TEST BANK - BuSiNESS LAw: TExT
ANd CASES 16Th EdiTioN By KENNETh
CLArKSoN, rogEr MiLLEr ALrEAdy
grAdEd A+
1. The primary purpose of law in a business environment is to:
A. Eliminate all business risks
B. Provide rules that govern conduct and resolve disputes
C. Guarantee profits for companies
D. Prevent competition
Correct Answer: B. Provide rules that govern conduct and resolve disputes
Rationale:
Business law establishes standards of conduct, protects rights, regulates transactions, and
provides methods for resolving disputes.
2. Which of the following is an example of statutory law?
A. A judge’s interpretation of a case
B. A law passed by a legislative body
C. A business custom
D. A private agreement
Correct Answer: B. A law passed by a legislative body
,Rationale:
Statutory law consists of laws enacted by legislative bodies such as Congress or state
legislatures.
3. The doctrine of stare decisis means:
A. Courts ignore previous decisions
B. Courts follow legal precedents
C. Judges create all laws
D. Businesses control courts
Correct Answer: B. Courts follow legal precedents
Rationale:
Stare decisis requires courts to follow established precedents from earlier cases to maintain
consistency.
4. Which court has authority to hear a case first?
A. Appellate court
B. Trial court
C. Supreme court only
D. Administrative agency
Correct Answer: B. Trial court
Rationale:
Trial courts have original jurisdiction and hear evidence before making decisions.
5. Alternative dispute resolution (ADR) includes:
A. Litigation only
B. Arbitration and mediation
C. Criminal prosecution
D. Constitutional amendments
Correct Answer: B. Arbitration and mediation
Rationale:
ADR methods resolve disputes outside traditional court litigation.
, 51. A contract is best defined as:
A. A promise made without consideration
B. An agreement enforceable by law
C. A social relationship
D. A government regulation
Correct Answer: B. An agreement enforceable by law
Rationale:
A contract is a legally enforceable agreement between two or more parties creating obligations
recognized by law.
52. Which element is required for a valid contract?
A. Consideration
B. Friendship between parties
C. Written form in every case
D. Government approval
Correct Answer: A. Consideration
Rationale:
Consideration is something of legal value exchanged between parties and is required for most
contracts.
53. An offer must contain:
A. Definite terms and intent to create a contract
B. A criminal purpose
C. A court order
D. A personal relationship
Correct Answer: A. Definite terms and intent to create a contract
Rationale:
An offer requires clear terms and an intention that acceptance will create a binding agreement.
ANd CASES 16Th EdiTioN By KENNETh
CLArKSoN, rogEr MiLLEr ALrEAdy
grAdEd A+
1. The primary purpose of law in a business environment is to:
A. Eliminate all business risks
B. Provide rules that govern conduct and resolve disputes
C. Guarantee profits for companies
D. Prevent competition
Correct Answer: B. Provide rules that govern conduct and resolve disputes
Rationale:
Business law establishes standards of conduct, protects rights, regulates transactions, and
provides methods for resolving disputes.
2. Which of the following is an example of statutory law?
A. A judge’s interpretation of a case
B. A law passed by a legislative body
C. A business custom
D. A private agreement
Correct Answer: B. A law passed by a legislative body
,Rationale:
Statutory law consists of laws enacted by legislative bodies such as Congress or state
legislatures.
3. The doctrine of stare decisis means:
A. Courts ignore previous decisions
B. Courts follow legal precedents
C. Judges create all laws
D. Businesses control courts
Correct Answer: B. Courts follow legal precedents
Rationale:
Stare decisis requires courts to follow established precedents from earlier cases to maintain
consistency.
4. Which court has authority to hear a case first?
A. Appellate court
B. Trial court
C. Supreme court only
D. Administrative agency
Correct Answer: B. Trial court
Rationale:
Trial courts have original jurisdiction and hear evidence before making decisions.
5. Alternative dispute resolution (ADR) includes:
A. Litigation only
B. Arbitration and mediation
C. Criminal prosecution
D. Constitutional amendments
Correct Answer: B. Arbitration and mediation
Rationale:
ADR methods resolve disputes outside traditional court litigation.
, 51. A contract is best defined as:
A. A promise made without consideration
B. An agreement enforceable by law
C. A social relationship
D. A government regulation
Correct Answer: B. An agreement enforceable by law
Rationale:
A contract is a legally enforceable agreement between two or more parties creating obligations
recognized by law.
52. Which element is required for a valid contract?
A. Consideration
B. Friendship between parties
C. Written form in every case
D. Government approval
Correct Answer: A. Consideration
Rationale:
Consideration is something of legal value exchanged between parties and is required for most
contracts.
53. An offer must contain:
A. Definite terms and intent to create a contract
B. A criminal purpose
C. A court order
D. A personal relationship
Correct Answer: A. Definite terms and intent to create a contract
Rationale:
An offer requires clear terms and an intention that acceptance will create a binding agreement.
