Business Law Final Exam Sophia
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1
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
2
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
3
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
4
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
5
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.
6
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
7
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
8
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
9
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
10
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
11
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
12
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
