Test Bank for Business Law, 12th Edition Henry R. Cheeseman

Test Bank For Business Law (What's New in Business
Law)
Cheeseman, Henry
Language: English

,Chapter 1: Legal Heritage and the Information Age

1. A U.S. company structures its contracts based on past court decisions interpreting similar
agreements. This practice best reflects which aspect of the legal system?
A. Statutory law
B. Administrative regulation
C. Common law
D. Constitutional law
Correct Answer: C
Rationale: Common law is developed through judicial decisions and relies on past cases
to guide current legal outcomes.
2. An entrepreneur argues that a new statute regulating online privacy should not apply to
her business because courts have not yet interpreted it. Which principle counters her
argument?
A. Stare decisis
B. Supremacy clause
C. Ignorance of the law
D. Legislative authority
Correct Answer: D
Rationale: Legislatures create statutory law, which applies once enacted even before
courts interpret it.
3. A judge follows a previous appellate court decision when ruling on a dispute involving
AI-generated contracts. This illustrates the doctrine of:
A. Judicial review
B. Stare decisis
C. Jurisprudence
D. Equity
Correct Answer: B
Rationale: Stare decisis requires courts to follow precedent established in prior cases.
4. Which source of law primarily reflects society’s evolving standards and ethical
considerations over time?
A. Administrative law
B. Constitutional law
C. Common law
D. Executive orders
Correct Answer: C
Rationale: Common law evolves through court decisions that adapt legal rules to
changing social values.
5. A business challenges a state law regulating data collection, claiming it violates the U.S.
Constitution. Which law takes precedence?
A. State statute
B. Common law
C. Federal statute
D. U.S. Constitution
Correct Answer: D

, Rationale: Under the supremacy principle, the U.S. Constitution is the highest source of
law.
6. Jurisprudence is best described as:
A. The enforcement of administrative rules
B. The philosophical study of law and legal reasoning
C. The process of passing statutes
D. The application of criminal penalties
Correct Answer: B
Rationale: Jurisprudence examines the theory, philosophy, and reasoning behind the law.
7. A court decides a case involving drone delivery by applying existing negligence
principles to new technology. This demonstrates:
A. Strict statutory interpretation
B. The flexibility of common law
C. Administrative enforcement
D. Constitutional amendment
Correct Answer: B
Rationale: Common law allows courts to apply established principles to new factual
situations.
8. Which factor most strongly explains why technology has increased the complexity of
business law?
A. Reduced global trade
B. Slower legislative processes
C. New forms of data and communication
D. Fewer court cases
Correct Answer: C
Rationale: Digital data, online platforms, and AI create novel legal issues requiring new
interpretations.
9. A legislature enacts a law regulating artificial intelligence in hiring. This law is an
example of:
A. Common law
B. Statutory law
C. Case law
D. Procedural law
Correct Answer: B
Rationale: Statutory law consists of written laws passed by legislative bodies.
10. When courts interpret ambiguous statutory language about cybersecurity duties, they are
performing which role?
A. Law enforcement
B. Legislative drafting
C. Judicial interpretation
D. Administrative regulation
Correct Answer: C
Rationale: Courts interpret statutes to determine legislative intent and apply the law.
11. A startup relies on ethical principles to guide decisions where no clear law exists
regarding AI use. This approach aligns most closely with:
A. Jurisprudence

, B. Criminal law
C. Civil procedure
D. Constitutional mandates
Correct Answer: A
Rationale: Jurisprudence considers moral and philosophical perspectives on legal issues.
12. Which legal tradition most influenced the U.S. legal system’s emphasis on precedent?
A. Civil law tradition
B. Canon law
C. English common law
D. International law
Correct Answer: C
Rationale: The U.S. system is rooted in English common law, which relies heavily on
precedent.
13. A judge departs from precedent because the earlier case involved outdated technology.
This is most justified when:
A. The prior decision was from a higher court
B. Social and technological conditions have significantly changed
C. The statute is unambiguous
D. The case involves criminal law
Correct Answer: B
Rationale: Courts may distinguish or reconsider precedent when circumstances have
evolved.
14. Which scenario best illustrates the interaction between law and business in the
Information Age?
A. A retailer sets prices based on demand
B. A firm complies with data breach notification laws after a cyberattack
C. A manager evaluates employee performance
D. A company negotiates office leases
Correct Answer: B
Rationale: Data breach laws directly regulate business conduct involving digital
information.
15. The primary purpose of law in a business context is to:
A. Eliminate all risk
B. Promote ethical behavior only
C. Provide stability and predictability
D. Maximize profits
Correct Answer: C
Rationale: Law creates predictable rules that allow businesses to plan and operate with
confidence.
16. A company argues that no liability should exist for harm caused by its AI because no
statute addresses it. Which source of law is most likely to fill this gap?
A. Constitutional law
B. Common law
C. Administrative law
D. International treaties
Correct Answer: B