Business Law Chapter 1-8 TF

Chapter 1—Introduction to Law
TRUE/FALSE
1. Roscoe Pound, a distinguished American jurist, defined law as predictions of the way in which a court will decide
specific legal questions
ANS: F PTS: 1 MSC: AACSB Analytic
2. The common law system is used in most of Europe, Scotland, and Latin America.
3. The primary function of the law is to maintain stability in the social, political, and economic system while
simultaneously permitting change.
ANS: T PTS: 1 MSC: AACSB Analytic
4. Substantive law creates legal rights and duties.

5. The Constitution provides that federal statutes are paramount to state constitutions and statutes.
6. The burden of proof in a criminal case is preponderance of the evidence.

7. The law does not change; it is based on unchanging and universal truths.
8. The main categories of the law are (a) substantive and procedural, (b) public and private, and (c) civil and
criminal.
9. Law is an instrument of social control.

10. Under the civil law system, adversaries initiate and conduct litigation.
11. A judge deciding a common law case must look to similar cases previously decided for guidance.
12. The United States Constitution establishes the principle of judicial review, which divides the government into
three distinct and independent branches: the judicial, executive, and legislative (Congress).
13. Since the end of the nineteenth century, case law developed from court opinions has been the primary source of
new law and ordered social change in the United States.
14. A constitution restricts the powers of the government and specifies the rights and liberties of the people.
15. The Uniform Commercial Code is a federal law that applies to commercial transactions among the states.
16. Laws passed by Congress are the supreme law of the land in the United States and take precedence over the
United States Constitution.
17. The final arbiter as to the constitutionality of laws passed by Congress or by the legislature of a state is the
Supreme Court of the United States.
18. The common law system of law uses the inquisitorial system of determining disputes.
19. Rodriguez and Compton asked a court for reformation of their contract based on a mutual mistake. They seek an
equitable remedy.
ANS: T PTS: 1 MSC: AACSB Analytic | AACSB Diversity
20. The principle of stare decisis gives stability to our system of jurisprudence.
21. Once a court has decided a case, the principle of stare decisis precludes correction of erroneous decisions.
22. Civil law systems, as found in the State of Louisiana and countries such as Scotland, depend on comprehensive
legislative enactments.
23. The business law topics of contracts, agency, property, and trusts are governed primarily by the common law.
24. One important source of law in the United States is the Restatement of law.
25. The State of Minnesota has been negotiating with the Canadian government on issues involving acid rain and
eventually reaches an agreement with Canadian officials. This is a valid treaty under the United States Constitution.
ANS: F PTS: 1 MSC: AACSB Reflective Thinking
26. In the United States, treaties are not subject to judicial review.
27. Tate brings an action against Marsheen for damages from trespass to Tate’s property. Tate must prove the case by
a preponderance of the evidence.
ANS: T PTS: 1 MSC: AACSB Reflective Thinking
28. All laws are related to morals, but some moral precepts are not enforced by legal sanctions.
29. Business law is primarily public law.

30. Decisions of courts of appeals are published in volumes known as "reports" or "reporters."
31. The terms "law" and "justice" are interchangeable.

Chapter 2—Business Ethics
TRUE/FALSE
1. Ethics can be defined broadly as the study of what is good or right for human beings.
ANS: T PTS: 1 MSC: AACSB Ethics | AACSB Analytic
2. Like legal analyses, analyses of ethics have a central authority and follow clear-cut, universal standards.
ANS: F PTS: 1 MSC: AACSB Ethics | AACSB Analytic
3. Business ethics has a special set of ethical principles that applies only to the world of business.
4. Kohlberg believed that all people reach the third stage of moral development by adulthood.
5. An ethical relativist looks to a central authority, such as the Bible, to guide her in ethical decision making.
6. It is possible for legal acts to be immoral.

7. Situational ethics, unlike ethical relativism, judges a person's ethics, but first looks at the decision or act from the
perspective of the actor.
8. Jeremy Bentham was a proponent of utilitarianism.

9. A person who believes in the situational ethics theory would agree that precise guidelines for business behavior
must be developed and adhered to by business professionals.
10. A leading proponent of the utilitarian approach to ethics was the eighteenth century philosopher Immanuel Kant.
11. Deontologists are criticized for rigidity and excessive formalism.

12. Intuitionism holds that rational persons possess inherent powers to assess the correctness of actions.
13. Kant's philosophy rejects the idea that the end justifies the means.
14. Harvard philosopher John Rawls stressed liberty as the most important obligation owed by a society to its
members.
15. To a libertarian, it is not unjust for some people to accumulate fortunes while others live in poverty.
16. Although corporations are not persons but artificial entities created by the state, it is clear that they can and should
be held morally accountable.
17. Rule utilitarianism supports rules that, on balance, produce the greatest good.
18. According to Milton Friedman, the social obligation of a corporation is to return as much money as possible to its
shareholders.
19. Kant's categorical imperative is a variation of the Golden Rule.

20. The essential characteristic of ethical fundamentalism is a reliance upon a central repository of wisdom.
21. To a libertarian, it is unjust for a society to take wealth earned by one citizen and to distribute it to others who did
not earn it.
22. What is unjust to a social egalitarian will also be unjust to a libertarian.

23. From a Kantian perspective, for an action to be moral, it must be possible for it to be made into a universal law
and it must be respectful of the autonomy and rationality of all human beings.
24. Under a Kantian approach to ethics, a person should not lie to colleagues unless that person supports the right of
all colleagues to lie to one another.
25. Harvard philosopher, Robert Nozick, stressed liberty, not justice, as the most important obligation that society
owes its members.
26. Kant's approach, like that of ethical fundamentalists, asserts that universal laws stem from the direct
pronouncements of God.
27. Bill would like to propose to the board of directors of Bizmarc, Inc., that the corporation distribute one percent of
its pre-tax yearly income to feed the poor. To Milton Friedman and others, Bill's proposal might be considered unethical,
because it violates the purpose for which the corporation was established.
28. Corporations are subject to a higher standard of accountability than are public bodies.
29. Philosophers have found that the most effective way to develop dependable and universal methods for making
ethical judgments is to fashion a priori guidelines.
30. The "Television Test" is a test that is generally accepted by adherents of intuitionism.
31. Deontological theories assess good and evil in terms of the consequences of actions.
32. Utilitarian notions underlie cost-benefit analysis.

33. Ethical issues in business settings include corporate governance, whistle-blowing, shareholder voting, and
management's duties to shareholders.
34. Ethical relativism holds that when any two individuals or cultures differ regarding the morality of a particular
issue or action, they are both correct because morality is relative.
35. Psychologist Lawrence Kohlberg observed that people progress through sequential stages of moral development
according to the two major variables of age and reasoning.
Chapter 3—Civil Dispute Resolution
TRUE/FALSE
1. A case before a U.S. Court of Appeals is generally heard by all judges of the circuit sitting en banc.
2. The U.S. District Court is the trial level court in the federal court system.
3. Judges who serve in the U.S. Courts of Appeals receive lifetime appointments from the President, subject to
confirmation by the Senate.
4. The federal courts only have jurisdiction to hear cases involving federal law.
5. In many states, judges are elected by the voters for a stated number of years.
6. The decisions of the U.S. Courts of Appeals are binding on the other federal courts except for the U.S. Supreme
Court.
7. Venue has to do with which court has jurisdiction over the subject matter of a lawsuit.
8. Arbitration is a commonly used technique for resolving international disputes.

9. A quorum for the United States Supreme Court consists of any three justices.
10. When compared to a court trial, arbitration has the advantage of privacy.
11. Congress has established thirteen judicial circuits (twelve numbered circuits plus the District of Columbia circuit),
each having a court known as the Court of Appeals.
12. The U.S. Court of Appeals for the Federal Circuit reviews decisions of the Merit Systems Protection Board, the
Patent and Trademark Office, and the U.S. Court of Veterans Appeals.
13. The federal courts have jurisdiction over all matters that have not been exclusively given to the state courts.
14. Watson, charged with crossing the center line in his vehicle, would ordinarily have the case heard in his state’s
trial court of general jurisdiction.
15. A decision of a state court is binding on all courts inferior to it in its jurisdiction. Thus, the decision of a state
supreme court binds all other courts in that state.
16. The appellate court does not hear any new evidence but rather takes the case upon the record, abstracts, and
briefs.
17. A deposition is a pretrial discovery device, which consists of sworn testimony of a witness or the opposing party.
18. In the United States, there is never a right to a jury trial in a civil case.
19. Mediation, like arbitration, is often a compulsory process in which the mediator can render a decision that is
binding upon the parties.
20. The federal courts and the state courts can never have concurrent jurisdiction over the same case.
21. Subject matter jurisdiction refers to the authority of a particular court to adjudicate a controversy of a particular
kind.
22. A long-arm statute allows a state to obtain jurisdiction over a nonresident defendant when the nonresident
defendant has sufficient contacts with the state.
23. In personam jurisdiction can only be obtained by serving process on the party within the state in which the court
is located.
24. A court needs to have both subject matter jurisdiction and jurisdiction over the parties involved before it can hear
a particular case.
25. Arbitration may be preferred over litigation because the quality of the arbitrator's decision is often higher than that
available through the court system.
26. Federal courts have exclusive jurisdiction over bankruptcy, patent, trademark, and copyright cases.
27. Stare decisis has no application in a dual court system.

28. For the general trial courts in the federal system, Congress has established nearly 100 judicial districts, each of
which is located entirely in a particular state.
29. The U.S. Supreme Court has held that a state may not exercise personal jurisdiction over a nonresident defendant
who is temporarily present by personally serving the defendant in the state.
30. A typical state long-arm statute applies only to nonresident defendants who commit criminal acts in the state.
31. Pleadings are the post-judgment requests of the losing party for a higher court to take an appeal of the case.
32. The purpose of pleadings is to give notice and to establish the issues of fact and law that the parties dispute.
33. The definition of in rem jurisdiction is jurisdiction based on claims against property.
34. A counterclaim is a document filed by a defendant denying the allegations of the complaint.
35. After a plaintiff files a complaint with the clerk of the trial court, the clerk issues a summons to be served on the
defendant to notify him that a suit has been brought against him.
36. A court will grant summary judgment after a trial if the judge makes a final, binding determination on the merits
of the case.
37. The jury's verdict in a summary jury trial is not binding on the parties.
38. An appeal from a small claims court is taken to the state court of appeals where a trial de novo is begun.
39. The U.S. Supreme Court is rigidly bound by its own decisions under the doctrine of stare decisis.
40. Jurisdiction is defined as the power or authority of a court to hear and decide a given case.
41. Attorneys for Tigre Corp. and Swindal Co. are entering a structured settlement process whereby they conduct
limited discovery and then present evidence to a panel of managers from each company as well as to a neutral retired
judge. They are involved in an alternative dispute resolution technique known as a mini-trial.
42. Issues of fact are not decided by the jury.

43. In the federal system, appeals from the Bankruptcy Court and Tax Court are heard directly by the U.S. Supreme
Court.
44. The function of appellate courts is to examine the record of a case on appeal and to determine whether the trial
court committed prejudicial error.
45. All methods of alternative dispute resolution, such as arbitration, mediation, conciliation, and negotiation, involve
a third party to help resolve the dispute.
ANS: F PTS: 1 MSC: AACSB Analytic TRUE/FALSE
1. Most constitutional protections apply only to governmental, or state, action.

2. Because of the Bill of Rights, state legislation that conflicts with federal legislation will preempt the federal
legislation and the courts will apply the state statute without modification.
3. The fourth Congress approved ten amendments to the U.S. Constitution, now known as the Bill of Rights, which
were adopted on December 15, 1799.
4. The U.S. Supreme Court can invalidate a law if it conflicts with the U.S. Constitution.
5. Generally, the executive branch of government has the power to enforce the law.
6. The framers of the Constitution considered it unnecessary to include in the original document liberties that the
people were to keep for themselves.
7. Action taken by private citizens cannot constitute state action.

8. The federal government's authority to govern economic matters flows from the Commerce Clause.
9. The Supreme Court has defined the scope of the Commerce Clause narrowly and, therefore, has restricted the
powers of the federal government to regulate business.
10. The Commerce Clause allows the federal government to invalidate state laws that burden interstate commerce.
11. The First Amendment allows free speech in any and all circumstances.
12. Judicial review is another phrase for an appeal of a lower court's judgment.
13. The First Amendment guarantee of free speech applies not only to individuals but also to corporations.
14. Under the Equal Protection Clause, all governmental action that treats two classes of citizens differently will be
invalid.
15. Federalism is the division of governing power between the federal government and the states.
16. Commercial speech is expression related to the economic interests of the speaker and his audience.
17. Judicial review is the process by which courts review governmental action to determine whether such actions
conform to the U.S. Constitution.
18. The federal government's power to tax has no limitations.

19. The Contract Clause of the Constitution prevents states from retroactively modifying public charters and private
contracts.
20. The Bill of Rights applies directly to the states.

21. A public figure who brings a defamation suit against a newspaper which prints a false story about her must prove
actual malice to win the suit.
22. A state regulation that does not conflict with a federal regulation may still be preempted by federal action.
23. The Fifth and Fourteenth Amendments contain due process clauses that limit the action of federal government.
24. The Minnesota Housing Authority plans to begin eminent domain proceedings to acquire 100 homes to rent to
low-income persons. The Housing Authority wants to pay as little as possible for the homes so that it can acquire more
homes in the future, but the homeowners insist they are entitled to the fair market value of the property. In a court hearing
on the matter, the homeowners are likely to prevail.
25. The Silkwood v. Kerr-McGee Corporation case illustrates the point that when Congress has not intended to
displace all state legislation, nonconflicting state legislation is permitted.
26. The Bill of Rights restricts the power and authority of the federal government.
27. The Bill of Rights was approved by the first Congress to guarantee that the federal government would not abuse
its powers.
28. The U.S. Constitution created a federal government of enumerated powers, and legislation enacted by Congress
must be based on a specific power the Constitution grants to the federal government or be reasonably necessary for
carrying out an enumerated power.
29. The U.S. Constitution was adopted in 1791 by representatives of the thirteen newly created states.
30. If Congress has not intended to displace all state legislation on a particular topic, state legislation that conflicts
with the federal legislation is permitted.
31. State action is a term that may include conduct by private parties who perform a public function.
32. Under the Commerce Clause, any state statute that affects interstate commerce is unconstitutional.
33. According to the U.S. Supreme Court, the “necessary and proper” clause gives Congress the authority to legislate
in areas not mentioned in the list of enumerated powers if the legislation reasonably relates to an enumerated power.
34. The Congressional power to borrow money on credit of the United States and to coin money have enabled the
federal government to establish a national banking system, the Federal Reserve System, and specialized federal lending
programs such as the Federal Land Bank.
35. The term "eminent domain" refers to a governmental taking of private property for public use.
36. The Contract Clause of the Constitution applies only to the actions of state governments and not to the federal
government.
37. The U.S. Supreme Court has held that the Takings Clause requires just compensation not only if a governmental
taking actually occurs, but also if a governmental regulation reduces the value of the property.
38. In commercial speech cases, the U.S. Supreme Court requires that any restriction on such speech must be the least
restrictive possible to achieve a substantial governmental interest.
39. The constitutional protection extended to commercial speech is based on the informational function of
advertising.
40. "Actual malice" in defamation cases against the press requires a showing that a reporter intentionally lied.
41. Under the Due Process Clause, entitlements conferred by the government, such as social security payments, are
property, which cannot be revoked without procedural due process.
42. Under the federalist system, the states retain significant powers; however, the Supremacy Clause of the
Constitution provides that within the areas of regulation that are federal in nature, federal law is supreme.
43. In equal protection cases involving economic regulation, the courts use the rational relationship test.
44. In a sex discrimination case under the equal protection clause, the courts apply the strict scrutiny standard of
review.
45. Classifications based on age and sex are examples of "suspect classifications" in the context of the Equal
Protection Clause of the Constitution.
46. The U.S. Supreme Court is the final authority as to the constitutionality of any federal or state law.
47. The federal government's power to tax is subject to three major limitations.
48. Eminent domain is not one of the recognized inherent powers of government.
49. Most forms of speech are protected by the strict or exacting scrutiny standard.
50. There is no state action where a court orders enforcement of a private agreement among property owners since the
property owners were private individuals.
51. In relation to the takings clause, public use has been held to be synonymous with public purpose.
52. The federal government has no restrictions under the Constitution on its power to impair contracts since the
Contract Clause restricts only actions of the states.
53. The U.S. Supreme Court has eliminated the doctrine that commercial speech is wholly outside the protection of
the First Amendment and now allows very narrow, limited protection of commercial speech.
ANS: F PTS: 1 MSC: AACSB Analytic TRUE/FALSE
1. Legislative rules by an administrative agency do not have the force of law.

2. Administrative agencies sometimes act as if they are judicial bodies.

3. Administrative agencies operate only at the federal level.

4. Administrative agencies establish rules, and then act as both prosecutor and judge in determining whether the
rules have been violated.
5. Agencies create more legal rules and adjudicate more controversies than all the nation’s legislatures and courts
combined.
6. Congress appoints and removes the chief administrators of federal executive administrative agencies.
7. Legislative rules may, in certain circumstances, exceed the authority granted to an agency by the enabling statute.
8. A statute may preclude judicial review of an agency action.

9. Under the informal rulemaking procedures of the APA, an agency must provide notice of a proposed rule only if
there is a good cause.
10. Enabling statutes may not impose more stringent requirements than those found in the APA.
11. Generally, legislative rules must be promulgated in accordance with the procedural requirements of the APA.
12. Interpretative rules of administrative agencies are automatically binding on the private parties the agency
regulates.
13. Interpretative rules of administrative agencies are not automatically binding on the courts.
14. In general, procedural rules are exempt from the notice and comment requirements of the APA.
15. An administrative agency must always use formal procedures to resolve matters.
16. In 1990, Congress enacted the Administrative Dispute Resolution Act to require agencies to use alternative
dispute resolution.
17. Only documentary evidence may be admitted at an administrative hearing.

18. Administrative hearings are held before a jury, just as are court hearings.
19. The 1990 Negotiated Rulemaking Act requires agencies to use negotiated rulemaking in the majority of
circumstances.
20. Administrative law judges are appointed by the President and confirmed by the Senate just as are judges in the
U.S. District Court.
21. An important and fundamental part of administrative law is the limits imposed by judicial review upon the
activities of administrative agencies.
22. To be constitutionally permissible, an enabling statute must establish reasonable standards to guide an agency in
implementing the statute. Using a broad phrase such as “fair and equitable” in an enabling statute meets this requirement.
23. Formal rulemaking is the most frequently used rulemaking procedure for administrative agencies.
24. Interpretative rules are exempt from the APA's procedural requirements of notice and comment.
25. Congress enacted the Administrative Procedure Act in 1946.

26. Agencies are required to submit most newly adopted agency rules to each house of Congress before the rules can
take effect.
27. Parties seeking to challenge agency action must have standing and must have exhausted their administrative
remedies.
28. An administrative agency's discretion to compel the disclosure of information is subject to any legal privileges to
withhold such information.
29. When reviewing factual determinations, the court uses one of three different standards: arbitrary and capricious,
substantial evidence, or unwarranted by the facts.
30. If the decision of an ALJ is appealed to the governing body of the agency, the case may be decided de novo.
31. The Freedom of Information Act and the Government in the Sunshine Act are different names for the same
statute.
32. Federal agencies may not charge for providing records to a person requesting access to the agency's files.
33. Only records specifically exempted by statute from disclosure are inaccessible under the FOIA.
34. Under the Administrative Procedure Act (APA), most legislative rules are issued in accordance with the informal
rulemaking procedures.
35. The Sunshine Act allows for closed meetings if they concern agency participation in pending or anticipated
litigation.
36. All agency decisions must include a statement of findings of fact and conclusions of law and the reasons or basis
for them, as well as a statement of the appropriate relief.
37. There are more than twice as many federal judges as there are administrative law judges.
38. Federal administrative agencies must, within one year after creating records, make them available by electronic
means.
39. An agency may impose in its orders sanctions, such as seizing property or revoking a license.
40. The technical common law rules governing admissibility of evidence are used by most administrative agencies
during hearings.
Chapter 6—Criminal Law
TRUE/FALSE
1. The burden of proof in a criminal case is the same as that in a civil case.
2. Corporations may be held liable for a crime.

3. Mala in se crimes are those crimes that are not morally wrong but are declared wrongful by the legislature.
4. If Gene mistakenly hits Audrey with his truck and kills her, when he intended to hit and kill Cerise, his intent to
kill Cerise is transferred to Audrey, regardless of whether he even knew Audrey, for the purpose of fulfilling the mental
element of the crime.
5. RICO provides for criminal penalties, but contains no provision for civil penalties.
6. Misdemeanors are less serious crimes punishable by a fine or imprisonment in a local jail.
7. A felony is a more serious type of crime than a misdemeanor.

8. Under the United States legal system, guilt is never presumed by the court.
9. The Fifth Amendment would protect a defendant from having to give blood samples to the prosecution since it
would be a form of self-incrimination as interpreted by the courts.
10. Robbery is a larceny accompanied by force or a threat of force.

11. The key distinction between larceny and embezzlement is whether the person taking the property has the intent to
deprive the victim permanently of the goods.
12. In the People v. Farell case, the court looked first to the words of the statute itself to determine legislative intent
and determined that the theft statute applied to trade secrets as well as money.
13. Civil law is a part of public law, whereas criminal law is a part of private law.
14. Bill has had a problem with vandalism at his business, so he rigs up a spring gun at the entryway to his store, so
that any after-hours intruder will be shot upon entry. Bill may legally use this deadly force to protect his business.
15. Kim offered $50,000 to the vice president of operations of ChemKore Co. to induce her to divulge a secret
process. In some states Kim would be guilty of commercial bribery.
16. The defendant must testify in a criminal proceeding.

17. The Fifth Amendment protects all individuals against unreasonable searches and seizures.
18. A crime is an act or omission in violation of public law and punishable by the government.
19. The American Law Institute's Model Penal Code provides that a corporation cannot be convicted of a criminal
offense for the conduct of its employees or board of directors.
20. The state may appeal a verdict of "not guilty" if there is an error in the trial.
21. A criminal defendant may be convicted by a preponderance of the evidence.

22. Vicarious liability is liability imposed upon one person for the acts of another.
23. A "bench trial" is one in which the decision is made without a jury.
24. Rhonda is arrested for a misdemeanor that carries a possible five-month prison sentence. She is entitled to a jury
trial.
25. The Fifth Amendment protects a defendant from double jeopardy.

26. Tracey offered the police chief $10,000 to ignore illegal gambling activity in her establishment. Tracey cannot be
found guilty of bribery since the police chief refused her offer.
ANS: F PTS: 1 MSC: AACSB Reflective Thinking | AACSB Diversity
27. RICO defines a pattern of racketeering as the commission of three or more predicate acts within a five-year
period.
28. Today most crimes are covered by statutory law rather than by the common law, although many of the crimes in
statutory form had their origins in the common law.
29. A preliminary hearing is held in a criminal case to determine whether there is probable cause to believe the
defendant is the one who committed the crime.
30. The Sixth Amendment protects persons against self-incrimination, double jeopardy, and being charged with a
capital offense except by grand jury indictment.
31. Some states still recognize common law crimes.

32. White-collar crime is defined as a nonviolent crime usually involving deceit, corruption, or breach of trust.
33. Carelessness or negligence is a form of subjective fault.

34. Although mens rea is a required element for most crimes, many regulatory crimes dispense with it.
35. Selling liquor to a minor can result in criminal liability only if the seller intended to sell to an underage person.
36. Murder is a mala prohibita type of crime.

37. Paul grabs Don and threatens to stab him with his knife if Don doesn’t help Paul commit a robbery. If Don helps
Paul and is prosecuted, Don would have a valid defense called self-defense.
38. The Federal Organizational Corporate Sentencing Guidelines may require restitution to victims of certain
corporate crimes.
39. The Federal Organizational Corporate Sentencing Guidelines encourage corporations to formulate and implement
compliance programs to deter crimes by their employees; compliance can lead to lesser penalties when crimes do occur.
40. RICO has been successfully applied to businesses that are not engaged in organized crime, despite the fact that its
intent is to target organized crime.
41. The term mala prohibita refers to the bad act element of a crime.
42. The term mens rea refers to the mental intent element of a crime.
43. Embezzlement and forgery are considered white-collar crimes.

44. There are no federal common law crimes.

45. The Sarbanes-Oxley Act passed in 2002 is the first comprehensive federal statute prohibiting computer crime.
46. All jurisdictions have enacted laws making it a crime to write a check when there is not enough money in the
account to cover the check.
Chapter 7—Intentional Torts
TRUE/FALSE
1. In order to sue for battery, a plaintiff must prove that he or she has received a physical injury.
2. Al, the bus driver on a cross-country Greyhound, kisses Susie, a passenger, while she sleeps. Al could be sued for
battery.
3. Sam goes to the movies one Friday evening. The movie is boring and Sam falls asleep. At 2 a.m., the security
guard locks the building. Sam awakens the next morning when the cleaning crew opens the door. Sam can sue for false
imprisonment.
4. The law of torts is primarily made up of statutory law.

5. Damages awarded in excess of normal compensation in order to punish a defendant for a serious civil wrong are
known as punitive damages.
6. Tim and his friend are playing catch in the back yard when Tim suddenly throws the ball over the fence into the
neighbor's yard where it breaks the window. This is trespass to real property, even if Tim himself does not go onto the
property to get the ball.
7. Disparagement differs from defamation in that defamation pertains to personal reputation, whereas disparagement
pertains to business interests
8. The purpose of tort law is to punish the wrongdoer.

9. Moore, an employee of Lewpenski Motors, fraudulently tells Tolson, a prospective car buyer, that the used car he
is considering has never been in an accident. If Tolson buys the car in reliance on Moore’s false statement, both Moore
and Lewpenski Motors are liable to Tolson for damages based on the fraudulent misrepresentation.
10. In only a minority of states a jury may award punitive damages if a defendant's tortuous conduct is intentional and
outrageous.
11. Arthur offers Bob, an employee of Carl, a yearly salary of $10,000 more than Bob receives under the contractual
relationship between Bob and Carl. Arthur knows about the contract between Bob and Carl and knows that the contract
should run for another five years, but Arthur badly wants Bob to work for him. Arthur probably is liable to Carl for
intentional interference with contractual relations.
12. The same act can be both a tort and a crime.

13. Qualified privilege depends on proper use of the privilege.

14. Brad doesn't like Carl and especially dislikes Carl's new felt hat, so he intentionally knocks it off Carl's head in
order to embarrass Carl. Brad has committed a battery.
15. Minors under the age of 18 are not held liable for their torts.
16. John and Megan are at a crowded theater. In the press of people exiting the theater, John accidentally steps on
Megan's big toe and breaks it. Megan can sue John for the tort of battery.
17. All conversions are trespasses but not all trespasses are conversions.
18. Under constitutional privilege, a public official or public figure must prove that the defendant published the
defamatory and false comment with knowledge of the comment's falsity or in reckless disregard of the truth.
19. BB, Inc. fires an employee and then, when asked for a reference on him, negligently makes some untrue
statements, which prevent him from finding a job. BB is liable for defamation.
20. Only the intentional destruction of personal property and not the use of the property in an unauthorized manner
can give rise to a cause of action for conversion.
21. Punitive damages is a term referring to damages that will merely compensate victims for the harm they have
suffered, but will cost defendants more money than they have.
22. The law provides no protection from harm to a person's right of dignity.
23. Intent, as used in tort law, requires an evil motive.

24. Defenses of absolute, conditional, and constitutional privilege apply to defamation and also to publication of any
matter that is an invasion of privacy.
25. Malicious prosecution and wrongful civil proceedings impose liability for damages caused by improperly brought
proceedings, including harm to reputation, credit, or standing; emotional distress; and expenses of defense.
26. Infliction of emotional distress occurs when a person by extreme and outrageous conduct intentionally or
recklessly causes severe emotional distress to another person.
27. The cause of action of infliction of emotional distress protects a person from abusive language by a supervisor.
28. In the Vaughn v. Wal-Mart Stores, Inc. case, the court of appeals held Wal-Mart liable for false imprisonment for
seeking to question a suspected shoplifter.
29. The law of torts reallocates losses caused by human misconduct.

30. Intentional infliction of emotional distress will protect a person from rudeness if the conduct was intended to
cause emotional distress.
31. For purposes of intentional torts, a person can have the intent to cause harm if the harm is substantially certain to
occur even if he or she doesn't desire that such harm occur.
32. Pointing an unloaded gun at someone who believes it is loaded and threatening to shoot constitutes an assault.
33. For purposes of defamation, a publication includes non-written, verbal communication to third parties.
34. The tort of appropriation protects a person's exclusive right to exploit the value of her identify.
35. A letter sent to someone falsely accusing her of being a murderer constitutes the tort of defamation.
36. The tort of defamation is best defined as the unreasonable public disclosure of private facts.
37. Invasion of privacy is in reality a collection of four distinct torts.

38. To help sell the product, a book publisher used a well-known commentator’s name and her quote on the back
book jacket of a new release without the commentator’s knowledge or permission. No tort was involved since there was
no injury to anyone.
39. A person cannot be guilty of trespass unless he or she intended to violate the other's rights.
40. In 1996 the ALI approved development of the Restatement Third, Torts: Liability for Physical and Emotional
Harm, which applies mostly to nonintentional torts and which, as of 2008, had not yet been published in final form.
41. A major difference between trespass to personal property and conversion is that the latter does not require intent
to harm whereas trespass does.
42. Tort liability is civil liability that is voluntarily assumed.

43. If Smith works for Jones under an informal arrangement by which there is no contract stating dates for beginning
or ending the relationship, Brown Co. could induce Smith to quit her job with Jones and come to work for Brown Co.
without liability to Jones.
44. X knows that Y has offered to sell wheat to Z at a certain price per bushel. Hoping to get Z for a customer, X
offers Z wheat at $.50 less a bushel than Y offered. X gets the contract. X is liable to Y for the tort of interference with
contractual relations.
45. Tort law gives persons relief from civil wrongs or injuries to their person and property but not their economic
interests.
46. One of the principal objectives of tort law is to prevent future harms and losses.
47. A privilege may result in immunity from tort liability.

48. In some instances the same facts will give rise to an action for both false light and defamation.
49. The tort of false light imposes liability if the matter in question is objectionable to a reasonable person, but is not
necessarily defamatory.
50. The tort of nuisance includes only the trespassory invasion of real property.
51. Perkins commits a battery against Connors. If the government brings a criminal action against Perkins, Connors
cannot bring a civil tort action against Perkins for the same battery because this would constitute double jeopardy.
52. A defamatory communication that is spoken or oral is designated as libel.

53. Sheena knowingly and falsely tells Jenn that an automobile she is trying to sell has never been in a flood. In
reliance upon Sheena’s statement, Jenn buys the car. Sheena is liable to Jenn for fraudulent misrepresentation.
54. All batteries are immediately preceded by an assault.

55. Misuse of procedure can occur even when the plaintiff succeeds in the litigation.
Chapter 8—Negligence and Strict Liability
TRUE/FALSE
1. A blind person will be held to the standard of care of the reasonable blind person rather than that of the reasonable
sighted person for purposes of determining negligence.
2. In applying the reasonable person standard, the court takes into account a person's physical, but not mental
handicaps.
3. A "reasonable person standard" does not apply to children since they do not have the judgment, intelligence,
knowledge, or experience of adults.
4. The standard of conduct which is the basis for the law of negligence is usually determined by a cost-benefit or
risk-benefit analysis.
5. In the majority of states, in a case of negligence per se, the plaintiff would only have to prove violation of a
statute in order to show negligent conduct.
6. A reasonable person, as used in the law of torts, is a fictitious individual who is always careful, prudent, and never
negligent.
7. The general rule for the standard of care used in tort law is: a person is under a duty to all others at all times to
exercise reasonable care for the safety of other persons and their property.
8. Compliance with a legislative enactment or administrative regulation does not prevent a finding of negligence if a
reasonable person would have taken additional precautions to avoid harm.
9. In most of the states, a sixteen-year-old who drives a car will be held to the same standard of care as an adult for
purposes of determining negligence.
10. Liability for the negligent conduct of a defendant requires not only that the conduct in fact caused injury to the
plaintiff but also that it was the proximate cause of the injury.
11. A defendant will be liable for all harm that can be traced back to the defendant's negligence.
12. All intervening events that occur subsequent to the defendant's negligent conduct will relieve the defendant of
liability.
13. If negligence of the plaintiff and negligence of the defendant proximately caused the injury and damage sustained
by the plaintiff, the plaintiff can recover some damages in those states where contributory negligence is still recognized.
14. The Love v. Hardee’s Food Systems, Inc. case dealt with the responsibility of the owner or possessor of property
to an invitee to warn of, remove, or barricade a dangerous condition of the premises.
15. Even if a defendant's own negligent conduct created an emergency, he will not be liable for the consequences of
the conduct if he acted with care in the resulting emergency situation.
16. A violation of a statute constitutes negligence per se regardless of whether the injured party is a member of the
class protected by the statute.
17. In some instances, people may be held liable for injuries they have caused even though they have not acted
intentionally or negligently.
18. Tom's dog has bitten three mail carriers, but Tom can't bear to chain him up. When the dog bites the newsboy,
Tom will be strictly liable.
19. If a raccoon gets loose from a cage and harms someone, the owner can escape liability by showing that he took
great care to keep the animal confined.
20. The owner of land is liable to adult trespassers for failure to maintain the land in a reasonably safe condition.
21. By law, bystanders are always required to help others in peril.

22. A widely applied test for causation in fact is the "but for" rule.
23. The duty of employers includes the duty to exercise reasonable care in hiring, training, supervising, and retaining
employees. This duty is the same as the vicarious liability of an employer for an employee’s tortious conduct during the
course of employment.
24. If an intervening cause is deemed to be a superseding cause, it does not relieve the defendant of liability for that
harm.
25. A tiger gets loose from the tent of a circus and mauls a passerby. The circus claims it has always treated the
animal well and that it was not at all negligent in its handling of the animal. The circus has no liability for the injury
caused by the animal.
26. If a person's 150-pound sheep dog has a propensity to jump enthusiastically on visitors, the animal's keeper would
be liable for any damages done by the dog's playfulness.
27. The plaintiff must prove that the defendant's negligent conduct proximately caused harm to a legally protected
interest in order to have a valid negligence action.
28. Express voluntary assumption of the risk is a defense to an action based upon strict liability.
29. Ray is informed that his six-year-old child is shooting in the street with a.22 rifle. Ray fails to take the gun away
from the child. The child unintentionally shoots Bill, a pedestrian. Ray is liable to Bill.
30. A licensee for purposes of tort law is a person invited upon land as a member of the public or for a business
purpose.
31. A possessor of land has a legal duty to warn business invitees of obvious dangers that invitees should be able to
discover themselves.
32. Res ipsa loquitur means "the thing speaks for itself" and it permits the jury to infer negligent conduct and
causation from the mere occurrence of certain types of events.
33. In determining a defendant's liability for negligence, his or her superior skill or knowledge will be attributed in
applying the reasonable person standard, thus increasing the chance that the defendant may be held liable.
34. If a defendant acts under emergency conditions, these conditions will be taken into account in applying the
reasonable person standard.
35. Negligence per se is a defense in a negligence case.

36. There is an established rule in the law of torts that even one who has not created a peril has a duty to take
affirmative action to assist an imperiled person, no matter what the relationship with that person, when the imperiled
person can be saved from harm at little or no personal risk to the rescuer.
37. A number of states have included social guests in the invitee category, although they have traditionally been
labeled as licensees.
38. Res ipsa loquitur makes it easier for the defendant to prevail in a negligence action.
39. In the majority of states, a defendant is liable for negligently inflicted emotional distress, even in the absence of
resultant physical harm.
40. Even though contributory negligence is proven by a defendant in a state in which it acts as a complete bar to
recovery, the plaintiff may still recover if the defendant had the last clear chance to avoid the injury.
41. Because of the harshness of the all-or-nothing contributory negligence rule, nearly all states have now substituted
the last clear chance doctrine for contributory negligence.
42. The “but for” test is useful when two or more forces, each of which is sufficient to bring about the harm in
question, are actively operating.
43. Some states have today merged the implied assumption of risk doctrine into their comparative negligence
systems.
44. All intervening causes of harm are also superseding causes.

45. While comparative negligence is generally not a defense in a strict liability case, contributory negligence
generally is a successful defense.
46. A number of states have abolished or modified the defense of implied assumption of risk.
47. For an action of negligence, six elements must be proved.

48. A possessor of land must warn licensees of dangerous conditions of which the possessor has knowledge and the
licensees do not and are not likely to discover
49. A duty to act is imposed on those whose innocent conduct has injured another and left him helpless and in danger
of further harm.
50. There are no defenses available for strict liability; it is imposed absolutely.

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Chapter 1—Introduction to Law

4. Substantive law creates legal rights and duties.

6. The burden of proof in a criminal case is preponderance of the evidence.

9. Law is an instrument of social control.

29. Business law is primarily public law.

31. The terms "law" and "justice" are interchangeable.

6. It is possible for legal acts to be immoral.

8. Jeremy Bentham was a proponent of utilitarianism.

11. Deontologists are criticized for rigidity and excessive formalism.

19. Kant's categorical imperative is a variation of the Golden Rule.

22. What is unjust to a social egalitarian will also be unjust to a libertarian.

32. Utilitarian notions underlie cost-benefit analysis.

8. Arbitration is a commonly used technique for resolving international disputes.

27. Stare decisis has no application in a dual court system.

42. Issues of fact are not decided by the jury.

1. Most constitutional protections apply only to governmental, or state, action.

7. Action taken by private citizens cannot constitute state action.

18. The federal government's power to tax has no limitations.

20. The Bill of Rights applies directly to the states.

1. Legislative rules by an administrative agency do not have the force of law.

2. Administrative agencies sometimes act as if they are judicial bodies.

3. Administrative agencies operate only at the federal level.

8. A statute may preclude judicial review of an agency action.

17. Only documentary evidence may be admitted at an administrative hearing.

25. Congress enacted the Administrative Procedure Act in 1946.

2. Corporations may be held liable for a crime.

7. A felony is a more serious type of crime than a misdemeanor.

10. Robbery is a larceny accompanied by force or a threat of force.

16. The defendant must testify in a criminal proceeding.

21. A criminal defendant may be convicted by a preponderance of the evidence.

25. The Fifth Amendment protects a defendant from double jeopardy.

31. Some states still recognize common law crimes.

33. Carelessness or negligence is a form of subjective fault.

36. Murder is a mala prohibita type of crime.

43. Embezzlement and forgery are considered white-collar crimes.

44. There are no federal common law crimes.

4. The law of torts is primarily made up of statutory law.

8. The purpose of tort law is to punish the wrongdoer.

12. The same act can be both a tort and a crime.

13. Qualified privilege depends on proper use of the privilege.

ANS: F PTS: 1 MSC: AACSB Reflective Thinking

23. Intent, as used in tort law, requires an evil motive.

29. The law of torts reallocates losses caused by human misconduct.

37. Invasion of privacy is in reality a collection of four distinct torts.

42. Tort liability is civil liability that is voluntarily assumed.

47. A privilege may result in immunity from tort liability.

52. A defamatory communication that is spoken or oral is designated as libel.

54. All batteries are immediately preceded by an assault.

21. By law, bystanders are always required to help others in peril.

35. Negligence per se is a defense in a negligence case.

44. All intervening causes of harm are also superseding causes.

47. For an action of negligence, six elements must be proved.

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