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) ( , Answer at the end of each Chapter) 1 / 4

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Class:

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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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• 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 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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