LS 283 - Chapter 1 Test Bank PDF

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Chapter1-KnowledgeofLawasaBusinessAsset 1.Whichofthefollowingbestdefinesbusinesslaw? a.legalresponsibilityfortheoccurrenceofaneventcausingloss b.rulesgoverningcommercialrelationshipsandtheenforcementofrights c.rulesgoverningproceduresinvolvedwhenonepersonsuesanother d.rulesprovidingmembersofasocietywithestablishedrights ANSWER:b 2.Kamalisacomputertechnicianwhoisabouttoenterintoaone-yearcontracttoprovideITservicestoarealestate agency.FromKamal’sperspective,whatisthemostimportantfunctionofthiscontract? a.toestablishpenaltiesfornon-compliance b.todealfairlywithunexpectedevents c.toresolveconflicts d.toplanforthefutureandenforceexpectations ANSWER:d 3.WhichofthefollowingisNOTanobjectiveofbusinesslaw? a.protectionofbusinessideasandtangibleproperty b.ensuringlossesarebornebythosewhocausethem c.impositionoffinesonthosewhobreachcontracts d.facilitatingplanningbyensuringcompliancewithcommitments ANSWER:c 4.Asmallgroupofentrepreneursundertakingabusinessventurehaveagreedontheroleseachwillassumeinthe business,buttheymustnowdeterminetheformofbusinessstructurefortheenterprise.Whatdoesthelawfacilitate byofferingentrepreneursdifferentbusinessstructureoptions? a.choiceofdegreeofexposuretoliabilityforbusinessrisks b.rulesthatmakewrittenagreementsbetweenpartiesbinding c.opportunitiestomaximizetheprotectionsthatthelawextends d.legalcertaintyforactivitiesconductedinthecommercialarena ANSWER:a 5.I’mNottaSoSmartInc.overlookedtheproperregistrationofitspatentforauniquerelaycomponentusedinitsnew softwarebeforereleaseforpublicsale.Ayearlateritdiscoveredacompetitorhadusedthecomponentinitsjustreleasedpatentedsoftware.Whichofthefollowingbestdescribestheconsequencestothecompetitorforitsactions a.Unprotectedintellectualpropertycanbeusedwithimpunity. b.Theftofbusinesspropertyisacriminaloffence. c.Patentlawinfringementsarepunishableoffences. d.Lossesduetotheftofbusinesspropertyarerecoverable. ANSWER:a

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Chapter1-KnowledgeofLawasaBusinessAsset 6.GlobeInvestmentInc.hasdiscoveredthatoneofitsemployeeshasbeenoverchargingclientsforthecompany’s services.Theemployeehasbeenterminated.Whattypeoflawdeterminedtheemployee’spunishment? a.employmentlaw b.businesslaw c.criminallaw d.contractlaw ANSWER:a 7.NovelSwingsInc.hasacontracttobeginconstructionofaschool’sswingsetonJune15th,andworkistobe completedbyAugust1st.Afterweeksofwetweather,thegroundwasunsuitableforworktobegininJuneand Novelwillnotmeetthecompletiondeadline.Whichofthefollowingbestdescribesthelegalstatutesofthe contractualrelationshipbetweenNovelSwingsandtheschool? a.Thecontractisvoidduetowetweather. b.Thecontractrequiresrenegotiation. c.Thecontractisingoodstanding. d.Thecontracthasbeenbreached. ANSWER:d 8.HowdoesCanadianlawrequirebusinessestoprotecttheircustomer’sprivateinformation? a.Businessesareprohibitedbyfederallegislationfromcollectinginformationabouttheircustomers. b.Federallegislationprohibitsalldisclosureofanyinformationaboutcustomers. c.Businessesarerequiredbyprovinciallegislationtodestroyallinformationaboutcustomers. d.Federalandprovinciallegislationgovernthecollection,use,anddisclosureofpersonalinformation. ANSWER:d 9.Whatistheroleofbusinessethics? a.toprovideacomprehensiveplanfordealingwithlegalrisk b.toestablishprinciplesandvaluesfordeterminingrightandwronginthebusinessworld c.toresolvedisputesbetweenconflictingparties d.toimposelegalresponsibilityforaneventorlossthathasoccurred ANSWER:b 10.Whatisthepurposeofcontractlaw? a.toensurelitigationofpartiescommittingcontractualbreach b.toprescribeprinciplesandvaluesforuseinsociety c.todeterminerightandwronginthebusinessworld d.toenforceexpectationsandfacilitateplanning ANSWER:d

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Chapter1-KnowledgeofLawasaBusinessAsset 11.WhatlawregulatestheuseoftanningbedsinNovaScotia? a.theTanningBedsAct b.theConsumerProtectionAct c.theCriminalCodeofCanada d.theConstitutionoftheWorldHealthOrganization ANSWER:a 12.ChampionWellDrillingInc.isbeingsuedforrupturingagaslinewhiledrillingawellonacustomer’sproperty.How mightChampionbestavoidsimilarrisksinthefuture? a.bydevelopingandimplementingalegalriskmanagementplan b.bylimitingitselftozero-riskprojects c.byensuringithassufficientresourcessetasidetopayoutfuturejudgments d.byhiringamediatortoassistinresolvingfuturelegaldisputes ANSWER:a 13.OrganicVeggies’4’UInc.hasenteredintoaone-year,extendablesuppliercontractwithEcoWiseFertilizersLtd.for thedeliveryof1.5-tonpalletsofwormcastingsfertilizeratapriceof$2,000pertoninMarchandJune.Whattypeof roledocontractlawanditscontributionstotheestablishmentofthisbusinessrelationshiphave? a.afacilitatingrole,providingdefinition,context,andcertainty b.anethicalrole,facilitatingbetterenvironmentalpractices c.alitigationrole,definingclearareasofliabilityforbreach d.agoverningrole,providingacomprehensiveactionplan ANSWER:a 14.Howdoesalegalcontractcontributetoabusinessrelationship? a.Itcontributesuncertaintyofliabilityintherelationship. b.Itdefinesthemoralprinciplesandvaluesoftherelationship. c.Itprovidesprinciplesofparamounttogoverntherelationship. d.Itgivesstructure,predictability,andsecuritytotherelationship. ANSWER:d 15.InwhatwayisSPAMdifferentfrommarketing? a.SPAMissolicitedbytherecipient. b.SPAMiselectronicmessagingthatisunsolicitedbytherecipient. c.SPAMiscustomizedtotherecipientformaximumeffectiveness. d.SPAMisexpensivebecauseitisdirectedtoalargenumberofrecipients. ANSWER:b

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Chapter1-KnowledgeofLawasaBusinessAsset 16.Whatlegalconsequencemightabusinessfacewereittoadvertiseanuntruestatementoffactaboutitscompetitor? a.mandatoryarbitration b.alawsuitfordefamation c.alawsuitforpassingoff d.prosecutionundertheCriminalCode ANSWER:b 17.Whichofthefollowingbestdescribeshowlawprotectsmembersofsociety? a.settingruleswithpenaltiesandmakingthosewhobreakthelawaccountable b.establishingethicalrulesandminimizingrisksbeforetheymaterialize c.constrainingbusinessactivityandregulatingcommercialrelationships d.minimizingunknowncontingenciestoavoidirreconcilabledisputesbetweenbusinesses ANSWER:a 18.Jimhasretainedalawyertofilealawsuitclaimingeconomiclossduetotheftofbusinessrevenuesbyhispartner. WhatformofdisputeresolutionhasJimundertaken? a.arbitration b.mediation c.litigation d.reconciliation ANSWER:c 19.GrootIndustriesInc.requiresmorespaceinordertoexpanditsbusiness.Whichofthefollowingisalegaldecision thatGrootIndustriesInc.mustnowundertake? a.whoshouldbehiredtoconstructanewbuilding b.whetheritsnewpremiseswillberegulatedbyhealthandfireregulations c.whethertobuy,build,orleaseadditionalpremises d.whethertoobtaininsuranceforitsnewpremises ANSWER:c 20.Whatarethecommonlyusedalternativedisputeresolutionmethodsforavoidinglitigation? a.intervention,negotiation,andreconciliation b.intervention,arbitration,andmediation c.negotiation,mediation,andadjudication d.directnegotiation,mediation,andarbitration ANSWER:d

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Chapter1-KnowledgeofLawasaBusinessAsset 21.Whattypeoflawisthevehicleforensuringthatthoseaffectedbyafailedbusinessaretreatedfairly,reasonably,and inaccordancewithagreedrules? a.bankruptcylaw b.contractlaw c.criminallaw d.corporatelaw ANSWER:a 22.Oliviaissuingasupplierforbreachofcontract.Assumingsheissuccessful,whatremedymightsheexpecttoreceiv fromthecourt? a.restitution b.punitivedamagesbasedontheseriousnessofthecontractbreach c.aggravateddamages d.asumofmoneythatwillputherinthepositionthatshewouldhavebeenhadthecontractbeenfulfilled ANSWER:d 23.Whichofthefollowingbestdescribesthenatureofthemediationprocess? a.submissiontolitigationofthedisputebeforeajudgeincourt b.negotiatedresolutionwiththeassistanceofaneutralperson c.submissiontoanarbitrator’sbindingdecisiontoresolveadispute d.renegotiationofthecontractwiththeassistanceofajudge ANSWER:b 24.WhatisthemaingoaloftheCanadianlegalsystem? a.tofacilitatecommerceandmediationofdisputes b.tofacilitatearbitrationandfreetrade c.tofacilitatefreetradeandplanningforthefuture d.tofacilitateplanning,protection,disputeresolution,andjustice ANSWER:d 25.Whatarethestandardformsofbusinessstructureavailabletoentrepreneurstofacilitatecreationofafor-profit businessenterprise? a.soleowner,proprietor,andpartnership b.soleproprietor,partnership,andcorporation c.solepartnership,proprietor,andcorporation d.soleowner,proprietor,andcorporation ANSWER:b

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Chapter1-KnowledgeofLawasaBusinessAsset 26.WhichofthefollowingbestexemplifiesaprotectiveelementofCanadianlaw? a.Itseekstomakethosewhobreakthelawaccountable. b.Itsetsrulesinordertoencouragecomplexity. c.Itsetsrulesinordertoencouragecomplacence. d.Itprovidesrulesthatprohibitmakingcommitments. ANSWER:a 27.Whichofthefollowingisanexampleofhowbusinesslawguidesbusinessconduct? a.Thelawsetsrulesandpenaltiestoencouragecompliance. b.Thelawsetsspecificcodesofethicstoguideconduct. c.Thelawseekslevelsofcompensationexceedinglosses. d.Thelawlimitsexecutivecompensationtoguideconduct. ANSWER:a 28.Inwhatwayismediationdifferentfromarbitrationandlitigation? a.Mediationisfreeanddoesnotrequiretheassistanceofalawyer. b.Mediationistime-consumingandtendstobeineffective. c.Mediationresultsinaninformal,non-bindingdecision. d.Mediationinvolvestheuseofaneutralpartytoassistwithresolutionofthedispute. ANSWER:d 29.AlphaTextileLtd.hasdevelopedalineofclothingandisconsideringusingthebrandnameKalvinCleininorderto takeadvantageofthefamiliarityofitstargetmarketwithawell-knowndesignernamedCalvinKlein.Whatlegal consequencesmightAlphaTextileLtd.faceifitproceedswithitsplan? a.beingsuedfornegligencebyitscustomers b.criminalproceedingsforbreachoftrademarklegislation c.beingsuedfordamagesbyCalvinKlein d.TherearenolegalconsequencesbecauseitisnotactuallyusingthenameCalvinKlein. ANSWER:c 30.EvergreenSolutionsInc.intendstosellitsdatabaseofcustomercontactinformationtoatelemarketingfirm.What infractionmightEvergreenSolutionsInc.becommittingifitproceedswiththisplan? a.privacybreach b.CriminalCodeconflict c.conflictofinterest d.financiallyprofitable ANSWER:c

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Chapter1-KnowledgeofLawasaBusinessAsset 31.Canadianbusinesslawconsistsofasetofestablishedbilingualrulesgoverningcommercialrelationshipsthatexclude enforcementofrights. a.True b.False ANSWER:False 32.Canadaoffersanattractivecommercialenvironmentforentrepreneursbecauseithasanestablishedsetoflaws comprisedofrulesandprinciplesintendedtoguideconductinbusinessrelationshipsandprotectthepropertyof personsandbusiness. a.True b.False ANSWER:True 33.Atanningsalonthatpermitsunderagetanningmayfaceprosecutionunderprovinciallegislation. a.True b.False ANSWER:True 34.Contractlawreferstoacollectionofrulesusedtoestablishcontractsasbindingagreementsbetweencontracting partiesandtoensuretheirobligationscanbelegallyenforced. a.True b.False ANSWER:True 35.Litigationisanexpensiveandlengthyprocessthatinvolvesonebusinessentityattemptingtofindaresolutionfora conflictcausedbytheotherpartytothecontractbyactivelyengaginginnegotiationsaidedbyaneutralparty. a.True b.False ANSWER:False 36.Litigationisusuallythemostcost-effectivemethodforresolvinglegaldisputes. a.True b.False ANSWER:False 37.Thecreationofcomplexityinbusinessrelationshipsisoneofthemostimportantcontributionsthelawcanmaketoth commercialarena. a.True b.False ANSWER:False

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Chapter1-KnowledgeofLawasaBusinessAsset 38.OneofthegoalsofCanadianlawistoensurethatlossesarepaidforbythepartiesresponsibleforcreatingthem. a.True b.False ANSWER:True 39.Abusinessthatneglectstoprotectitsintellectualpropertymayhaveitsideastakenwithimpunitybyacompetitor. a.True b.False ANSWER:True 40.Ineverytypeofbusinessdisputeresolution,Canadianlawrequiresthatajudgemustdecidetheamountofthelossto preventhardfeelingsbetweenthepartiesandallowthebusinessrelationshiptobemaintained. a.True b.False ANSWER:False 41.Acontractprovidesthelegalbackdroptocommercialrelationshipsbydefiningtherightsandobligationsoftheparties butitisthebusinessrelationshipitselfthatwilldeterminewhether,inaconflict,thepartieswillinsistuponstrict enforcementoftheirlegalrights. a.True b.False ANSWER:True 42.Themediationprocessisonlyavailableinlimitedcircumstancesandisusuallymoretime-consumingandcostlythan litigation. a.True b.False ANSWER:False 43.Partiesthatagreetosubmitdisputestoaneutralpartywhowillultimatelymakeabindingdecisiontoresolvethe disputeareagreeingtoparticipateinthearbitrationprocess. a.True b.False ANSWER:True 44.Businessesthathavebeenunabletoresolvecomplexcontractualdisputesmayhavetoturntolitigationasthelast resortto,amongotherthings,establishtheliabilityofonebusinesstoanother. a.True b.False ANSWER:True

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Chapter1-KnowledgeofLawasaBusinessAsset 45.Abusinessthatfailstoexploredifferentmodesofcarryingoutbusinessmaysufferunnecessarylosses. a.True b.False ANSWER:True 46.Liabilitybetweenpartiesengagedinacontractualbusinessrelationshiprefersspecificallytothelegalresponsibilityof onepartytotheotherforanyeventorlossthatmayoccurduetobreachofthecontract. a.True b.False ANSWER:True 47.Itisaruleoflawthatapartywhosuffersabreachofcontractisentitledtobeputinthepositionitwouldhavebeen inhadthecontractbeenfulfilled. a.True b.False ANSWER:True 48.Inthelitigationprocess,thepartyinitiatingaclaimforbreachofcontractisobligatedtoproveitscase,andthejudge isobligatedtobeasobjectiveaspossibleindeterminingwhetherthecaseofbreachhasbeenproven. a.True b.False ANSWER:True 49.Asupplierwhocommitstoacontractisfreeofanylegalobligationsfordirectandforeseeablefinancialconsequence thattheotherpartytothecontractmayexperienceshouldthesupplierbreachthecontract. a.True b.False ANSWER:False 50.Alegalriskmanagementplaninvolvesabusinessstrategythatmayrequirelegalsupervisiontoreducetheprobability andseverityofloss. a.True b.False ANSWER:True 51.Brieflydescribethemainreasonsonepartytoacontractmightdecidetooverlookabreachofcontractbytheother party. ANSWER:Apartytoacontractmightdecidetooverlookabreachofthecontractifitisaminorbreachand maintainingthebusinessrelationshipisimportantanddesirable.Aminorbreachismorelikelytobe quicklyresolveddirectlybetweentheparties,whilelitigationisaslowandexpensiveprocessforresolving adispute. Copyright Cengage Learning. Powered by Cognero.

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Chapter1-KnowledgeofLawasaBusinessAsset 52.Describehowthelawprotectsmembersofsociety,andprovidetwoexamplesofhowabusinessorclientmightbe protectedbylaws. ANSWER:Thelawprotectsmembersofsocietyintwoways:(1)itsetsruleswithpenaltiesinordertoencourage compliance,and(2)itseekstomakethosewhobreakthelawaccountablefortheirmisconduct. Thelawalsoprotectsbusinessesbysettingpenaltiesandensuringaccountability.Forexample,ifone businessmisappropriatesanotherbusiness’slegallyprotectedcommercialidea,thelawcancensurethat conduct.Aswell,thelawensuresthat,forexample,ifalawfirmgivesnegligentadvicetoaclient,that clientcansuethefirmforassociatedlosses. 53.Brieflydescribethestepsthatpartiesmustgothroughtoachievetheconsensusreflectedinacontract.Whatrole doesalawyerplayinthisprocess? ANSWER:Usuallyonepartyhasidentifiedaneedandwillmakeaproposaltoanotherpartyforanexchangethat willsatisfythatneed.Iftheotherpartyseesbenefitinmakingtheexchange,thepartieswillnegotiateunt theyarriveatmutuallyacceptableterms.Typically,eachpartywillhavealawyerwhoseroleistoprovide legaladvicethroughoutthenegotiationprocessand,onceconsensusisreached,tothenaccurately documentthetermsoftheagreementinacontract. 54.Lawsuitscometocourtforeitheroftworeasons:thereisadisputeaboutthefactsthatactuallyoccurredorthereisa disputeaboutthewaythelawtreatstheparties.Describetheroleandobligationsofthejudge,includingwhatdetails mustbeconsideredandwhatmustbeproventothecourttoallowittoreachadecisionresolvingthedispute. ANSWER:Theroleofthejudgeistoreviewtheclaimandconsiderthecontractandotherevidence,aswellaslegal argumentspresentedbybothsidestodeterminewhattheagreementbetweenthepartiesactuallywasan whatlawsapply.Thejudgeisobligatedtothenimpartiallyapplythelawinanobjectivemannerto determinewhethertheinitiatingparty’sclaimhasbeenproven,and,ifso,whatlegalconsequenceswould providearemedytomakeupfortheloss. 55.Brieflydescribehowthelawofcontractfacilitatescommercialactivity. ANSWER:Thelawofcontractprovidesawayforpartiestoenterintobindingagreements,therebycreatinga measureofsecurityandcertaintyintheirbusinessoperations.Contractlawalsoallowsbusiness enterprisestoplanforthefutureandtoenforcetheirexpectations. 56.Brieflydescribethemainreasonsthatsomebusinessdisputesmustberesolvedincourt. ANSWER:Themainreasonsacourtmustdecidesomebusinessdisputesinvolveinstanceswherethepartiesare unwillingorunabletonegotiateasettlementthemselves,orwherethereisno...