BUSINESS LAW - When an employee in Colorado sues her employer for sexual harassment, the state court judge applies federal law relating to workplace harassment because it extends protections to employees beyond those provided by state law.

1

In which scenario do the different court systems in the U.S. interact properly?



When an employee in Colorado sues her employer for sexual harassment, the state court judge applies federal law relating to workplace harassment because it extends protections to employees beyond those provided by state law.



When an employee tries to file a discrimination complaint against her employer in Maine after she loses in a Vermont state court, the Maine state court agrees to hear the case.



An Arizona resident drove through New Mexico to visit his college roommate and is hit by a delivery truck. When the New Mexico state court hears the case, the judge only takes Arizona law into consideration, since that's where the plaintiff resides.



A federal judge refuses to hear a negligence case that includes a state-based claim in addition to a federal one. She cites the fact that federal courts can never have jurisdiction over cases that involve state laws.

CONCEPT

The Courts and the Legal Process

2

Since corporations are separate legal entities from their shareholders, which of the following is true?



Shareholders do not need to pay taxes on dividend earnings since corporations are taxed independently.



Under no circumstances can the protection of limited liability be removed from shareholders.



Shareholders are usually not financially accountable for the actions of the corporation, but neither do they own the assets of the corporation.



A corporation can only exist for as long as its original owners are present.

CONCEPT

Corporations

3

The CEO of Oil Company X is dismayed to learn that oil has been leaking from one of its offshore 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?



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.



Decide which stakeholders are most important and whose needs should be prioritized.



Weigh the financial cost of each possible course of action against the core values that it promotes.

CONCEPT

An Ethical Decision Model

4

A corporation is concerned about their exposure to criminal liability after the most recent election cycle placed a number of new legislators in Congress who campaigned against corporate corruption.

Select the strategy that would be least effective in reducing the company's criminal liability.



It could encourage reporting by establishing internal protections for whistleblowers beyond what is provided by Congressional law.



It could strengthen its code of ethics to reflect the current political mood.



It could prioritize ethical leadership when making hiring decisions for management-level positions.



It could donate to the election campaigns of the new members of Congress to establish goodwill.

CONCEPT

Minimizing Corporate Criminal Liability

5

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 sees the investors' interests as unequal to the interests of the CEO and the corporation.



ABC Corporation is acting unethically because it is not striving for truthfulness or highmindedness.



ABC Corporation is acting unethically because it has certain rights as a corporation, and therefore has a corresponding duty to consider the public good.



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.

CONCEPT

Major Ethical Perspectives

6

State governments have jurisdiction over __________.



only the areas of law explicitly given to them by the U.S. Constitution



individual rights, but not public law



any areas of law not specifically reserved to the federal government



the exact same areas of law as the federal government

CONCEPT

U.S. Constitution as a Source of Law

7

The theory of legal realism holds that __________.



law has nothing to do with the exercise of power



law should be interpreted based on social and economics considerations



a judge's personal perspective has no bearing on how law is applied



law should always be applied exactly as written

CONCEPT

What Is Law?

8

Select the true statement about administrative law.



It is produced by private individuals working at the request of the government to manage a social or business activity.



Administrative agencies create enabling legislation, which makes up the body of administrative law.



Administrative law can be vetoed by the President, which represents a "check" on the legislative branch.



The authority for administrative law at the federal level comes from Congress.

CONCEPT

Legislation and Other Sources of Law

9

Which of the following is an example of a limited partnership?



Maria agrees to invest some of her college savings in her sister's natural skin care company, but she doesn't want to risk losing more than she invested. Maria and her sister sign a partnership agreement that protects Maria from further accountability.



Liam's father invites Liam to help him run the family HVAC business. They sign an agreement in which they agree to share all of the business' profits and losses.



Bethany and four of her friends open an interior design business when they graduate from college. Only Bethany meets directly with clients and opens new contracts, but all of the friends are fully liable for the contracts that Bethany signs.



Anthony decides to turn his woodworking hobby into a business and is so successful that he soon employs ten people to help him manage the daily demands of his business. Anthony remains exclusively responsible for all of the company's decisions and for all of its debts.

CONCEPT

Sole Proprietorships and Partnerships

10

Which of the following is true of LLCs and their members?



Each member of an LLC can choose how he or she wishes to be taxed.



The members of an LLC can only be persons, and not other business entities.



An LLC should have at least two members to be effective.



There is no requirement regarding how many members an LLC must have.

CONCEPT

Limited Liability Entities

11

Which of the following is true of U.S. positive law?



It includes common law and state statutory law, but not federal statutory law.



It includes common law, as well as federal and state statutory law.



It includes statutory law, but not common law.



It includes common law, but not statutory law.

CONCEPT

U.S. Positive Law

12

Select the example where the court has established personal jurisdiction over the defendant.



Caroline is served a summons to appear in court in Florida. She is accused of not paying a man in full after purchasing a car from him. Caroline lives in North Carolina, which is also where she purchased the car. However, the seller lives in Florida.



Jorge receives a summons in the mail, notifying him that a complaint has been filed against him in Kansas. He is being sued by Julia, a resident of Kansas, in relation to a small traffic accident between the two in Colorado. Jorge is a resident of Oklahoma and has never been to Kansas.



Daniel and Lee both live in Illinois. Daniel is personally delivered a summons at his home, ordering him to appear in court in Illinois to defend himself against a lawsuit filed by Lee alleging fraud.



Taylor is a resident of Wyoming and works in the state as well. Her employer is suing her for destruction of property in Montana, which is her employer's state of residence. Taylor has no substantive connections to Montana, and she has not responded to the summons that she received.

CONCEPT

Personal Jurisdiction

13

The new CEO of a large coffee corporation makes fighting sexual harassment a cornerstone of the company's culture after a series of embarrassing incidents involving several of the company's managers are leaked to the media. The corporation drafts a new code of ethics with an expanded set of policies related to sexual harassment, creates a series of

mandatory workshops for its workforce, and fires the managers involved in the incidents. Consider what you have learned about the factors that impact corporate culture. What is the ethical strength of the corporation in the example?



Strong, because the CEO is setting expectations for ethical behavior and holding violators accountable.



Weak, because this focus on matters of social justice has no place in capitalism.



Weak, because the CEO should have cracked down on the employees who were leaking information to the media as well.



Strong, because the corporation must show that it has an ongoing process to discourage wrongdoing in order to avoid legal action.

CONCEPT

Corporate Culture and Codes of Ethics

14

Which level of state court would most likely decide a case related to running a red traffic light?



General jurisdiction court



Intermediate appellate court



Limited jurisdiction court



Supreme court

CONCEPT

State Courts in the U.S.

15

Arbitration is a __________ form of alternative dispute resolution.



voluntary, binding



sometimes involuntary, non-binding



sometimes involuntary, binding



voluntary, non-binding

CONCEPT

Alternative Dispute Resolution

16

A 33-year-old business owner is put on trial for negligence. When in his trial process does voir dire occur?



At the beginning, as part of jury selection



In the appeals stage



After a witness has given testimony, as part of the cross-examination



After the closing arguments

CONCEPT

The Trial

17

Select the case that is under the subject matter jurisdiction of a state court.



A case involving navigation in Puget Sound



A dispute over a copyright



A paternity suit



A suit between two states

CONCEPT

Subject Matter Jurisdiction

18

Select the true statement about primary sources of law in the U.S.



Banning cigarette sales to minors is an example of private law.



Racial discrimination in hiring is a concern of procedural law.



Speed limits are an example of substantive law.



How a lawyer is required to file papers in a civil case is a concern of substantive law.

CONCEPT

Origins of Law

20

Which of the following accurately characterizes the function of the U.S. Circuit Courts?



The Circuit Courts are responsible for overseeing all of the federal court system.



The Circuit Courts are responsible for trying both criminal and civil cases.



The Circuit Courts are responsible for hearing appeals sent to them by the District Court system.



The Circuit Courts are responsible for reviewing cases decided by the Supreme Court.

CONCEPT

21

Which of the following is a consideration when choosing a form of business organization?



The time of year that the business was established



The degree of competition faced by the business



The ease with which the founder of a business can transfer ownership to someone else



The type of product manufactured by the business