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Chapter 2 Courts and Alternative Dispute Resolution TRUE/FALSE QUESTIONS 1.

Federal courts are superior to state courts. ANSWER: F PAGE: Objective: AACSB Analytic

2.

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Generally, a state court can exercise jurisdiction over a nonresident by showing that he or she had minimum contacts with the state. ANSWER: T PAGE: Objective: AACSB Analytic

5.

28 TYPE: Skill Level: AICPA Legal

Generally, a state court can exercise jurisdiction over anyone within the boundaries of the state. ANSWER: T PAGE: Objective: AACSB Analytic

4.

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The courts act as a check on the other branches of government. ANSWER: T PAGE: Objective: AACSB Analytic

3.

28 TYPE: Skill Level: AICPA Legal

29 TYPE: Skill Level: AICPA Legal

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Any lawsuit involving a federal question can originate in a federal court. ANSWER: T PAGE: Objective: AACSB Analytic

31 TYPE: Skill Level: AICPA Legal

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12          TEST BANK 1—UNIT ONE:  THE LEGAL ENVIRONMENT OF BUSINESS 6.

Cyberspace is its own jurisdiction. ANSWER: F PAGE: Objective: AACSB Analytic

32 TYPE: + Skill Level: AICPA Critical Thinking


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7.

Doing substantial business in a jurisdiction exclusively over the Internet is never enough to support jurisdiction over a nonresident defendant. ANSWER: F PAGE: Objective: AACSB Analytic

8.

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36 TYPE: Skill Level: AICPA Legal

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Alternative dispute resolution refers to any method for resolving a dispute outside the court system. ANSWER: T PAGE: Objective: AACSB Reflective

13.

35 TYPE: Skill Level: AICPA Legal

The United States Supreme Court has appellate authority over all cases decided in the state courts. ANSWER: F PAGE: Objective: AACSB Analytic

12.

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The federal equivalent of a state trial court is a U.S. court of appeals. ANSWER: F PAGE: Objective: AACSB Analytic

11.

34 TYPE: Skill Level: AICPA Legal

The decisions of state trial courts of limited jurisdiction may sometimes be appealed to state trial courts of general jurisdiction. ANSWER: T PAGE: Objective: AACSB Analytic

10.

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A justiciable controversy is a case in which the court’s decision—the “justice” that will be served—will be controversial. ANSWER: F PAGE: Objective: AACSB Analytic

9.

32 TYPE: Skill Level: AICPA Legal

37 TYPE: N Skill Level: AICPA Critical Thinking

In some courts, pretrial negotiation is mandatory. ANSWER: T PAGE: Objective: AACSB Reflective

39 TYPE: Skill Level: AICPA Legal

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14          TEST BANK 1—UNIT ONE:  THE LEGAL ENVIRONMENT OF BUSINESS 14.

Negotiation is the most complex form of alternative dispute resolution. ANSWER: F PAGE: Objective: AACSB Reflective

39 TYPE: N Skill Level: AICPA Critical Thinking


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15.

No court offers mediation as an option before a case goes to trial. ANSWER: F PAGE: Objective: AACSB Reflective

16.

42 TYPE: = Skill Level: AICPA Critical Thinking

43 TYPE: Skill Level: AICPA Legal

N

Access to online dispute resolution services is possible 24/7. ANSWER: T PAGE: Objective: AACSB Technology

20.

N

Most online dispute resolution (ODR) forums automatically apply the law of the state of California. ANSWER: F PAGE: Objective: AACSB Analytic

19.

40 TYPE: Skill Level: AICPA Legal

In early neutral case evaluation, a third party’s evaluation of each party’s strengths and weaknesses forms the basis for negotiating a settlement. ANSWER: T PAGE: Objective: AACSB Reflective

18.

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An arbitrator can never render a legally binding decision. ANSWER: F PAGE: Objective: AACSB Analytic

17.

39 TYPE: Skill Level: AICPA Legal

43 TYPE: = Skill Level: AICPA Leveraging Technology

When a forum-selection or choice-of-law clause is included in an international contract, legal proceedings are more complex and attended by more uncertainty. ANSWER: F PAGE: Objective: AACSB Reflective

44 TYPE: N Skill Level: AICPA Critical Thinking


16          TEST BANK 1—UNIT ONE:  THE LEGAL ENVIRONMENT OF BUSINESS MULTIPLE CHOICE QUESTIONS 1.

The Ohio state legislature passes a law to regulate local delivery services. The final authority regarding the constitutionality of this law is a. b. c. d.

the the the the

judicial system. president of the United States. governor of Ohio. U.S. Congress.

ANSWER: A PAGE: Objective: AACSB Reflective 2.

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Leo, a resident of Missouri, owns a warehouse in Nebraska. A dispute arises over the ownership of the warehouse with Opal, a resident of Kansas. Opal files a suit against Leo in Nebraska. Regarding this suit, Nebraska has a. b. c. d.

diversity jurisdiction. in personam jurisdiction. in rem jurisdiction. none of the above.

ANSWER: C PAGE: Objective: AACSB Reflective 3.

28 TYPE: Skill Level: AICPA Legal

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Ace Company files a suit against Beta, Inc., in a Colorado court with general jurisdiction. Dan files a suit against Eagle, Inc., in a Colorado court with limited jurisdiction. The difference between general and limited jurisdiction is a. the subject matter of the cases that the court can decide. b. whether a case is being heard for the first time. c. whether a case is brought by a citizen or by a business. d. whether the court is exercising in personam or in rem jurisdiction. ANSWER: A PAGE: Objective: AACSB Reflective

30 TYPE: Skill Level: AICPA Legal

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4.

Stan, a citizen of Texas, wants to file a suit against Uma, a citizen of Virginia. Their diversity of citizenship may be a basis for a. b. c. d.

any court to exercise in rem jurisdiction. a federal district court to exercise original jurisdiction. a U.S. court of appeals to exercise appellate jurisdiction. the United States Supreme Court to issue a writ of certiorari.

ANSWER: B PAGE: Objective: AACSB Reflective 5.

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Lariat Rope Company, a firm based in Montana, advertises on the Web. A court in North Carolina would be most likely to exercise jurisdiction over Lariat if the firm a. b. c. d.

conducted substantial business with North Carolina residents at its Web site. interacted with any North Carolina resident through its Web site. only advertised without interactivity at its Web site. all of the above.

ANSWER: A PAGE: Objective: AACSB Reflective 6.

31 TYPE: Skill Level: AICPA Legal

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Ann files a suit against Bob in a California state court, noting that Bob operates a Web site through which California residents have done substantial business with him. If the court applies the principles expressed in Case 2.2, Bird v. Parsons, it will likely exercise jurisdiction over Bob a. b. c. d.

if Ann’s claim arises from anything a California resident has done. if Ann’s claim arises from Bob’s Web site activities. if Ann’s claim arises from something other than Bob’s Web site. under no circumstances.

ANSWER: B PAGE: 32 TYPE: N Objective: AACSB Communication Skill Level: AICPA Critical Thinking


18          TEST BANK 1—UNIT ONE:  THE LEGAL ENVIRONMENT OF BUSINESS 7.

Don files a suit against Eagle Sales, Inc., in a Florida state court based on a Web site through which Florida residents can do business with Eagle. If the court applies the principles expressed in Case 2.2, Bird v. Parsons, it will likely exercise jurisdiction over Eagle if the interactivity of the site is seen as a. b. c. d.

a “neutral” connection with the state. an “Internet” connection with the state. a “passive” connection with the state. a “substantial enough” connection with the state.

ANSWER: D PAGE: 32 TYPE: N Objective: AACSB Communication Skill Level: AICPA Critical Thinking 8.

Inferior Company sells products that are poorly made. Jack, who has never bought an Inferior product, files a suit against Inferior, alleging that its products are defective. The firm’s best ground for dismissal of the suit is that Jack does not have a. b. c. d.

certiorari. jurisdiction. standing. sufficient minimum contacts.

ANSWER: C PAGE: Objective: AACSB Reflective 9.

34 TYPE: + Skill Level: AICPA Decision Modeling

Mary wins her suit against National Manufacturing Company. National’s best ground for appeal is the trial court’s interpretation of a. b. c. d.

the the the the

conduct of the witnesses during the trial. credibility of the evidence that Mary presented. dealings between the parties before the suit. law that applied to the issues in the case.

ANSWER: D PAGE: Objective: AACSB Reflective

36 TYPE: Skill Level: AICPA Legal

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10.

Ben 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 a. b. c. d.

not required to hear required to hear the required to hear the required to hear the

the case. case because Cathy lost in a federal court. case because Cathy lost in a lower court. case because it is an appeal.

ANSWER: A PAGE: Objective: AACSB Reflective 11.

certiorari. jurisdiction. standing. venue.

ANSWER: A PAGE: Objective: AACSB Reflective

37 TYPE: Skill Level: AICPA Legal

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Edie files a suit against Frank. If this suit is like most cases, it will be a. b. c. d.

dismissed during a trial. dismissed or settled before a trial. resolved only after a trial. settled at a trial.

ANSWER: B PAGE: Objective: AACSB Reflective 13.

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Cody wants to appeal his case against Digital Corporation to the United States Supreme Court. Cody must ask the Court to issue a writ of a. b. c. d.

12.

37 TYPE: Skill Level: AICPA Legal

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Sally and Tom disagree over the amount of money due under their contract. To avoid involving any third party in a resolution of the dispute, Sally and Tom might prefer to use the alternative dispute resolution method of a. b. c.

arbitration. litigation. mediation.


20          TEST BANK 1—UNIT ONE:  THE LEGAL ENVIRONMENT OF BUSINESS d.

negotiation.

ANSWER: D PAGE: Objective: AACSB Reflective

39 TYPE: N Skill Level: AICPA Critical Thinking


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Fact Pattern 2-1 (Questions 14-16 apply) Java Cafes, Inc., and Kaffe Import Corporation dispute a term in their contract. 14.

Refer to Fact Pattern 2-1. The least expensive method to resolve the dispute between Java and Kaffe may be a. arbitration because the case will be heard by a mini-jury. b. litigation because each party will pay its own legal fees. c. mediation because the dispute will be resolved by a nonexpert. d. negotiation because no third parties are needed. ANSWER: D PAGE: Objective: AACSB Reflective

15.

Refer to Fact Pattern 2-1. If Java and Kaffe have a long-standing business relationship that they would like to continue, a preferred method of settling their dispute may be mediation because a. b. c. d.

the the the the

case will be heard by a mini-jury. dispute will eventually go to trial. process is not adversarial. resolution of the dispute will be decided an expert.

ANSWER: C PAGE: Objective: AACSB Reflective 16.

39 TYPE: N Skill Level: AICPA Risk Analysis

Refer to Fact Pattern 2-1. Resolving the dispute between Java and Kaffe by having a neutral third party render a binding decision is one of the advantages of a. b. c. d.

arbitration. conciliation. intervention. mediation.

ANSWER: A PAGE: Objective: AACSB Reflective 17.

39 TYPE: N Skill Level: AICPA Risk Analysis

40 TYPE: N Skill Level: AICPA Risk Analysis

National Consumer Goods Corporation and Paula Purchaser agree to resolve their dispute in arbitration. The arbitrator’s decision is called


22          TEST BANK 1—UNIT ONE:  THE LEGAL ENVIRONMENT OF BUSINESS a. b. c. d.

a conclusion of law. a finding of fact. an award. a verdict.

ANSWER: C PAGE: Objective: AACSB Reflective

40 TYPE: Skill Level: AICPA Legal

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18.

Transnational Corporation and United Shipping, Inc., agree to a contract that includes an arbitration clause. If a dispute arises, a court having jurisdiction may a. b. c. d.

monitor any arbitration until it concludes. order an arbitrator to rule in a particular way. order a party to bring the dispute to court. order a party to submit to arbitration.

ANSWER: D PAGE: Objective: AACSB Reflective 19.

N

Lee files a suit against Grant. Lee and Grant meet, and each party’s attorney argues the party’s case before a judge and jury. The jury presents an advisory verdict, after which the judge meets with the parties to encourage them to settle their dispute. This is a. b. c. d.

court-ordered arbitration. early neutral case evaluation. a mini-trial. a summary jury trial.

ANSWER: D PAGE: Objective: AACSB Reflective 20.

40 TYPE: Skill Level: AICPA Legal

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Dick submits his claim against EZ Sales Corporation to FairSettle.com, a private, online dispute resolution forum. At any time, an appeal of the dispute to a court may be made by a. b. c. d.

Dick only. Dick or EZ. EZ only. neither Dick nor EZ.

ANSWER: B PAGE: Objective: AACSB Reflective

43 TYPE: Skill Level: AICPA Legal

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ESSAY QUESTIONS 1.

Eve is walking to work along a sidewalk next to a road. A National Distribution Company (NDC) truck strikes and injures Eve, causing her injuries that result in more than $100,000 in medical expenses.


24          TEST BANK 1—UNIT ONE:  THE LEGAL ENVIRONMENT OF BUSINESS Eve is a resident of California, where the accident occurred. NDC has its principal place of business, and is incorporated, in New York. In what court may Eve sue NDC? ANSWER: Eve may sue NDC in New York, because NDC has its principal place of business, and is incorporated, in that state. NDC may be sued in California, because that is where Eve’s injury occurred. NDC may be subject to Eve’s suit in federal court, because the parties have diversity of citizenship (Eve is a resident of California and NDC has its principal place of business, and is incorporated, in New York) and the amount in controversy is more than $75,000 (the cost of Eve’s injuries is more than $100,000). PAGE:29–31 TYPE: = Objective: AACSB Reflective Skill Level: AICPA Decision Modeling 2.

On a Web-based auction site, Beth advertises a laptop computer for sale “as is” to the highest bidder. After a brief online discussion with Beth about the qualities of the computer, Adam submits a bid. Adam’s bid is the highest offer, and Beth ships the computer to him, insured and packed in bubble-warp and packing peanuts. Ten days later, Adam begins sending e-mail complaints to Beth about an inadequate processor, insufficient memory, and a cracked case. He threatens to complain about the deal in every chatroom on the Web unless she refunds his money. Which online dispute resolution (ODR) forum is the most appropriate for resolving the dispute between Beth and Adam, and why? What might be a good resolution of this dispute? ANSWER: SquareTrade, or a similar ODR service, might be the best forum for resolving the dispute between Adam and Beth. SquareTrade has had experience with resolving Web-based auction site disputes through its pilot program with eBay. SquareTrade offers a relatively easy dispute resolution service, with five steps: a case is filed, the other party is notified, negotiation begins, a mediator is available if the parties cannot independently settle their case, and the case is resolved. If the dispute is resolved without a mediator, the service is free. The entire process may take less than two weeks. A good resolution of this dispute would involve the circumstances of the parties and whatever they were willing to accept. If Beth can replace the laptop, or substitute a different model, and Adam finds this acceptable, that would resolve their dispute. Maybe Adam would accept a low-cost upgrade and a cheap or free repair of the case.


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Maybe Beth could offer a reduced price on a computer that Adam would find more agreeable, with credit for a trade-in of the one he’s just bought. Maybe Beth could refund some of the price, and Adam would keep the laptop. PAGE:43–44 TYPE: = Objective: AACSB Reflective Skill Level: AICPA Decision Modeling


Test bank wests business law alternate edition 10th edition jentz