LEGAL AND REGULATORY ENVIRONMENT OF BUSINESS
LEGAL STUDIES 2700
PROBLEMS
ELIZABETH J. MUSTARD
1. Two additional terms for state legislation are:
a.Dicta and precedent
b.Dicta and rules
c.Rules and Dicta
d.Acts and Statutes
e.None of the above
f. All of the above
Answer. The correct answer is d.
2. Pierson v. Post the court held
a. A wild animal belongs to the first to see it
b. A wild animal belongs to the first to pursue it
c. A wild animal belongs to the first to hunt it
d. A wild animal belongs to the first to wound it
e. None of the above
f. All of the above
Answer. The correct answer is e. The court held that pursuit is not enough for possession (ownership) of a wild animal.
3. Contract law is substantive law
a. True
b. False
Anwer
a. Contract law is substantive law because it will define and describe
the rights related to contracts between parties. It is also civil and
private law.
4. The length of time it takes to start or end a business is an indicator of economic freedom
a. True
b. False
Answer. The correct answer is a.
5. What is the foundation of the private market and prosperity ?
a. educational and technological resources
b. a legal system that is adequately enforced
c. a high GDP
d. a and b
e. none of the above
Answer. The correct answer is b.
6. The following are stakeholders in a corporation
a. creditors
b. owners
c. employees
d. All of the above
e. None of the above
Answer. The correct answer is d.
7. A Culture of Honesty permits a student to share exam answers with a
student taking the same course from the same professor during
a subsequent semester
a. True
b. False
Answer. The correct answer is b. Unless the instructor has authorized sharing answers, it is prohibited.
8. A law that explains how a party to a law suit files a response to a pleading with the court would be
a. Public law and Substantive law
b. Private law and Criminal law
c Common Law and Substantive law
d. Public law and procedural law
f. None of the above
Answer. The correct answer is d.
9. Common law is judge made law
a. always
b. never
c. sometimes
Answer. The correct answer is a. Common law is judicial decisions.
10. Statutory construction is how legislation is written by the legislature
a. true
b. false
Answer. The correct answer is false. Statutory construction is how legislation is interpretted by the legislature.
11. As Susie Q is walking down the middle of the street a car driven by
Bucky D comes along and strikes her . Susie Q is injured and wants
Bucky D to pay for her medical bills. She asks Lisa L, a lawyer, to
evaluate the law to determine if she has any legal rights against Bucky
D to get him to pay her medical bills.. Lisa L will look at
a. Procedural law
b. Criminal law
c. Public law
d. Substantive law
e. None of the above
Answer. The correct answer is d. The law that defines legal rights is substantive.
12. The federal legislature by statute can alter federal judicial decision
a. always
b. never
c. sometimes
Answer. The correct answer is c. The federal legislature can alter a
judicial decision unless it is a judicial decision ruling on the U.S.
Constitution. A judicial decision on the U.S. Constitution can only be
altered by an amendment to the U.S. Constitution. The federal
legislature may enact legislation that is contrary to the U.S.
Constitution. However, the judiciary can later find that law to be
unconstitutional under its power of judicial review. This possibility
does not impact the answer in problem 12.
13. Bob a citizen of Georgia and Jim a citizen of Alabama are in a car
accident. Bob files a lawsuit in federal court against Jim for
negligence in the amount of $40,000. In his complaint he also raises an
additional claim against Jim for breach of contract in the amount of
$50,000. Which of the following is most accurate?
a. Because Bob is filing the lawsuit in federal court, he must be doing so under federal law.
b. Because Bob and Jim have diversity of
citizenship, the federal court has subject matter jurisdiction of this
controversy.
c. The federal district court does not have
jurisdiction over this case because the amount in controversy is not
sufficient.
d. The federal district court has subject matter jurisdiction over this controversy.
e. None of the above.
Answer. The best answer is d. b is also a viable answer. However, it is
not just because their diversity of citizenship that they are going to
court.
14. The state of Georgia is in the 9th Federal Circuit.
a. True
b. False
Answer. The correct answer is b.
15. A district court in the 10th Circuit is confronted with a federal
question case with facts for which it does not have a legal precedent
from the 10th Circuit Court of Appeals. However, the 9th Circuit Court
of Appeals has decided a case on identical facts. According to stare
decisis, the district court in the 10th Circuit must follow the 9th
Circuit Court of Appeals holding.
a. True
b. False
Answer. The correct answer is b. The 10th circuit can decide its own
case. It can look at the 9th circuit opinion for persuasive purposes.
16. In Georgia, the Probate Court is a court of limited jurisdiction.
a. True
b. False
Answer. The correct answer is a. The Probate court has very limited
jurisdiction over matters of estates and wills and guardianships and a
few other matters.
17. In Georgia, all appeals from the Superior Court must be made directly to the Court of Appeals.
a. True
b. False
Answer. The correct answer is b. The Supreme Court of Georgia has exclusive appellate jurisdiction over certain cases.
18. Which of the following statements is most accurate.
a. The petit jury is such a small jury that it is rarely used.
b. The U.S. Constitution requires that
federal and state courts conduct grand jury hearings in all criminal
cases.
c. The petit jury decides the verdict in just criminal trials.
d. The grand jury decides the verdict in all civil trials.
e. None of the above.
Answer. The correct answer is e. The petit jury is commonly used in
civil and criminal trials. The U.S. Constitution requires the federal
system to conduct grand jury hearings. The petit jury decides the
verdict in both criminal and civil trials. The grand jury does not
decide civil matters.
19. In tort a defendant can be be liable when the jury finds causation in fact but not proximate cause.
a. True
b. False
Answer. The correct answer is b. This is simply an elements question.
You have to know that the elements of a tort include BOTH causation in
fact and proximate cause.
20. A common way for a plaintiff to show defective design in strict
products liability case is to show that there was an alternate design
available to the defendant, which if the defendant had used would have
prevented the type of injury plaintiff incurred.
a. True
b. False
Answer. The correct answer is a. Defective design can be shown by
alternative design that is safer. The example given on page 244
of your text where Ford should have designed its vans to have a
heat-venting system so childrern accidentally locked in the vans would
be safe - is suggesting a safer alternate design to the current design
which lacks the venting system.
21. Martha, an elderly, frail woman of 92 years, is visited repeatedly
by "Bruno," a large, young man, who lives down the street. He badgers
her constantly about leaving her garbage out, not cleaning her yard,
her cats and various other issues. He claims he is going to report her
to the authorities and she will "be put away in a safe place." He also
harasses her about her age and tells her repeatedly she has dementia.
He tells her "if she comes into the yard once more in her bathrobe, he
is going to do something to her." Finally, he started making phone
calls in the night and then hanging up.. Martha is afraid to leave her
house for fear she will see Bruno and what he might do. Martha could
bring an action against Brurno for
a. False Imprisonment
b. Malicious prosecution
c. Defamation
d. Intentional Infliction of Emotional Distress
e. None of the above.
Answer. Correct answer is d.
22. Mr. and Mrs. Jones borrow $20,000 from Mr. Angus. Mr. Angus assigns
his rights under that note to his son Fred Angus in exchange for Fred's
promise to manage the farm for a year. Fred gave notice to Mr. and
Mrrs. Jones that he was assigned Mr. Angus rights under their note.
Based on the above facts, choose the best answer.
a. The agreement between Fred and Mr. Angus is not a contrarct because it is not supported by consideration.
b. Mr. and Mrs. Jones object to the assignment of
their note to Fred because it is more burdensome for them to mail their
check to Fred than Mr. Angus. Therefore, the assignment is invalid.
c. If Mr. and Mrs. Jones refuse to pay Fred, Fred
can bring an action in breach of contract against Mr. and Mrs. Jones.
d. If Mr. and Mrs. Jones refuse to pay Fred, Mr.
Angus can bring an action in breach of contract against Mr. and Mrs.
Jones.
e. None of the above.
Answer. The correrct answer is c.
23. When you wash and detail my car, I will pay you $75. The foregoing is a(n)
a. Executed contract
b. Bilateral contract
c. Unilateral contract
d. Quasi-contract
Answer. The correct answer is c. See page 192 of your text.
24. All prormises arre enforrceable though legal action.
a. True
b. False
Answer. The correct answer is b. Only promises exchanged with consideration are enforceable through legal action.
25. Mary offers to sell her donkey to Joseph for $5.00. Joseph says "I
accept." When Joseph tenders his $5.00, Mary refuses to tender the
donkey. Based on the foregoing facts, choose the best answer.
a. Mary and Joseph's agreement is not a contract because the consideration is inadequate.
b. Because Mary was just joking when she offered her
donkey to Joseph, Mary and Joseph failed to establish a contract.
c. Mary and Joseph have formed a contract.
d. Mary and Joseph have formed a contract, but it is
is unenforcable because it does not comply with the statute of frauds.
e. None of the above.
Answer. The correct answer is c. THIS QUESTION IS TYPICAL OF MANY OF THE QUESTIONS ON THE EXAM.
26. Although the double jeopardy defense is available in both federal and
state court, it is not protect a defendant from a prosecution in
federal court after a prosecution in state court or a prosecution in
state court after a prosecution in federal court. Think of federal
crimes and state crimes being different offenses even if they are based
on the same fact patters.
27. To secure a loan Rubin pledged stock that he represents as being
marketable and worth approximately $1.7 million. The stock is not
marketable and practically worthless. Rubin can have Section 10(b)
liability?
a. True
b. False
Answer. The issue will be whether or not the pledge of the security is
"in connection with a purchase or sale." What we know is that this
phrase is interpretted broadly according to the Zandford case. A pledge
of a security will be considered a purchase or sale. Even though it is
not an outright transfer, it is adequate to trigger the Section 10(b)
liability. The correct answer is true. THIS QUESTION IS HARDER THAN ANY
SECURITY LAW QUESTION YOU WLL SEE ON THE EXAM.
28. Donna is a corporate director of a corporation having over 500
shareholoders and $10,000,000 in assets. On June 1, 2007 she sold 100
shares at $10.50/share. Two months later after the corporaiton had
announced substantial second quarter losses, Donna purchased 100 shares
for $7.25/share. Donna has had a short swing profit.
a. True
b. False
Answer. The corporation is a reporting corporation and Donna is an
insider under 14B. She does have profit as a result of the two
transactions which are within 6 months of each other. Donna has had a
short swing profit. The correct answer is true.
29. Choose the best answer. Lana and Georgie have formed a limited
partnership with Georgie agreeing to be the general partner. This
partnership has purchased supplies from Shep. Shep has received a
promissory note signed on behalf of the partnership by Georgie as
general partner .for payment. If the partnership is unable to pay this
note
a. Shep can hold Georgie liable for the amount of the note.
b. Shep can hold Lana liable for the amount of the note.
c. Shep can hold both Georgia and Lana liable for the amount of the note.
d. A limited partnership cannot bind any of the partners to liability.
Answer. This is a poorly worded question. Shep can hold Georgie liable
for the amount of the note and Lana will have liability up to the
amount of her investment. A is the best answerr but the answers should
have been more carefully written.
30. The name "Fast Food" could be registered as a distinctive trademark
for a bookstore that obtains the most recent publications earlier than
any other bookstore.
a. True
b. False
Answer. The correct answer is true. Fast Food uses descriptive words
but when used in relation to the type of product/service the words are
used in an arbitrary way so it is distinctive.
31. The name "Fast Food" could be registered as a distinctive trademark for a drive-thru breakfast "on the run" restaurant.
a. True
b. False
Answer. The correct answer is false. Fast Food is descriptive of a fast
food restaurant and therefore could not be diistinctive.
32. Jo-Jo spends the time and effort necessary to alphabetize the names
of the students in two legal studies classes. Jo-Jo includes in the
list, the first, middle and last names and emails of these students.
Choose the best answer
a. Jo-Jo's work would be patentable subject matter because he has finalized a process.
b. Jo-Jo's work would be copyright subject matter,
it was fixed in and would be sufficiently creative and original to have
copyright protection.
c. Jo-Jo's work would be capable of trademark protection once it achieved secondary meaning.
d. Jo-Jo's work would not be patent, copyright or trademark protected.
Answer. The correct answer is d.
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