Management and the Legal Environment
Midterm Exam
Course Introduction
Management and the Legal Environment explores the complex relationship between managerial decision-making and the legal frameworks that govern business organizations. This course introduces students to key areas of law affecting businesses, including contracts, torts, agency, employment law, intellectual property, and government regulation. Emphasis is placed on understanding how legal considerations impact managerial strategies, risk assessment, and ethical responsibilities, enabling future managers to navigate legal challenges and make informed decisions. Through case studies and practical examples, students develop the skills to identify legal issues in the workplace and collaborate effectively with legal professionals to ensure organizational compliance and integrity.
Recommended Textbook Managers and the Legal Environment Strategies for the 21st Century 7th Edition by Constance E.
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Chapter 1: law, value creation, and risk management
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Q1) As the public has become more concerned about childhood obesity,which of the following is a government agency referenced in the text that is considering a ban on certain types of children's advertising?
A) The American Consumer Agency
B) The Federal Communications Commission
C) The Federal Trade Commission
D) The Federal-State Advertising Coalition
Answer: B
Q2) Worker protection is one major public policy concern underlying U.S.business law.
A)True
B)False
Answer: True
Q3) Which of the following is a type of law referencing formal rules embodied in judicial decisions rendered by courts?
A) Public
B) Private
C) Substantive
D) Remedial
Answer: A
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Chapter 2: Ethics ant the law
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Q1) You are the CEO of a multi-billion dollar company.Your company employs over 75,000 people.The company is being sued for $100 million dollars as the result of racial discrimination against your customers.Your investigation reveals that some of your managers are actively violating the law.Discuss the steps you would take to ensure your company's compliance with ethical norms and legal requirements.
Answer: Students should discuss the need for an ethical code of conduct and the need to take immediate action to end the discrimination,including discharge of those responsible if needed.
Q2) Which of the following is true regarding the relationship between law and ethics?
A) The law attempts to prohibit all "bad" behavior.
B) An action that is unethical is also considered illegal in the U.S.
C) Both that the law attempts to prohibit all "bad" behavior and that an action that is unethical is also considered illegal in the U.S.
D) An action that is unethical may nonetheless be legal.
Answer: D
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Chapter 3: Courts, sources of law, and dispute resolution
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Q1) A judge is always compelled to follow Restatements of law in making a decision.
A)True
B)False
Answer: False
Q2) A lawsuit may be resolved before trial by the judge granting a[n]
A) judgment notwithstanding the verdict
B) interlocutory judgment
C) motion to dismiss
D) request for production of documents
Answer: C
Q3) The process of questioning potential jurors is called discovery.
A)True
B)False
Answer: False
Q4) The Supreme Court has found a national policy expressed by Congress disfavoring arbitration agreements.
A)True
B)False Answer: False
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Chapter 4: Constitutional bases for business regulation
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Q1) Congress can override a President's veto by a _________ vote of both the House of Representatives and the Senate.
A) majority
B) two-thirds
C) three-quarters
D) unanimous
Q2) The Tiny Motel is located in State X.It is not readily accessible from any major highway.Few,if any of their guests are from out of state.The motel has filed suit in federal court to be exempt from the anti-discrimination provisions of the Civil Rights Act of 1964. What are the arguments for and against exemption?
Q3) When equal protection is concerned,classifications based on gender are subject to a[n] ____________ test.
A) rational basis
B) strict scrutiny
C) substantially related
D) gender-based
Q4) Procedural due process protects fundamental rights.
A)True
B)False
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Chapter 5: Agency
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Q1) Leased workers are precluded from being considered employees of the company for which they are doing work because they are on the payroll of an employment agency.
A)True
B)False
Q2) Refer to fact pattern 5-2. Did Samantha breach any fiduciary duties owed to Billy?
A) Yes, only the duty of loyalty
B) Yes, only the duty of care
C) Yes, both the duty of loyalty and the duty of care
D) No
Q3) Once an agent is given express authority,he or she also has _______ authority to do whatever is reasonable to complete the task he or she has been instructed to undertake.
A) implied
B) absolute
C) limited
D) contractual
Q4) Agents owe a fiduciary duty to the principal.Describe the specific responsibilities that are generated by this duty.Discuss fully.
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Chapter 6: Administrative Law
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Q1) Statutes and agency rules often provide that courts performing judicial review of agency action may not rule on which of the following issues?
A) issues raised with the agency and won.
B) issues raised with the agency and lost.
C) issues raised with the lower courts and lost.
D) issues not raised with the agency.
Q2) Refer to fact pattern 6-2. Which of the following is the best defense the city has against the lawsuit brought by Tony?
A) That Tony lacks standing to sue.
B) That courts have no authority to determine the validity of agency rules.
C) That Tony lacks permission of the agency to sue since authorization of the agency is required prior to a lawsuit challenging the validity of an agency regulation.
D) That Tony has not lived in the jurisdiction for at least a year since residence in the jurisdiction for at least a year is required in order to challenge the validity of a local regulation.
Q3) As set forth in the text,what are the seven basic steps for working successfully with an administrative agency?
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Chapter 7: Contracts
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Q1) ________ damages compensate a party for losses that occur as a foreseeable result of the breach.
A) Quantum meruit
B) Reliance
C) Restitution
D) Consequential
Q2) Refer to fact pattern 7-2. Which of the following is true regarding the offer to Frank assuming Hester's revocation was ineffective?
A) The offer was probably still open the next day because a reasonable length of time would not have expired.
B) The offer would have terminated because Frank did not provide any consideration to leave it open.
C) By operation of law, it would have terminated at midnight on the day it was made.
D) By operation of law, it would still have been open because it would not have terminated until midnight on the day after it was made.
Q3) Define the term "consideration" as it is used in contract law.
Q4) What are the four basic elements necessary for a valid contract?
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Chapter 8: sales,licensing,and e-commerce
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Q1) In a state that had adopted the Uniform Electronic Transactions Act,Kiera and Ben entered into a contract whereby Ben would clean Kiera's house once a week for eighteen months for $75 per week. The transaction was done electronically,and both Kiera and Ben signed through the use of an electronic signature. Unfortunately,problems resulted when Ben failed to show up as scheduled. Ben told Kiera that the contract was not good because his signature was made electronically. Kiera told him that he was wrong and that he needs to get up to date with the modern age. Which of the following is correct regarding the dispute?
A) Ben is correct because electronic signatures are not recognized as valid under any circumstances.
B) Ben is correct only if Kiera's name was typed as opposed to being shown in handwriting-style (cursive) form.
C) Kiera is correct that the signature is sufficient only if she can show that she and Ben had previously engaged in electronic transactions.
D) Kiera is correct that her electronic signature is sufficient.
Q2) The UCC does not specifically define an offer or an acceptance.
A)True
B)False
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Chapter 9: Torts and Privacy protection
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Q1) What does the term respondeat superior mean?
A) Let the master answer
B) Let the servant answer
C) Let the servant or master answer
D) The master was negligent
Q2) Tort damages generally attempt to restore the plaintiff to the same position he or she was in before the tort occurred.
A)True
B)False
Q3) Blastco is an expert demolition company.During the process of leveling some land,Blastco fell behind in their schedule and used twice the normal amount of dynamite to blast some hills.When a charge exploded,the blast broke several of the windows in Paul's home.Paul lives near the blast site.What theory or theories may Paul use to recover damages from Blastco? Discuss fully.
Q4) An employer may not be held directly liable under tort law for the failure to use care in issuing a reference.
A)True
B)False
Q5) Define and explain the theory behind the economic loss rule.
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Chapter 10: product liability
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Q1) Which of the following allows the filing of a lawsuit previously barred by the running of the statute of limitations?
A) A statute of repose
B) A recommence statute
C) A revival statute
D) None of the above because any such law would be unconstitutional.
Q2) For a defendant to be held strictly liable,the plaintiff must prove that the defect existed at the time the product left the defendant.
A)True
B)False
Q3) The European Union applies strict liability to services.
A)True
B)False
Q4) The doctrine of strict product liability in tort is grounded in the common law and was transported to this country from England in the 1800's.
A)True
B)False
Q5) Set forth the elements of a strict liability claim.
Q6) What are the four basic parts of the rationale for strict product liability?
Page 12
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Chapter 11: Intellectual property
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Q1) Which of the following is not true regarding current U.S.copyright law?
A) The material must be sufficiently original.
B) Protection is automatic.
C) Use of a copyright notice is required.
D) Registration is not required.
Q2) The U.S.Supreme Court ruled that living organisms can be patented if they are human-made.
A)True
B)False
Q3) Terms that were once enforceable trademarks may become generic and thereby not protected.
A)True
B)False
Q4) The _________ doctrine provides that copyright protection does not extend to the useful application of an idea.
A) useful article
B) utility
C) equivalents
D) design
Q5) Discuss in detail common law rights,if any,in a trademark in the U.S.
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Chapter 12: The employment agreement
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Q1) States vary in their willingness to enforce noncompete agreements.
A)True
B)False
Q2) The National Labor Relations Act prohibits employers from interrogating employees about union sentiment or activity.
A)True
B)False
Q3) Which of the following is true regarding private employer monitoring of employee e-mail on company-owned equipment?
A) There is a federal law prohibiting private employers from monitoring employee e-mail on company-owned equipment.
B) Most states have state laws prohibiting private employers from monitoring employee e-mail on company-owned equipment.
C) Most states allow private employers to monitor employee e-mail on company-owned equipment, but employees must first be warned that the e-mail will be monitored.
D) Most courts have upheld a private employer's right to monitor employee e-mail on company-owned equipment.
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Chapter 13: civil rights and employment discrimination
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Q1) A claim for sexual harassment may be asserted by either male or female employees.
A)True
B)False
Q2) Many states have passed their own fair employment acts.
A)True
B)False
Q3) Denial of promotion in retaliation for a person's refusal to respond to his or her supervisor's sexual advances is referred to as ________ harassment.
A) sina qua non
B) quid pro quo
C) actual
D) constructive
Q4) Under federal law,employees may not waive their rights under the Age Discrimination in Employment Act (ADEA).
A)True
B)False
Q5) Set forth the categories of individuals classified as disabled under the Americans with Disabilities Act.
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Chapter 14: Criminal law
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Q1) The Racketeer Influenced and Corrupt Organizations Act (RICO)was originally designed to combat corporate crime.
A)True
B)False
Q2) The Model Prison Code is a set of criminal law statutes that were proposed by the National Conference of Commissioners on Uniform state Laws for adoption by the states.
A)True
B)False
Q3) Set forth five of the nine factors used by the Department of Justice to decide whether to indict a corporation.
Q4) Which of the following types of immunity prohibits any criminal prosecution of a witness that relates to any matter discussed in his or her testimony?
A) Transactional
B) Use
C) Nolo contendere
D) Plea
Q5) Fully discuss limitations on the protection against double jeopardy.
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Page 16
Chapter 15: Environmental law
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Q1) Which of the following laws governs the quality of drinking water served by public drinking-water systems?
A) Clean Sip Act
B) Chemical Control Act
C) Safe Drinking Water Act
D) None of the responses are correct
Q2) Which of the following refers to the belief that decisions with environmental consequences should not discriminate against poor and minority communities?
A) Fair allocation
B) Brownfield containment
C) Environmental justice
D) Equitable allocation
Q3) Kentucky unveiled the first statewide cap-and-trade program to reduce greenhouse gases in the U.S.
A)True
B)False
Q4) The EPA is a cabinet-level department
A)True
B)False
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Chapter 16: Antitrust
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Q1) Section 7 of the Clayton Act prohibits
A) price discrimination.
B) monopolies and attempts to monopolize.
C) every contract, combination or conspiracy in restraint of trade.
D) mergers that threaten competition.
Q2) Explain the purpose and scope of the Robinson-Patman Act.What factors will courts use in determining whether or not a violation has occurred? Discuss fully.
Q3) Unilateral conduct may violate Section 1 of the Sherman Act under some circumstances.
A)True
B)False
Q4) Firms can incur liability under Section 2 of the Sherman Act by acquiring monopoly power through corporate mergers or acquisitions.
A)True
B)False
Q5) Set forth when a monopolist has a duty to deal with its rivals and the four elements considered in determining such a duty.
Q6) What types of price-fixing agreements are considered horizontal price-fixing?
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Chapter 17: Consumer Protection
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Q1) The Truth-in-Lending Act (TILA)is intended to assure a truthful loan application by the consumer.
A)True
B)False
Q2) Congress has made it a federal crime to engage in the extortionate extension of credit.
A)True
B)False
Q3) The Truth-in-Lending Act provides consumers a right of ________ whenever their home is used as collateral for credit except for original construction or acquisition.
A) rescission
B) redemption
C) new mortgage
D) refinance
Q4) A car loan is an example of a closed-end credit transaction.
A)True
B)False
Q5) When does an advertiser violate the Federal Trade Commission bait and switch advertising rules?
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Chapter 18: real property and land use
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Q1) Refer to fact pattern 18-1. What should Bruce advise Prudence regarding her plans?
A) That she should forget the project because she would be ineligible for any cleanup assistance and, as owner, would be individually liable for the entire project.
B) That she should buy the property without any investigation and deny knowledge of contamination if later questioned because under federal law she can only be held liable if she had full and informed knowledge of contaminants when she made the purchase.
C) That she should incorporate because while an individual is liable for the entire costs of cleanup, a corporation is not.
D) That by taking appropriate steps to become a bona fide prospective purchaser, she can avoid liability for legacy contamination.
Q2) All tenants in common have an equal right to possession of the property. A)True
B)False
Q3) Describe in detail the three basic types of deeds including any warranties or guarantees the deeds provide.
Q4) Compare and contrast joint tenancy and tenancy by the entirety.
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Chapter 19: Forms of business organizations
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Q1) The _______ theory applies to the situation in which owners of a corporation have so mingled their own affairs with those of the corporation that the corporation does not exist as a distinct entity.
A) undercapitalization
B) alter ego
C) per se
D) absolute
Q2) Which of the following refers to a merger in which some shareholders are required to surrender their shares in the disappearing corporation for cash?
A) Illegal merger
B) Termination merger
C) Surrender consolidation
D) Freeze-out merger
Q3) The ________ set forth the steps that must be taken to establish a corporation in a state.
A) Uniform Federal Rules
B) corporate statutes of each state
C) corporate bylaws
D) corporate charter requirements
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Chapter 20: Directors, Officers, and Controlling Shareholders
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Q1) __________ is a purchase of a dissident shareholder's stock by the issuer at a premium over market,often in exchange for a standstill agreement,whereby the shareholder agrees not to commence a tender offer or proxy contest or to buy additional shares of the issuer for a period of time.
A) Greenmail
B) A freeze out
C) Choice agreement
D) Equitable agreement
Q2) The ________ requires that officers and directors not take personal advantage of a desirable business investment that rightfully belongs to the corporation.
A) right of first refusal
B) corporate opportunity doctrine
C) line of business test
D) expectancy test
Q3) Companies listed on the New York Stock Exchange must have compensation committees composed entirely of independent directors.
A)True
B)False
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Chapter 21: Public and Private Offerings of Securities
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Q1) Set forth the two principal federal acts that regulate securities transactions and issuers. Additionally,list the three beliefs federal securities laws embody as set forth in the text. Do you believe that the securities rules that are in place are sufficient to protect investors? Why or why not? Discuss fully.
Q2) Refer to fact pattern 21-3. Which of the following is true regarding Yolanda's situation?
A) Because she is in the active period, no sales of securities are allowed.
B) During this quiet period, offers to buy may be accepted.
C) During this waiting period, so long as requirements are met, she may solicit offers to buy securities but may not accept them yet.
D) During this quiet period, no sales of securities are allowed; and the red herring may not be distributed
Q3) Which of the following is not an accredited investor under Rule 501?
A) any national bank
B) any director of the issuer
C) any corporation with total assets in excess of $1 million
D) any natural person with a net worth in excess of $1 million
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Chapter 22: Securities Fraud and insider trading
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Q1) Under the Sarbanes-Oxley Act of 2002,it is a misdemeanor to knowingly execute a scheme to defraud any person in connection with any security of a publicly traded company.
A)True
B)False
Q2) A securities fraud claim can be used as a predicate act in a civil case under the Racketeer Influenced and Corrupt Organizations Act regardless of whether the defendant has been criminally convicted in connection with the fraud.
A)True
B)False
Q3) List the seven elements of a Rule 10b-5 cause of action.
Q4) Section 16(b)of the 1934 Act governs ________ by officers,directors,and greater-than-10% shareholders of equity securities of a public company.
A) fraud
B) deceptive practices
C) short-swing profits
D) unorthodox transactions
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Chapter 23: Debtor-Creditor Relations and Bankruptcy
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Q1) Under a guaranty of ________,the guarantor's obligation to pay the lender is triggered automatically when the debtor fails to make a payment when due.
A) security
B) collection
C) payment
D) performance
Q2) Agreements for term or revolving loans may call for mandatory prepayment when certain events occur.
A)True
B)False
Q3) If a borrower fails to repay a secured loan,the lender may foreclose on the collateral.
A)True
B)False
Q4) The UCC requires that a precise form be followed in order to create a security interest.
A)True
B)False
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Chapter 24: International Business
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Q1) Amanda was just hired to work for a federal agency in the procurement department. Amanda shops for the best buys possible and thinks she has found a great deal. She returns to her office and tells her supervisor about her discovery. Her boss tells her to be sure that the Buy American Act is satisfied. Amanda decides to research the law. What will she find?
A) That under all circumstances federal agencies must purchase products that are 100% made in the U.S.A.
B) That under all circumstances federal agencies must purchase products with at least 75% of the components made in the U.S.A.
C) That unless the price is a certain percentage higher than the price of the equivalent foreign product, federal agencies must buy products with at least 50% of the components made in the U.S.A.
D) That federal agencies may buy foreign made products so long as it can be established that a representative did comparison shopping and established that the foreign made good is a better deal than the made in the U.S.A. product.
Q2) Set forth the differences between the current British common law system and the U.S.common law systems. Describe the difference between a solicitor and a barrister in the British system.
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