Business Law A Storytelling Approach, 1st edition Michael Fricke Test Bank

Business Law A Storytelling Approach, 1st edition By Michael Fricke

Email: richard@qwconsultancy.com

Business Law: A Storytelling Approach, 1e (Fricke) Chapter 1 Sources of Laws 1) Multiple individuals and entities create the laws that govern American businesses.

Answer: TRUE Explanation: The United States has shared governance between federal and state authorities.

The courts also set out law through case law.

Learning Objective: 1.1 Skill: Comprehension AACSB: Application of Knowledge 2) A state law that contradicts the U.S. Constitution is allowed to stand because the states have the right to regulate their own citizens.

Answer: FALSE Explanation: The Constitution is the supreme Law of the Land and overrides all lower laws.

Learning Objective: 1.1 Skill: Comprehension AACSB: Application of Knowledge 3) A federal treaty has the force of law throughout the states.

Answer: TRUE Explanation: Federal treaties are fully binding on the states.

Learning Objective: 1.1 Skill: Comprehension AACSB: Application of Knowledge 4) U.S. law is an example of a purely common law system.

Answer: FALSE Explanation: The United States blends statutory and common law.

Learning Objective: 1.1 Skill: Comprehension AACSB: Application of Knowledge 5) The concept of judicial review, which stems from the case Marbury v. Madison, allows the Supreme Court to provide a check on congressional action, but not executive action.

Answer: FALSE Explanation: Judicial review allows the courts to evaluate both legislative and executive action for constitutionality.

Learning Objective: 1.1 Skill: Comprehension AACSB: Application of Knowledge

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6) The federal circuit courts of appeals are each numbered from 1 to 13.

Answer: FALSE Explanation: Two of the Circuits are known by name: DC and Federal.

Learning Objective: 1.2 Skill: Comprehension AACSB: Application of Knowledge 7) Each state has the same hierarchy of courts from lowest to highest: district court, circuit court, supreme court.

Answer: FALSE Explanation: Some states invert some of the layers. In some states the circuit court is the lowest and the district court is in the middle, for example.

Learning Objective: 1.2 Skill: Comprehension AACSB: Application of Knowledge 8) The U.S. Supreme Court does not hear every case submitted to it. There is an evaluation process to determine which cases it hears.

Answer: TRUE Explanation: There is no automatic right to be heard by the U.S. Supreme Court.

Learning Objective: 1.2 Skill: Comprehension AACSB: Application of Knowledge 9) There are more federal district courts than state district courts because more cases are brought with federal jurisdiction than with state jurisdiction.

Answer: FALSE Explanation: There are only 94 total federal district courts, but many more state district courts.

Learning Objective: 1.2 Skill: Comprehension AACSB: Application of Knowledge 10) The equal protection clause applies to both federal and state courts.

Answer: TRUE Explanation: This is provided for in the 14th Amendment to the U.S. Constitution.

Learning Objective: 1.2 Skill: Comprehension AACSB: Application of Knowledge 11) In order to sue someone, the court must have jurisdiction over both the parties and the subject matter.

Answer: TRUE Explanation: Courts must have both personal and subject matter jurisdiction.

Learning Objective: 1.3 Skill: Comprehension AACSB: Application of Knowledge 2 .

12) "Minimum contacts" is a subject matter jurisdiction concept.

Answer: FALSE Explanation: Minimum contacts relate to personal jurisdiction.

Learning Objective: 1.3 Skill: Comprehension AACSB: Application of Knowledge 13) To have jurisdiction, a court must have jurisdiction over either the parties or the subject matter.

Answer: FALSE Explanation: To have jurisdiction, a court must have both personal and subject matter jurisdiction.

Learning Objective: 1.3 Skill: Comprehension AACSB: Application of Knowledge 14) There are both courts of general and limited jurisdiction.

Answer: TRUE Explanation: Courts of limited jurisdiction hear cases on a specific subject matter, such as traffic or probate.

Learning Objective: 1.3 Skill: Comprehension AACSB: Application of Knowledge 15) The statute of limitations always runs from the time the wrongful act was done.

Answer: FALSE Explanation: The statute of limitations is tolled in some cases until the wrongful act is discovered.

Learning Objective: 1.3 Skill: Comprehension AACSB: Application of Knowledge 16) The concept that the federal and state governments share authority is called: A) Imperialism B) Supremacy C) Federalism D) Stare decisis Answer: C Explanation: The concept of federalism is captured in the U.S. Constitution.

Learning Objective: 1.1 Skill: Comprehension AACSB: Application of Knowledge

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17) The U.S. Constitution provides for specific powers to rest with the U.S. Congress. They are known as: A) Enumerated powers B) Federalism C) Policing powers D) Federated powers Answer: A Explanation: The U.S. Constitution lays out the enumerated powers of Congress in Article I. Learning Objective: 1.1 Skill: Comprehension AACSB: Application of Knowledge 18) The U.S. Constitution specifically describes the executive branch as: A) The president, only B) The president and vice president, only C) The leaders of the administrative agencies D) The president, vice president, and Cabinet Answer: B Explanation: The U.S. Constitution makes no reference to the Cabinet or administrative agencies in Article II. Learning Objective: 1.1 Skill: Comprehension AACSB: Application of Knowledge 19) Which of the following is NOT true regarding treaties?

A) A treaty is an agreement between countries.

B) The president has the authority to negotiate treaties.

C) Treaties are approved by a simple majority of both the House and Senate.

D) Treaties are approved by a two-thirds vote in the Senate.

Answer: C Explanation: Only the Senate provides advice and consent to the president on treaties.

Learning Objective: 1.1 Skill: Comprehension AACSB: Application of Knowledge 20) The vast majority of laws arise from: A) Statutes B) Treaties C) Executive orders D) Administrative rules Answer: A Explanation: Laws are most commonly statutes that have been approved by both houses of Congress and signed by the president.

Learning Objective: 1.1 Skill: Comprehension AACSB: Application of Knowledge 4 .

21) The U.S. legal system is descended from: A) French Napoleonic law B) British common law C) Dutch common law D) Maritime law Answer: B Explanation: The U.S. legal system is considered a common law system, even though there are other ways to establish laws, aside from judicial precedent. It descends from British common law.

Learning Objective: 1.1 Skill: Comprehension AACSB: Application of Knowledge 22) The idea that judicial decisions should only be overturned with great reluctance is: A) Estoppel B) Supremacy C) Priority D) Stare decisis Answer: D Explanation: Stare decisis is loosely translated as "Let the decision stand." It stands for the idea that law should be stable and consistently applied. Therefore, prior decisions should be highly respected.

Learning Objective: 1.1 Skill: Comprehension AACSB: Application of Knowledge 23) Which of the following is NOT true regarding administrative regulations?

A) They do NOT have the binding authority of a law.

B) They are created by administrative agencies.

C) They are issued by agencies run by unelected officials.

D) They are created as part of the executive branch.

Answer: A Explanation: They DO have the binding power of a law.

Learning Objective: 1.1 Skill: Comprehension AACSB: Application of Knowledge

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24) Which of the following is correct about executive orders?

A) They must be approved by the Senate.

B) They must be approved by both the House and Senate.

C) They can require administrative agencies to do something, but they cannot prohibit the agencies from doing something.

D) They have the force of law.

Answer: D Explanation: Executive orders have the force of law and do not need the approval of Congress.

Learning Objective: 1.1 Skill: Comprehension AACSB: Application of Knowledge 25) The statement that the U.S. Constitution is the supreme Law of the Land reflects the: A) Supremacy clause B) Enabling legislation C) Stare decisis D) Federalism Answer: A Explanation: The Constitution establishes the U.S. Constitution as the supreme Law of the Land, which has come to be known as the supremacy clause.

Learning Objective: 1.1 Skill: Comprehension AACSB: Application of Knowledge 26) Aubrey and Brooke are in a lawsuit covered by a federal statute. The statute would NOT be used to determine the outcome if there is a competing ruling based on which of the following: A) A state Constitution B) A local ordinance C) The U.S. Constitution D) An executive order Answer: C Explanation: The U.S. Constitution is the supreme Law of the Land.

Learning Objective: 1.1 Skill: Application AACSB: Application of Knowledge

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27) Which of the following is correct in ranking the hierarchy of the following sources of law from highest to lowest: I. Municipal ordinance II. State statute III. Federal executive order A) III, I, II B) III, II, I C) I, III, II D) I, II, III Answer: B Explanation: Answer choice III, II, I reflects that federal laws trump state laws, which trump local ordinances.

Learning Objective: 1.1 Skill: Application AACSB: Application of Knowledge 28) Carmella and Dante are involved in a lawsuit in Ohio. Dante found a case in Pennsylvania that supports his position. Which of the following is true?

A) Dante wins because state cases are binding on each other.

B) Carmella is correct in stating that the Pennsylvania case is not binding in Ohio.

C) Dante wins because of the supremacy clause that states that state cases are binding within a federal circuit.

D) Carmella wins as long as there is a case that supports her position from another state.

Answer: B Explanation: States are equal. Case law from one state is merely guidance on another.

Learning Objective: 1.1 Skill: Application AACSB: Application of Knowledge 29) Emerson and Chandler are having an argument over the governor's executive order.

A) Emerson is correct in arguing that governors are not allowed to issue executive orders.

B) Emerson is correct in arguing that the governor's executive order is not valid because the state legislature has not voted on it.

C) Chandler is correct that the governor's executive order is binding regardless of federal law.

D) Chandler is correct that the governor's executive order is binding if there is no contrary federal law.

Answer: D Explanation: Federal law trumps state law. Governors are executives just like the president.

Learning Objective: 1.1 Skill: Application AACSB: Application of Knowledge

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30) The president of the United States signs a treaty with Nigeria. The treaty is effective if: A) The treaty is automatically effective because it was negotiated by the president B) The treaty is approved by a majority of the Senate C) The treaty is approved by two-thirds of the Senate D) The treaty is approved by a majority of the entire Congress Answer: C Explanation: Treaties must be approved by two-thirds of the Senate.

Learning Objective: 1.1 Skill: Application AACSB: Application of Knowledge 31) Frankie disagrees with Quinn on what case established the concept of judicial review. Which case established judicial review?

A) Plessy v. Ferguson B) Roe v. Wade C) Brown v. Board of Education D) Marbury v. Madison Answer: D Explanation: Marbury v. Madison firmly established the judicial branch as co-equal to the executive and legislative branches through the concept of judicial review.

Learning Objective: 1.1 Skill: Application AACSB: Application of Knowledge 32) The U.S. Supreme Court, through judicial review of federal sources of law, can: A) Overturn an executive order, but not a federal statute B) Overturn both an executive order and a federal statute if they are deemed to be unconstitutional C) Overturn a federal statute, but not an executive order D) Overturn an executive order and federal statute that it disagrees with Answer: B Explanation: Judicial review makes the judiciary a co-equal branch of government with the executive and legislative branches. The actions of the executive and legislative branches can be overturned if they are unconstitutional.

Learning Objective: 1.1 Skill: Application AACSB: Application of Knowledge

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33) Hayden cites an administrative regulation. Ezra cites a federal statute. If the two sources present contradictory requirements: A) Ezra wins because a federal statute is a higher law than an administrative regulation.

B) Hayden wins because an administrative regulation is a higher law than a federal statute.

C) Both will lose if the state constitution contradicts both.

D) Neither Ezra nor Hayden wins because each are of equal weight.

Answer: A Explanation: A federal statute is higher in the hierarchy of law than an administrative regulation.

Learning Objective: 1.1 Skill: Application AACSB: Application of Knowledge 34) Sam cites an executive order. Kennedy cites a federal statute. If the two sources present contradictory requirements: A) Kennedy wins because a federal statute is a higher law than an executive order.

B) Sam wins because an executive order, in effect, is a higher law than a federal statute.

C) Both will lose if the state constitution contradicts both.

D) Neither Kennedy nor Sam wins because each are of equal weight.

Answer: B Explanation: Executive orders can effectually overturn a federal statute.

Learning Objective: 1.1 Skill: Application AACSB: Application of Knowledge 35) Lonnie and Mackenzie are engaged in a lawsuit. Lonnie cites a precedent that supports his position.

A) Lonnie will always win due to stare decisis.

B) Mackenzie will win because the precedent is federal and this lawsuit is a state case.

C) Lonnie will likely win due to stare decisis.

D) Mackenzie will win because courts are not bound by precedent.

Answer: C Explanation: Stare decisis, when followed, establishes consistency in the law. Courts DO have the authority to overturn precedent, if there is a compelling reason to do so.

Learning Objective: 1.1 Skill: Application AACSB: Application of Knowledge

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36) The Due Process Clause provides that before a court can render a judgment against you, you must: A) Receive notice of the case against you B) Have an opportunity to have a hearing before an impartial judge or jury C) Have a right to bail D) Both receive notice of the case against you and have an opportunity to have a hearing before an impartial judge or jury Answer: D Explanation: Both rights are covered by the Due Process Clause.

Learning Objective: 1.2 Skill: Comprehension AACSB: Application of Knowledge 37) Which of the following is NOT a federal circuit court?

A) 12th Circuit B) DC Circuit C) 9th Circuit D) 1st Circuit Answer: A Explanation: There are 11 numbered circuits in addition to the DC and Federal circuits.

Learning Objective: 1.2 Skill: Comprehension AACSB: Application of Knowledge 38) Which of the following is NOT a federal circuit court?

A) 6th Circuit B) DC Circuit C) 15th Circuit D) Federal Circuit Answer: C Explanation: There are 11 numbered circuits in addition to the DC and Federal circuits.

Learning Objective: 1.2 Skill: Comprehension AACSB: Application of Knowledge 39) Which of the following has jurisdiction based on subject matter rather than geographic location?

A) Federal Circuit B) DC Circuit C) 3rd Circuit D) 1st Circuit Answer: A Explanation: The Federal Circuit hears cases from across the United States that concern specific types of subject matter.

Learning Objective: 1.2 Skill: Comprehension AACSB: Application of Knowledge 10 .

40) The Due Process Clause is binding on the states through which amendment?

A) 5th B) 14th C) 3rd D) 20th Answer: B Explanation: The Due Process Clause is binding on the federal government through the 5th Amendment and on state and local governments through the 14th Amendment.

Learning Objective: 1.2 Skill: Comprehension AACSB: Application of Knowledge 41) All of the following are "inferior" federal courts except: A) The Tax Court B) The Bankruptcy Court C) The Voting Rights Court D) The FISA Court Answer: C Explanation: There are currently no specialized courts that hear only voting rights cases.

Learning Objective: 1.2 Skill: Comprehension AACSB: Application of Knowledge 42) There are how many federal Circuit Courts of Appeal?

A) 13 B) 12 C) 11 D) 20 Answer: A Explanation: There are 11 numbered circuits in addition to the DC and Federal circuits for a total of 13.

Learning Objective: 1.2 Skill: Comprehension AACSB: Application of Knowledge 43) Which of the following is incorrect about administrative courts?

A) They straddle the judicial and executive branches of government.

B) They are created by the executive branch.

C) They are created by legislative statute.

D) They are specialty courts.

Answer: B Explanation: Administrative courts are created by legislative statute and housed in the executive branch.

Learning Objective: 1.2 Skill: Comprehension AACSB: Application of Knowledge 11 .

44) Which of the following is incorrect about administrative courts?

A) Administrative hearings do not always concern violations of statutes.

B) They are created by legislative statute.

C) They are housed in the legislative branch.

D) They have a very narrow scope of authority.

Answer: C Explanation: Administrative courts are created by legislative statute and housed in the executive branch.

Learning Objective: 1.2 Skill: Comprehension AACSB: Application of Knowledge 45) Which of the following is true about administrative orders?

A) They have the force of law.

B) Administrative orders can only be appealed to appellate courts.

C) Administrative hearings are more formal than court proceedings.

D) Administrative orders are reported in the Federal Code.

Answer: A Explanation: Administrative orders have the force of law and can be appealed to either a trial or appellate court.

Learning Objective: 1.2 Skill: Comprehension AACSB: Application of Knowledge 46) Drew loses his case against Avery in an administrative hearing. Which of the following is true?

A) Drew can appeal to a trial court, only.

B) Drew can appeal to an appellate court, only.

C) Drew cannot appeal the decision.

D) Drew can appeal to either a trial or appellate court.

Answer: D Explanation: Administrative orders can be appealed to either a trial or appellate court.

Learning Objective: 1.2 Skill: Application AACSB: Application of Knowledge 47) Reagan and Kendall both live in Pennsylvania. Neither party is happy with the decision of the Pennsylvania courts. They would need to appeal to which Federal Circuit Court of Appeals?

A) 1st B) 3rd C) Federal D) 5th Answer: B Explanation: Pennsylvania is in the 3rd Circuit.

Learning Objective: 1.2 Skill: Application AACSB: Application of Knowledge 12 .

48) Reagan and Kendall both live in Pennsylvania. Neither party is happy with the decision of the lower court concerning their patent claims. They would need to appeal to which Federal Circuit Court of Appeals?

A) 1st B) 3rd C) Federal D) 5th Answer: C Explanation: The Federal Circuit hears cases from across the United States that concern specific types of subject matter, such as patent disputes and international trade cases.

Learning Objective: 1.2 Skill: Application AACSB: Application of Knowledge 49) Quinn works in the judicial branch. Rae works in the legislative branch. Who most likely works for an administrative agency?

A) Quinn B) Rae C) Both Quinn and Rae D) Neither Quinn nor Rae Answer: D Explanation: The administrative agencies are housed in the executive branch.

Learning Objective: 1.2 Skill: Application AACSB: Application of Knowledge 50) Quinn works in the judicial branch. Rae works in the legislative branch. Who most likely works as an administrative law judge?

A) Quinn B) Rae C) Both Quinn and Rae D) Neither Quinn nor Rae Answer: D Explanation: The administrative agencies are housed in the executive branch.

Learning Objective: 1.2 Skill: Application AACSB: Application of Knowledge

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51) Sul and Bailey are suing the state of Texas over a due process violation. They will cite which amendment?

A) 4th Amendment B) 5th Amendment C) 14th Amendment D) Due process is not applicable to the states.

Answer: C Explanation: The 5th Amendment applies to the federal government, whereas the 14th Amendment applies to state and local governments.

Learning Objective: 1.2 Skill: Application AACSB: Application of Knowledge 52) Tristan and Toby own and operate an Arizona corporation. They think their right to equal protection has been violated. Which of the following is true?

A) Businesses have no right to claims of equal protection.

B) Businesses have equal protection under the 14th Amendment.

C) Individuals have equal protection under the 4th Amendment, but businesses use the 14th Amendment.

D) Both individuals and businesses have equal protection under the 5th Amendment.

Answer: B Explanation: The Equal Protection Clause is found in the 14th Amendment and applies to both individuals and businesses.

Learning Objective: 1.2 Skill: Application AACSB: Application of Knowledge 53) Ursulla sued Virgil and was awarded $20,000 by the trial court. Which of the following is true?

A) Both Ursulla and Virgil can appeal.

B) Only Ursulla can appeal.

C) Only Virgil can appeal because he lost.

D) Ursulla cannot appeal because she won.

Answer: A Explanation: Either party who is dissatisfied with the result can appeal. Ursulla may not be happy with the amount she was awarded.

Learning Objective: 1.2 Skill: Application AACSB: Application of Knowledge

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54) Ursulla sued Virgil and was awarded $20,000 by the Federal Circuit court. Which of the following is true?

A) Both Ursulla and Virgil can appeal to the U.S. Supreme Court because there is a right to be heard.

B) Either party can appeal to the U.S. Supreme Court, but the Court will decide whether or not to accept the case.

C) Only Virgil can appeal to the U.S. Supreme Court because he lost and has a right to be heard.

D) Ursulla cannot appeal because she won.

Answer: B Explanation: The U.S. Supreme Court does not take every appeal. It will determine whether the case is "worthy."

Learning Objective: 1.2 Skill: Application AACSB: Application of Knowledge 55) Riley and Jordan sued each other in California federal court. Their appeal would be to which Federal Circuit Court of Appeals?

A) 1st B) 4th C) 6th D) 9th Answer: D Explanation: The largest Federal Circuit is the 9th Circuit covering most of the West Coast States, including Alaska and Hawaii.

Learning Objective: 1.2 Skill: Application AACSB: Application of Knowledge 56) To sue someone, each of the following criteria must be met except: A) Subject matter jurisdiction B) Monetary controversy C) Personal jurisdiction D) Standing to sue Answer: B Explanation: A monetary controversy is NOT required to bring a lawsuit.

Learning Objective: 1.3 Skill: Comprehension AACSB: Application of Knowledge

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57) To sue someone, each of the following criteria must be met except: A) Subject matter jurisdiction B) An unexpired statute of limitations C) Personal jurisdiction D) Monetary controversy Answer: D Explanation: A monetary controversy is NOT required to bring a lawsuit.

Learning Objective: 1.3 Skill: Comprehension AACSB: Application of Knowledge 58) To have standing, all of the following requirements must be met except: A) A financial interest B) Actual harm or an actual dispute C) A ripe claim D) A personal stake in the claim Answer: A Explanation: A personal stake may or may not be financial.

Learning Objective: 1.3 Skill: Comprehension AACSB: Application of Knowledge 59) Which of the following is true concerning personal jurisdiction?

A) A defendant is considered to have voluntarily submitted to any court with jurisdiction over the plaintiff.

B) A plaintiff is always considered to have voluntarily submitted to jurisdiction of the court where they filed the case.

C) Parties are NOT always subject to jurisdiction where they live.

D) A party must have certain significant contacts with the jurisdiction.

Answer: B Explanation: Parties are always subject to jurisdiction where they live. The term is minimum contacts, not significant contacts.

Learning Objective: 1.3 Skill: Comprehension AACSB: Application of Knowledge 60) For a corporation, each of the following are components of personal jurisdiction except: A) The state where the corporation is headquartered B) The state of incorporation C) The location of a client who asked a question on "chat" D) A state where the corporation conducts substantial business Answer: C Explanation: One client chat is not likely to be sufficient to demonstrate "minimum contacts."

Learning Objective: 1.3 Skill: Comprehension AACSB: Application of Knowledge 16 .

61) State trial courts are: A) Subject matter courts B) Courts of limited jurisdiction C) Inferior courts D) Courts of general jurisdiction Answer: D Explanation: State courts can hear most cases, making them courts of general jurisdiction.

Learning Objective: 1.3 Skill: Comprehension AACSB: Application of Knowledge 62) All of the following are courts of limited jurisdiction except: A) State trial courts B) Traffic court C) State appellate courts D) State supreme courts Answer: A Explanation: State trial courts are all courts of general jurisdiction.

Learning Objective: 1.3 Skill: Comprehension AACSB: Application of Knowledge 63) Each of the following gives rise to federal question jurisdiction except a dispute arising out of: A) Federal law B) The U.S. Constitution C) Bankruptcy D) A federal statute Answer: C Explanation: Bankruptcy is heard in a court of limited jurisdiction but does NOT raise federal question jurisdiction.

Learning Objective: 1.3 Skill: Comprehension AACSB: Application of Knowledge 64) Andy and Kris get into a car accident in Vermont. Andy is from Maine and Kris is from Connecticut. Andy's car was leased in Massachusetts. All of the following states are appropriate for personal jurisdiction except: A) Vermont B) Maine C) Connecticut D) Massachusetts Answer: D Explanation: The car lease is not relevant to personal jurisdiction.

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65) Alphonso sues Beto for allegedly stealing cattle from his ranch in Texas. Alphonso lives in Louisiana. Beto lives in Arkansas with his mother, while his father lives in Tennessee. Both Alphonso and Beto are students at the local Texas college. All of the following states are appropriate for personal jurisdiction except: A) Texas B) Tennessee C) Louisiana D) Arkansas Answer: B Explanation: Because Beto does not live with his father, Tennessee would not be appropriate for personal jurisdiction.

Learning Objective: 1.3 Skill: Application AACSB: Application of Knowledge 66) Casey, Dakota, and Uke get into a bar fight in Florida during spring break. Casey lives in Indiana. Dakota lives in Illinois. Uke lives in Iowa. The location LEAST likely to be appropriate for personal jurisdiction is: A) Florida B) Indiana C) Illinois D) Iowa Answer: A Explanation: The location of the fight is least likely to be used, as none of the parties live in Florida.

Learning Objective: 1.3 Skill: Application AACSB: Application of Knowledge 67) Edward, Dray, and Uke get into a bar fight in Florida during spring break. Wayne sees the fight and sues Edward one week later because Uke, Wayne's friend, refuses to sue to collect damages for his injuries. Wayne cannot sue because: A) The court does not have personal jurisdiction.

B) He does not have standing.

C) The claim is not ripe.

D) The statute of limitations has expired.

Answer: B Explanation: Wayne does not have a personal stake in the case.

Learning Objective: 1.3 Skill: Application AACSB: Application of Knowledge

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68) Price is filing for bankruptcy. The bankruptcy case can only be heard in: A) State trial court B) Federal trial court C) A court of limited jurisdiction D) An appellate court Answer: C Explanation: Bankruptcy cases are heard in bankruptcy court, which is a court of limited jurisdiction.

Learning Objective: 1.3 Skill: Application AACSB: Application of Knowledge 69) Hiroshi owns a company that is being sued. Which of the following would NOT likely suffice to meet the "minimum contacts" standard?

A) Hiroshi has a distribution center in the state.

B) Hiroshi's trucks drive through the state to make deliveries in other states.

C) Hiroshi advertises on TV stations targeted to customers in the state.

D) Hiroshi's registered agent is located in the state.

Answer: B Explanation: Driving through a state would not likely be sufficient to establish minimum contacts. The action is passive and does not make use of the resources of the state in furtherance of a significant business interest.

Learning Objective: 1.3 Skill: Application AACSB: Application of Knowledge 70) Felicia is opposed to a new law that was passed. She will have a claim or controversy if she moves forward with plans she had before the law was passed. Which of the following is true about standing to sue under the new law?

A) Felicia has standing to sue.

B) Felicia lacks standing because she has no personal stake in the controversy.

C) Felicia lacks standing because her plans exempt her from the new law.

D) Felicia lacks standing because her claim is not ripe.

Answer: D Explanation: Because Felicia has not gone forward with her plans and been challenged under the new law, the claim is not ripe.

Learning Objective: 1.3 Skill: Application AACSB: Application of Knowledge

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71) Logan has a tax dispute. The case can only be heard in: A) State trial court B) Federal trial court C) A court of limited jurisdiction D) An appellate court Answer: C Explanation: Tax cases are held in tax court, which is a court of limited jurisdiction.

Learning Objective: 1.3 Skill: Application AACSB: Application of Knowledge 72) Randy is filing a lawsuit concerning a federal statute. Which of the following is the appropriate court to hear the case?

A) Federal trial court B) Appellate court C) The Supreme Court D) A court of limited jurisdiction Answer: A Explanation: Federal statutes give rise to federal question jurisdiction. These cases should be heard in federal trial court.

Learning Objective: 1.3 Skill: Application AACSB: Application of Knowledge 73) Bethesda is the victim of a financial fraud that occurred on December 15, 2018. The statute of limitations is three years. Which of the following is true regarding the statute of limitations?

A) The statute of limitations will always expire on December 15, 2021.

B) There is no statute of limitations on financial fraud.

C) The statute of limitations may be tolled because the amount of the damages cannot be calculated.

D) The statute of limitations will expire on October 20, 2023, if the fraud is discovered on October 20, 2020.

Answer: D Explanation: The statute of frauds is sometimes tolled and only begins running when the plaintiff discovers the action.

Learning Objective: 1.3 Skill: Application AACSB: Application of Knowledge 74) Briefly describe the concept of federalism as it relates to the United States government system.

Answer: There are two parallel systems of law that impact Americans. Federal and state governments share authority to govern the American people. It is important to know that law comes from both federal and state authorities.

Learning Objective: 1.1 Skill: Comprehension AACSB: Application of Knowledge 20 .

75) Briefly describe the supremacy clause.

Answer: Federal law always trumps state law when it is in conflict. The hierarchy of laws is more complex than just the supremacy clause.

Learning Objective: 1.1 Skill: Comprehension AACSB: Application of Knowledge 76) Briefly explain the "four" floors of the court system.

Answer: The basement contains specialty courts, such as the bankruptcy court. The first floor is the trial court, where many cases are heard and the trial usually takes place. The upstairs is the appellate court, where appeals are heard. The penthouse is the supreme court level where a final appeal can be had at the discretion of the court. It is critical to understand the layers of the court system and that they may have varying names depending on what state you live or work in.

Learning Objective: 1.2 Skill: Comprehension AACSB: Application of Knowledge 77) Briefly explain the Due Process Clause and where it comes from.

Answer: The Due Process Clause is found in the 5th and 14th Amendments to the U.S. Constitution. The 5th applies to the federal government, whereas the 14th applies to state and local governments. The Due Process Clause provides that "No person shall be…deprived of life, liberty, or property, without due process of law." It is critical that students understand the Due Process Clause.

Learning Objective: 1.2 Skill: Comprehension AACSB: Application of Knowledge 78) Briefly describe the concept of minimum contacts.

Answer: Minimum contacts is the test to establish personal jurisdiction. The analysis is often very fact-specific, depending on the exact circumstances of the individual case. Typically, if an individual or business has "purposefully [availed] itself of the privilege of conducting activities within the forum State" (Hanson v. Denckla, 357 U.S. 235 [1958]), the minimum contacts test is satisfied. The concept is very involved.

Learning Objective: 1.3 Skill: Comprehension AACSB: Application of Knowledge 79) Briefly list the requirements for diversity of citizenship.

Answer: When filing a case in federal court under diversity jurisdiction, the court has the authority to hear any type of dispute (breach of contract, tort, etc.) as long as the plaintiff and defendant are not residents of the same state and the damages at issue exceed $75,000. Do not forget the monetary requirement.

Learning Objective: 1.3 Skill: Comprehension AACSB: Application of Knowledge

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