Chapter 1-5 practice questions
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Thompson Rivers University *
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Feb 20, 2024
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docx
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Uploaded by MajorRainAlligator37
These are sample questions from the textbook. I will NOT be giving you true/false or multiple choice questions….but they are good to practice with. All questions will be short answer based on fact patterns.
https://www.studocu.com/en-ca/document/thompson-rivers-university/business-law/
blaw-chapter-1-notes-business-law-with-john-ofee/7114556
Short Answer Questions Chapter 1
1.
Define “law” and describe its purpose.
2.
Explain how business law differs from business ethics.
True or False?
1.
Laws promote certainty and predictability because they never change. 2.
A purpose of a legal risk management plan is to reduce the risk of being sued and to reduce the amount of liability in the event of a lawsuit. 3.
The courts are empowered to strike down any law that violates the Charter. Multiple Choice
1.
Which definition or definitions best describe “the rule of law”?
a.
Everyone has equal rights before the law, and nobody is above the law, including
government.
b.
The wealthy and educated are more likely to benefit from the law than are the poor and uneducated, and all societies are ruled by law.
c.
Punishment for breaking the law is imposed according to rules of conduct.
d.
All of the above.
Chapter 2
Short Answer
1. When should you choose negotiation over other dispute settlement techniques?
2. When should you choose mediation over other dispute settlement techniques?
3.
When should you choose arbitration as a dispute resolution technique?
Multiple Choice
1. Arbitration as a process is
a. more formal than negotiation
b. more formal than litigation
c. controlled by the parties
d. none of the above
2. If the parties have a history of conflict, and one is stronger than the other, the following is
probably the best alternative dispute resolution process:
a. negotiation
b. mediation
c. arbitration
d. either b or c would work equally well
3. In the mediation process,
a. the mediator guides discussions and imposes a settlement after hearing both sides
b. the mediator guides discussions
c. the mediator always keeps the parties apart during discussions
d. the parties must not be in an adversarial position
4. “Solicitor–client privilege” means
a. anything your lawyer tells you cannot be repeated by you to anyone else
b. anything you write to your lawyer cannot be revealed by either of you
c. your lawyer has a right ahead of other creditors to payment of his or her bill for services
d. third parties who provide your lawyer with information about your case cannot reveal
it to anyone else
e. your lawyer cannot reveal any information you give to him or her about the case without your permission
Chapter 3 Torts
True or False?
1. The standard of proof for tort actions is on a balance of probabilities. 2. Many actions that were originally torts have become offences under provincial statutes.
3. To prove that a defendant has committed a tort, a plaintiff must establish that the defendant’s actions were the sole cause of the harm. 4. A fiduciary duty is an enhanced duty of care that flows from a relationship of special trust. 5. The law assesses professional negligence according to the “reasonable professional” standard. 6. Defamation in writing is called slander. Short Answer
7. What is the difference between negligence and strict liability?
8. Explain the “but for” test. 9.
Your company makes a spray product designed to remove odours from carpets, upholstery, and curtains. Your public relations department advises that a story is circulating on the Internet specifically naming your product and alleging that it is toxic to
house cats. According to the source of the story, an alleged veterinarian in Manitoba, hundreds of cats are reported to have died of liver and kidney failure after being exposed to the product. Your product is made mainly of water, baking soda, and mild natural fragrance oils. All the ingredients have been extensively tested, and you know that the product poses no threat whatsoever to house cats. Your own investigation reveals that the person who
leaked the story is actually a disgruntled former employee who now works for a competitor. Answer the following questions. a. Has your former employee committed a tort by starting this story? Which tort?
b. Did your former employee owe you a duty of care?
c. Is your former employee’s new employer—your competitor—liable for its employee’s actions?
d. What are your damages?
e. Would you request any other remedies in this case?
Chapter 4 Contracts Part 1
True or False?
1. Family members or friends who enter into unwritten business agreements with one another may have difficulty proving they intended the agreement to be legally binding. 2. Contract law presumes business people understand that their promises to one another may be enforced by courts and tribunals. 3. If you shake hands on the essential terms of a business transaction, it will not be legally binding until a contract is written up and signed by the parties. 4. If an essential term of a contract is not precise and results in a contractual dispute that ends up in court, the plaintiff’s subjective interpretation of the term will always prevail. 5. Standard form contracts are one-sided and will not be enforced by the courts. 6. Which of the following is an example of a disclaimer or limitation of liability clause?
a. “This contract will automatically terminate in the event that the purchaser orders less than the quota for four consecutive weeks.”
b. “If the supplier fails to deliver the weekly supply of products to the retailer on or before the first day of each week, the supplier shall pay the retailer $100 for each day that the delivery is late.”
c. “The supplier shall not be liable to the retailer in respect of any losses, damages, costs, or claims resulting from circumstances that are not within the control of the supplier.”
d. “This is the entire agreement between the parties, covering everything agreed or understood in connection with the subject matter of this transaction. No oral promises, conditions, warranties, representations, understandings, or interpretations were relied on by either party to execute this contract.”
7. Which of the following is an example of a liquidated damages clause?
a. “This contract will automatically terminate in the event that the purchaser orders less than the quota for four consecutive weeks.”
b. “If the supplier fails to deliver the weekly supply of products to the retailer on or before the first day of each week, the supplier shall pay the retailer $100 for each day that the delivery is late.”
c. “The supplier shall not be liable to the retailer in respect of any losses, damages, costs, or claims resulting from circumstances that are not within the control of the supplier.”
d. “This is the entire agreement between the parties, covering everything agreed or understood in connection with the subject matter of this transaction. No oral promises, conditions, warranties, representations, understandings, or interpretations were relied on by either party to execute this contract.”
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8. A party to a contract might choose to include a condition subsequent clause in a contract:
a. if there is a risk of forfeiting a deposit if a deadline is missed. b. if it does not want to be bound to the terms of the contract if a certain situation arises. c. to avoid the high cost of litigation if the contract is breached. d. to ensure any dispute will be resolved according to the law in a designated jurisdiction. 9. What are the benefits of a well-written contract?
Chapter 5 Working with Contracts
T/F
1. If an offer specifies that it must be accepted by fax before a certain deadline, your acceptance by email message before the deadline will result in a legally binding contract. 2. Your business purchases a new computer. A week later, you see the same model at a different store at a significantly lower price and realize you paid too much. If you attempt to return the computer to the store where you bought it, the store must refund
your money. 3. If they change their mind about a contract, individuals under the age of majority may be excused from their contractual obligations. Multiple Choice
Multiple Choice
4.
A property developer is negotiating the purchase of several acres of land from the owner to develop a residential complex. The owner has made an attractive offer that is set to expire within 24 hours. The property developer wants more time to consider the offer before making a final commitment. What should the property developer do to gain
additional time?
a.
Make a counteroffer on slightly different terms. b.
Allow the offer to lapse and make a new offer later. c.
Enter into an option agreement with the owner. d.
Reject the offer and make a new offer later. 5.
When a dispute arises concerning a business contract, the first step the parties should take is:
a.
negotiation
b.
mediation
c.
arbitration
d.
litigation
6.
If found to be untrue, which of the following statements made by a car salesperson to a potential buyer would constitute a misrepresentation that could render the contract unenforceable?
a.
“The colour of the car matches your eyes—it’s perfect for you!”
b.
“In my opinion, this car is the best value for your money.”
c.
“This car is accident-free and has had only one previous owner.”
d.
“You won’t get a better deal anywhere else.”
7. Explain the remedies available if a breach of contract involves a condition versus a warranty.
Answer Key:
Answer Key
Chapter 1 3.
Define “law” and describe its purpose.
Law consists of the body of norms, or rules, by which a society chooses to govern itself. Through the law, society seeks to create a stable environment in which its members can plan their affairs with a measure of certainty and predictability. It seeks to help create productive relationships and interactions among individuals, businesses, and governments and to resolve disputes peacefully.
4.
Explain how business law differs from business ethics.
Business law and business ethics intersect but they are not the same thing. Conduct that is legal may not necessarily be considered ethical and vice versa. Legal risk management is one aspect of protecting one’s business. Other aspects, such as business reputation, should also factor into business decision-
making. Compliance with the law may not safeguard a company’s reputation if there is unethical, albeit lawful, conduct.
True False:
1.
F 2. T 3. T
Multiple Choice: A
Chapter 2
1. When should you choose negotiation over other dispute settlement techniques?
Choose negotiation when the parties are establishing rules for resolving potential conflicts in situations where no actual conflict yet exists and when both parties are interested in advancing each other’s business interests as well as their own and are willing to seek win–win solutions. 2. When should you choose mediation over other dispute settlement techniques?
Choose mediation when both parties are prepared to make serious efforts to resolve the issues. Mediation is also useful when both parties are prepared to explore mutual interests and maintain business relationships. Finally, it is useful if you and the other party want to settle a rights issue and your mutual desire to set your own rules exceeds your desire to have a third party set them
for you. 2.
When should you choose arbitration as a dispute resolution technique?
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Arbitration works well if the parties agree to an arbitration system prior to the development of a
conflict. It also works if they wish to maintain a business relationship even when they are involved in a difficult dispute that they cannot agree to resolve through negotiation or mediation. Multiple Choice:
1.
A
2.
C
3.
B
4.
E
Chapter 3
1.
T
2.
T
3.
F
4.
T
5.
T
6.
F
7.
What is the difference between negligence and strict liability?
In a negligence case, the plaintiff must prove that the defendant failed to act reasonably and that this resulted in harm to the plaintiff. In a strict liability case, the burden is on the defendant to prove “due diligence”—that the defendant took every reasonable precaution to prevent the harm. 8. Explain the “but for” test. The “but for” test is the basic test used to establish causation. When trying to determine whether the actions of the defendant were a cause of the harm to the plaintiff, the court asks, “But for the actions of the defendant, would the plaintiff have suffered harm?” If the answer is no, the defendant’s actions were
a cause (not necessarily the only
cause) of the harm to the plaintiff. 10. Your company makes a spray product designed to remove odours from carpets, upholstery, and curtains. Your public relations department advises that a story is circulating on the Internet specifically naming your product and alleging that it is toxic to house cats. According to the source of the story, an alleged veterinarian in Manitoba, hundreds of cats are reported to have died of liver and kidney failure after being exposed to the product. Your product is made mainly of water, baking soda, and mild natural fragrance oils. All the ingredients have been extensively tested, and you know that the product
poses no threat whatsoever to house cats. Your own investigation reveals that the
person who leaked the story is actually a disgruntled former employee who now works for a competitor. Answer the following questions. a. Has your former employee committed a tort by starting this story? Which tort?
These facts support the tort of slander of goods,( also known as injurious falsehood.) b. Did your former employee owe you a duty of care? The former employee owes you a duty of care. Harm to a business caused by spreading false rumours is foreseeable, and harm does not take a past business relationship into consideration. c. Is your former employee’s new employer—your competitor—liable for its employee’s actions?
The chances are low, but if you can prove that the new employer encouraged or knew of the employee’s slanderous activity, or that the employee posted the story while at work, you may be able to argue that the new employer is vicariously liable for the harm. You would likely have to prove that the new employer actually encouraged, or knew of and tolerated, the activity. d. What are your damages?
Your damages would be equal to any decrease in sales, or decrease in corporate goodwill, directly associated with the story. These damages will be difficult to prove, so you may need to spend money on customer surveys, etc. If
you can
tie losses to the story, you may be able to include the cost of a campaign designed to rehabilitate your company’s image in your damage claim. If you have trouble quantifying the damage done by the story, you may still be entitled to nominal damages if you can prove all the elements of the tort. e. Would you request any other remedies in this case?
You might consider asking for injunctive relief: asking the court to order that the defendant take down their original posting and refrain from posting any other slanderous material on the Internet and elsewhere. You may also be able to get an order requiring that the defendant publish a retraction. Chapter 4 Contracts Part I
1.
T
2.
T
3.
F
4.
F
5.
F
6.
C
7.
B
8.
B
9. What are the benefits of a well-written contract?
A well-written contract provides:
•a record of the parties’ rights and responsibilities,
•proof of the parties’ agreement if a dispute arises,
•clarification of the scope of obligations and rights (for example, quality of products, deadlines, quantities, pricing, limitations), and
•concise and clear terms, limiting the application of the court’s rules of construction if terms are vague. Chapter 5 Working With Contracts 1.
F
2.
F
3.
T
4.
C
5.
A
6.
C
7.
Explain the remedies available if a breach of contract involves a condition versus
a warranty. When a breach involves a condition, the non-breaching party is free of all further obligations under the contract. Breach of a condition allows the non-
breaching party to treat the contract as if it had ended. It also gives the non-
breaching party a right to claim compensation for any losses or damages that flow from the breach. If the breach is less serious and involves a relatively minor contractual term or warranty, the non-breaching party must fulfill its remaining obligations under the contract. The non-breaching party does, however, have the right to claim damages as compensation for losses it incurred as a result of the breach.
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