Strayer University LEG 510 Midterm Exam (pdf) | 2026/2027 | Law &
Ethics Q&A | Business Law
1. Which of the following best describes the primary purpose of law in a
business context?
A) To maximize profits for shareholders
B) To provide a framework for orderly conduct and dispute resolution
C) To eliminate all business risks
D) To protect only the interests of consumers
Correct Answer: To provide a framework for orderly conduct and dispute
resolution
Rationale: The law provides a structured framework for business conduct,
establishing rules that govern relationships, enforce contracts, and resolve
disputes. It creates predictability and stability essential for commerce. While
law does protect consumers and shareholders, its primary purpose is to
establish order and fairness in business transactions.
2. The doctrine of stare decisis refers to:
A) The principle of following precedent in legal decisions
B) The authority of administrative agencies
C) The separation of powers in government
D) The right to a fair trial
Correct Answer: The principle of following precedent in legal decisions
Rationale: Stare decisis is a foundational legal principle meaning "to stand by
things decided." It requires courts to follow precedents established in
previous similar cases, promoting consistency, predictability, and stability in
,the law. This principle is essential to the common law system used in the
United States.
3. A law passed by a legislative body is known as:
A) Common law
B) Statutory law
C) Administrative law
D) Constitutional law
Correct Answer: Statutory law
Rationale: Statutory law consists of written laws enacted by legislative
bodies at the federal, state, and local levels. These laws are formally passed
through the legislative process and codified in statute books. Common law
develops through court decisions, administrative law through agency
regulations, and constitutional law is based on the U.S. Constitution.
4. The U.S. Constitution serves as:
A) A set of guidelines for business conduct
B) The supreme law of the land
C) A code of ethics for lawyers
D) A collection of state statutes
Correct Answer: The supreme law of the land
Rationale: The U.S. Constitution is the highest law in the United States,
establishing the framework for the federal government and delineating the
powers of the three branches. It also protects individual rights and liberties.
All other laws—federal, state, and local—must be consistent with the
Constitution.
,5. Which of the following is NOT a source of law in the United States?
A) Constitutional law
B) Statutory law
C) International treaties
D) Corporate bylaws
Correct Answer: Corporate bylaws
Rationale: While corporate bylaws are legally binding internal rules for
corporations, they are not a primary source of law. The primary sources of
law are constitutional law, statutory law, administrative law, and common
law. International treaties, when ratified, also become part of U.S. law.
6. The doctrine of federal preemption means that:
A) State laws always take precedence over federal laws
B) Federal law supersedes conflicting state law
C) States have exclusive authority over business regulation
D) Federal courts cannot hear state law claims
Correct Answer: Federal law supersedes conflicting state law
Rationale: The Supremacy Clause of the U.S. Constitution establishes that
federal law is the supreme law of the land. When federal and state laws
conflict, federal law preempts state law. This doctrine ensures uniform
national standards on issues where federal authority is paramount.
7. Administrative agencies derive their authority from:
A) The U.S. Constitution directly
, B) Enabling legislation passed by Congress or state legislatures
C) Executive orders issued by the President
D) Judicial decisions from the Supreme Court
Correct Answer: Enabling legislation passed by Congress or state legislatures
Rationale: Administrative agencies are created by enabling legislation that
defines their powers, jurisdiction, and responsibilities. This legislation
delegates authority to agencies to promulgate regulations, enforce laws, and
adjudicate disputes within their designated areas of expertise.
8. The "reasonable person standard" is used in which area of law?
A) Contract law
B) Tort law
C) Criminal law
D) Constitutional law
Correct Answer: Tort law
Rationale: The reasonable person standard is central to negligence law, a
branch of tort law. It establishes an objective measure of conduct: what a
reasonably prudent person would do in similar circumstances. This standard
is used to determine whether a defendant breached their duty of care.
9. Which of the following is NOT a required element of a valid contract?
A) Offer
B) Acceptance
C) Consideration
D) Written form
Ethics Q&A | Business Law
1. Which of the following best describes the primary purpose of law in a
business context?
A) To maximize profits for shareholders
B) To provide a framework for orderly conduct and dispute resolution
C) To eliminate all business risks
D) To protect only the interests of consumers
Correct Answer: To provide a framework for orderly conduct and dispute
resolution
Rationale: The law provides a structured framework for business conduct,
establishing rules that govern relationships, enforce contracts, and resolve
disputes. It creates predictability and stability essential for commerce. While
law does protect consumers and shareholders, its primary purpose is to
establish order and fairness in business transactions.
2. The doctrine of stare decisis refers to:
A) The principle of following precedent in legal decisions
B) The authority of administrative agencies
C) The separation of powers in government
D) The right to a fair trial
Correct Answer: The principle of following precedent in legal decisions
Rationale: Stare decisis is a foundational legal principle meaning "to stand by
things decided." It requires courts to follow precedents established in
previous similar cases, promoting consistency, predictability, and stability in
,the law. This principle is essential to the common law system used in the
United States.
3. A law passed by a legislative body is known as:
A) Common law
B) Statutory law
C) Administrative law
D) Constitutional law
Correct Answer: Statutory law
Rationale: Statutory law consists of written laws enacted by legislative
bodies at the federal, state, and local levels. These laws are formally passed
through the legislative process and codified in statute books. Common law
develops through court decisions, administrative law through agency
regulations, and constitutional law is based on the U.S. Constitution.
4. The U.S. Constitution serves as:
A) A set of guidelines for business conduct
B) The supreme law of the land
C) A code of ethics for lawyers
D) A collection of state statutes
Correct Answer: The supreme law of the land
Rationale: The U.S. Constitution is the highest law in the United States,
establishing the framework for the federal government and delineating the
powers of the three branches. It also protects individual rights and liberties.
All other laws—federal, state, and local—must be consistent with the
Constitution.
,5. Which of the following is NOT a source of law in the United States?
A) Constitutional law
B) Statutory law
C) International treaties
D) Corporate bylaws
Correct Answer: Corporate bylaws
Rationale: While corporate bylaws are legally binding internal rules for
corporations, they are not a primary source of law. The primary sources of
law are constitutional law, statutory law, administrative law, and common
law. International treaties, when ratified, also become part of U.S. law.
6. The doctrine of federal preemption means that:
A) State laws always take precedence over federal laws
B) Federal law supersedes conflicting state law
C) States have exclusive authority over business regulation
D) Federal courts cannot hear state law claims
Correct Answer: Federal law supersedes conflicting state law
Rationale: The Supremacy Clause of the U.S. Constitution establishes that
federal law is the supreme law of the land. When federal and state laws
conflict, federal law preempts state law. This doctrine ensures uniform
national standards on issues where federal authority is paramount.
7. Administrative agencies derive their authority from:
A) The U.S. Constitution directly
, B) Enabling legislation passed by Congress or state legislatures
C) Executive orders issued by the President
D) Judicial decisions from the Supreme Court
Correct Answer: Enabling legislation passed by Congress or state legislatures
Rationale: Administrative agencies are created by enabling legislation that
defines their powers, jurisdiction, and responsibilities. This legislation
delegates authority to agencies to promulgate regulations, enforce laws, and
adjudicate disputes within their designated areas of expertise.
8. The "reasonable person standard" is used in which area of law?
A) Contract law
B) Tort law
C) Criminal law
D) Constitutional law
Correct Answer: Tort law
Rationale: The reasonable person standard is central to negligence law, a
branch of tort law. It establishes an objective measure of conduct: what a
reasonably prudent person would do in similar circumstances. This standard
is used to determine whether a defendant breached their duty of care.
9. Which of the following is NOT a required element of a valid contract?
A) Offer
B) Acceptance
C) Consideration
D) Written form
