant into the environment. This statute applies

to all of the states

Krystal is a federal judge. Krystal's judicial decisions are part of case law. This law includes interpretations of primary sources of law. These sources include

administrative regulations

If a provision in the Florida state constitution conflicts with a provision in the U.S. Constitution

the U.S. Constitution takes precedence

As a judge, Nina decides cases that involve principles of various sources of law. Common law is

case law

The federal government and the state governments constitute the U.S. legal system. This system is based on the legal system of

England

In a suit against Owen over the performance of their contract, Phil ob¬tains specific performance. This is

an order to perform what was promised

MaxiMart, Inc., is a discount retailer. MaxiMart's customer service em-ployees are on strike. Sixty of the workers block the entrances to one of MaxiMart's stores. To get them away from the doors, MaxiMart should seek

an injunction

Leona enters into a contract with Munchie Bakery to cater a sales con-ference. When the conference is postponed indefinitely, Leona asks a court to cancel the contract. This request involves

an equitable remedy

Eliza is a state court judge. Flora appears in a case in Eliza's court, claim¬ing that Glover breached a contract. As in most state courts, Eliza may

award damages or cancel the contract

Diana is a state court judge. In her court, as in most state courts, she may grant in a particular case

equitable and legal remedies

Jill is an appellate court judge. In this capacity, Jill establishes a rule of law. Under the doctrine of stare decisis, the principle must be adhered to by

that court and courts of lower rank

In Sales Distribution Corp. v. Consumer Products Co., the court decides that a precedent is incorrect or in¬ap¬plicable. The court

may rule contrary to the precedent

Brian's pick-up truck collides with Miranda's semi-trailer on a county highway. Weighing Brian's liability for the collision, Rachel, a judge, reasons by analogy. To reason by analogy is to

compare the facts in previous cases and apply the same rule of law.

Quinn is a state court judge. In the case of Royal Banners, Inc. v. Superior Flags Co., Quinn establishes a logical relationship by compar-ing the facts in the case to the facts in other cases and, to the ex¬tent the facts are similar, applies the same rule. This is

reasoning by analogy

Julius is a judge. How the Julius and the judges in other courts interpret a particular statute determines

how that statute will be applied

To Serena, the written law of a particular society at a particular time is most signifi¬cant. Serena is

a legal positivist

Standard Business Company appeals a decision against it, in favor of Fast Delivery Corporation, from a lower court to a higher court. Standard is

the appellant

The title of a case appears as "Duck Down Corp. v. Egret Feathers Co." The party in whose favor the case was decided

could be either party

The South Carolina Supreme Court decides the case of Toy Co. v. Umbrella Corp. The court issues an opinion that does not indicate which justice authored it. This opinion is

a per curiam opinion.

Federal courts are superior to state courts

FALSE

The courts can decide whether the other branches of government have acted within the scope of their constitutional authority.

TRUE

Minimum contacts with a jurisdiction can be sufficient to support jurisdiction over a nonresident defendant

TRUE

Federal courts have jurisdiction over any case involving citizens of different states regardless of the amount in controversy

FALSE

Concurrent jurisdiction exists when neither federal nor state courts have the power to hear a particular case

TRUE

A court cannot exercise jurisdiction over an out-of-state defendant who has only done business in the state over the Internet

FALSE

Venue is the term for the subject matter of a case.

FALSE

A justiciable controversy is a case in which the court's decision—the "jus¬tice" that will be served—will be controversial

FALSE

Generally, lawyers are required to represent people in small claims courts

FALSE

Federal cases typically originate in appellate courts

FALSE

The United States Supreme Court has original jurisdiction in rare instances

TRUE

There is one set of procedural rules for federal courts and various sets for state courts

TRUE

A default judgment is entered against a party who fails to respond to the allegations in a complaint

TRUE

At every stage of a trial, either party can file a motion to dismiss the case

TRUE

A summary judgment is granted only if there is no genuine question of law

FALSE

If a discovery request involves confidential business information, the scope of the request can be limited

TRUE

Hearsay evidence is testimony about a statement made by someone who was not under oath at the time

TRUE

A motion for a directed verdict is also known as a motion for judgment as a matter of law

TRUE

A trial commences with the plaintiff's attorney's direct examination of the first witness

FALSE

An appellate court can affirm or reverse the decision of a trial court in part

TRUE

The Ohio state legislature passes a law to regulate local delivery serv¬ices. The final authority regarding the constitutionality of this law is

the judicial system

Ginger wants to file a suit against Fred. For a court to hear the case

the court must have jurisdiction

The case of Max v. National Credit Co. is heard in a trial court. The case of O! Boy! Ice Cream Co. v. Pickled Peppers, Inc., is heard in an appellate court. The difference between a trial and an appellate court is whether

a trial is being held

Tyler, a citizen of Utah, files a suit in a Utah state court against Veritas Sales Corporation, a Washington state company that does business in Utah. The court has original jurisdiction, which means that

the case is being heard for the first time

Rolf, a citizen of New Mexico, wants to file a suit against Sandy, a citizen of Texas, relating to a motorcycle accident in which Rolf's injuries resulted in medical costs of more than $75,000. Their diversity of citizenship may be a basis for

a federal court to exercise original jurisdiction

Liu files a suit against Macro Sales, Inc., in a New Jersey state court based on a Web site through which New Jersey residents can do busi¬ness with Macro. The court will most likely exercise jurisdiction over Macro if the interactivity of the site is seen as

a "substantial enough" connection with the state

3D HD TV Company, a firm in Minnesota, advertises on the Web. A court in North Dakota would be most likely to exercise jurisdiction over 3D HD if the firm

conducted substantial business with North Dakota residents through its Web site

Gaudy Ornaments, Inc., sells decorative ware. Hank, who has never bought a Gaudy product, files a suit against the firm, alleging that its products are defective. The firm's best ground for dis¬missal of the suit is that Hank does not have

standing

Mariah wins her suit against Natural Products Company. Natural's best ground for appeal is the trial court's interpretation of

the law that applied to the issues in the case

Drummond wants to make a federal case out of his dispute with Elena. Federal cases originate in

federal district courts

Boyd files a suit in a federal district court against Cathy. Cathy loses the suit, appeals to the U.S. Court of Appeals for the Second Circuit, and loses again. Cathy asks the United States Supreme Court to hear the case. The Court is

not required to hear the case

Ulrica wants to initiate a suit against Valley Farms by filing a complaint. The complaint should include

the facts establishing Ulrica's basis for relief

Beyond-the-Sea Imports, Inc., disputes the use of "beyond-the-sea.com" as a domain name by Beyond-the-Sea Overseas Exports, Ltd., and files a suit to re¬solve the dispute. Service of process must be

according to the rules of the court in which the suit is brought

Loren files a suit against Mabel, alleging a failure to pay for the harvest of Mabel's orchards. Mabel denies Loren's charge and claims that Loren breached their contract to harvest a certain number of acres and owes Mabel money for the breach. Mabel's claim is

a counterclaim

To prepare for a trial between Condo Development Corporation and Demo Construction Company, Condo's attorney places Demo's president under oath. An authorized court official makes a record of the attorney's questions and the officer's answers. This is

a deposition

In Dawg Stop's suit against Condiment Vendor, Inc., Dawg serves a written request for Condiment to admit the truth of matters relating to the trial. Condiment's admission in response is the equivalent of

an admission in court

During a trial in Gene's suit against Homer over the use of Gene's lakeside cabin, Gene's attorney asks questions of the plaintiff's witness Illya. This is

a direct examination

During a trial, the attorney for Gloria the plaintiff questions her witness Heidi. Heidi, who is not an expert in the matter about which she is being asked, can

testify about only what she personally observed

After a trial between OptiGames, Inc., and Play Video Corporation, the jury renders a verdict in OptiGames's favor. Play Video's attorney can file a motion

for a new trial

In Recycle Cafe's suit against Sanitary Services, Inc., the court issues a judgment in Recycle's favor. The judgment can be appealed to an appropriate court of appeals by

Recycle or Sanitary

The function of the courts is to interpret and apply the law

TRUE

State courts are inferior to federal courts

FALSE

The political branch of government is the final authority concerning the constitutionality of a law

FALSE

Under a long arm statute, a court cannot exercise jurisdiction over a defendant who has minimum out-of-state contacts

FALSE

state court can exercise jurisdiction over property located within the state's boundaries regardless of the property owners' location

TRUE

For purposes of diversity of citizenship, a corporation is a citizen only of the state in which its principal place of business is located

FALSE

A business firm may have to comply with the laws of any jurisdiction in which it actively targets customers for its products

TRUE

To have standing to sue, a party must have been injured or have been threatened with injury by the action about which he or she is complaining

TRUE

Small claims courts are inferior trial courts

TRUE

Courts of appeals conduct new trials in which evidence is submitted to the court but witnesses are not examined

FALSE

U.S. district courts have original jurisdiction in matters involving federal questions

TRUE

The United States Supreme Court can review any case decided by any of the federal courts of appeals

TRUE

Before a lawsuit begins, the court must have proof that the defendant was notified

TRUE

Discovery is the process of obtaining information from an apposing party before trial

TRUE

deposition is sworn testimony by a party to a lawsuit or any witness

TRUE

Information stored electronically cannot be the object of a discovery request

FALSE

A closing argument is a statement by a party that results in a summary judgment in that party's favor

FALSE

A court of appeals hears all of the same evidence that the trial court heard

FALSE

A petitioner is the party against whom an appeal is taken

FALSE

The expenses associated with an appeal are minor

FALSE

Harvey, a resident of Indiana, has an accident with Janette, a resident of Kentucky, while driving through that state. Janette files a suit against Harvey in Kentucky. Regarding Harvey, Kentucky has

in personam jurisdiction

Inferior Company, which is based on South Carolina, makes and sells products that are poorly made. Jack, who is a resident of North Carolina, buys an Inferior product and suffers harm through its use. The diversity of citizenship between these parties means that

federal and state courts have concurrent jurisdiction

Lora is a resident of Illinois. Ned is a resident of Wisconsin. They dispute the ownership of a boat docked in a Michigan harbor. This diversity of citizenship could serve as a basis for

federal jurisdiction

Jo files a suit against Kara in a Missouri state court. Kara's only connection to Missouri is an ad on the Web originating in Nebraska. For Missouri to exercise jurisdiction, the issue is whether Kara, through her ad, has

conducted substantial business with Missouri residents

Child's Play, Inc., sells a toy with a dangerous defect. Drew buys the toy for his son but discovers the defect before the child is injured. Drew files a suit against Child's Play. The firm's best ground for dismissal of the suit is that Drew does not have

standing to sue

Lacey files a suit in Michigan against Ned over the ownership of a boat docked in a Michigan harbor. Lacey and Ned are residents of Ohio. Ned could ask for a change of venue on the ground that Ohio

is a more convenient location to hold the trial

Kit loses her suit against Lou in a Minnesota state trial court. Kit appeals to the state court of appeals and loses again. Kit would appeal next to

the Minnesota Supreme Court

The Idaho Supreme Court rules against Jiffy Mart in a case against Kwik Stop Stores, Inc. Jiffy Mart files an appeal with the United States Supreme Court. The Court does not hear the case. This

means that the Idaho court's decision is the law in Idaho.

Jason files a suit against Maybelline. If Maybelline fails to respond, Jason

will be awarded the remedy sought.

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