3. The study of business law does not involve an ethical dimension.

Chapter 01: Legal and Constitutional Foundations of Business

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Indicate whether the statement is true or false.

• All laws establish rights, duties, and privileges that are consistent with the values and beliefs of a society (or its ruling

group).

• True
• False

• Because laws may change, the ability to analyze and evaluate the legal ramifications of situations as they arise is not a

lasting skill.

• True
• False

• The study of business law does not involve an ethical dimension.
• True
• False

• Compartmentalizing the law into discrete topics indicates that each business transaction is subject to only one specific

area of the law.

• True
• False

• A constitution is a primary source of law.
• True
• False

• A secondary source of law establishes the law on a particular issue.
• True
• False

• Courts often refer to secondary sources of law for guidance in interpreting and applying a primary source of law.
• True
• False

• Legal encyclopedias, law review articles, and treatises are sources of primary law.
• True
• False

• Even if it conflicts with the U.S. Constitution, a state constitution is supreme within that states’ borders.
• True
• False

• A local ordinance commonly has to do with a matter concerning only a local governing unit.
• True
• False

• A federal statute applies only to those states that agree to apply it within their borders.

(Business Law Today, The Essentials Text and Summarized Cases, 13e Roger LeRoy Miller) (Test Bank, Answer at the end of each Chapter) 1 / 4

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Class:

Date:

Chapter 01: Legal and Constitutional Foundations of Business

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• True
• False

• The UCC is a uniform law that most states have adopted to govern commercial transactions.
• True
• False

• Congress or a state legislature establishes an administrative agency to perform a specific function.
• True
• False

• Independent regulatory agencies are not subject to the authority of the president.
• True
• False

• Federal agency regulations do not take precedence over conflicting state regulations.
• True
• False

• An administrative legislative rule is not legally binding on businesses.
• True
• False

• The Administrative Procedure Act (APA) imposes strict procedural requirements that agencies must follow in

legislative rulemaking and other functions.

• True
• False

• Courts give significant weight—deference—to an agency’s judgment, and interpretation of its rules.
• True
• False

• The common law is a body of law developed from judicial decisions.
• True
• False

• Case law governs all areas of business not covered by statutory or administrative law.
• True
• False

• Under the doctrine of stare decisis, judges are encouraged to follow the precedents established

within their jurisdictions.

• True
• False

• A court might look at fairness, social values and customs, and public policy in deciding a case if there is no precedent. 2 / 4

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Chapter 01: Legal and Constitutional Foundations of Business

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• True
• False

• A controlling precedent is any legal authority or source of law that a court may look to for guidance but need not

follow when making its decision.

• True
• False

• Because courts of law and equity have merged, the principles of equity are no longer applied.
• True
• False

• Rescission is an equitable remedy.
• True
• False

• Typically, in a civil case, a private party sues another private party who has failed to comply with a duty.
• True
• False

• In a criminal case, the object is to obtain a remedy.
• True
• False

• The basis of a civil law system is a written code of laws.
• True
• False

• International law derives from a variety of sources, including the laws of individual nations.
• True
• False

• The system of checks and balances in the U.S. Constitution allows each branch of government to limit the actions of

the other branches.

• True
• False

• The commerce clause has had no greater impact on business than any other provision in the Constitution.
• True
• False

• When there is a direct conflict between a federal law and a state law, both laws are rendered invalid.
• True
• False

• The Fifth Amendment allows persons to be deprived of property without due process of law. 3 / 4

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Chapter 01: Legal and Constitutional Foundations of Business

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• True
• False

• A law that limits a fundamental right that may be held to violate substantive due process.
• True
• False

• A law based on a suspect trait will not stand under the equal protection clause, even if it is necessary to promote a

compelling government interest.

• True
• False

Indicate the answer choice that best completes the statement or answers the question.

• Power, Inc., is a corporation engaged in the business of producing, refining, and distributing energy resources. With

respect to the firm’s managers, legal concepts can be useful for Power’s (choose all applicable answers)

• accounting and finance manager.
• human resources manager.
• marketing manager.
• customers.

• A constitution sets forth a government’s
• limits, but not powers.
• limits and powers.
• neither limits nor powers.
• powers, but not limits.

• The basis of all law in the United States is
• the U.S. Constitution.
• laws passed by Congress.
• case law.
• regulations created by administrative agencies.

• The Montana legislature enacts a state law that violates the U.S. Constitution. This law can be enforced by
• no one.
• the federal government only.
• the state of Montana only.
• the United States Supreme Court only.

• The Uniform Commercial Code facilitates commerce
• among the states.
• between the states and the federal government.
• in countries that were once colonies of Great Britain.
• in international markets.

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