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In ethical terms, a cost-benefit analysis is an assessment of the negative and positive effects of alternative actions on individuals. True.

Holly, a lawyer on the staff of International Group, applies the utilitarian theory of ethics in business contexts. Utilitarianism focuses on the consequences of an action. In making decisions for -------------------------------------------------------------------------------------------------------------United Merchandising Company, Viv incorporates a social cost-benefit analysis. This is part of utilitarianism. An ethics program can clarify what a company considers to be unacceptable conduct. True. The roles that women play in some foreign countries may present some difficult ethical problems for firms doing business internationally. True. Establishing which duties take priority over others determines a firms views on corporate social responsibility. True. Bribery of foreign government officials is both an ethical and a legal issue. True. Kit follows certain religious principles. With respect to the behavior of Kit and other adherents of her religion, its principles are most likely absolute. An action may be unethical but legal. True. As a judge, Jay applies common law rules. These rules develop from decisions of the courts in legal disputes. In an action against Elin, Frank obtains a remedy. This is the legal means to recover a right or to redress a wrong. -Net Corporation files a suit against Omega, Inc., alleging that Omega breached a contract to sell Net a computer system for $100,000. Net is the plaintiff. Hawaii enacts a state law that violates the U.S. Constitution. This law can be enforced by no one. Damages is a modern form of the traditional "remedies at law." True. The Federal Trade Commission is a government agency that issues rules, orders, and decisions. The Georgia state legislature enacts statutes. The Jackson County Board and the Peach City Council enacts ordinances. Administrative law includes the rules, orders, and decisions of the Federal Trade Commission. The Montana Supreme Court decides the case of National Co. v. Overseas Corp. Of nine justices, six believe the judgment should be in National's favor. Justice Peel, one of the six, writes a separate opinion. The four justices who believe the judgment should be in Overseas's favor join in a third separate opinion. The opinion joined by the four justices who favor Overseas is known as a dissenting opinion. In Abel v. Baker, a state supreme court held that a minor could cancel a contract for the sale of a car. Now a trial court in the same state is deciding Charles v. Delta, a case with similar facts. Under the doctrine of stare decisis, the trial court is likely to

allow the minor to cancel the contract. The Montana Supreme Court decides the case of National Co. v. Overseas Corp. Of nine justices, six believe the judgment should be in National's favor. Justice Peel, one of the six, writes a separate opinion. The four justices who believe the judgment should be in Overseas's favor join in a third separate opinion. Peel's opinis known as a concurring opinion. Service of process is the process of obtaining information from an opposing party before trial. False Ula wants to initiate a suit against Valley Farms by filing a complaint. The complaint should include a statement of the facts necessary to show Ula is entitled to relief. Cy files a suit against Digby Corporation. Digby responds that it appears from the pleadings the parties do not dispute the facts and the only question is how the law applies to those facts. Digby supports this response with witnesses' sworn statements. This is a motion for summary judgment. A motion for a new trial will be granted only if the trial judge feels that it is appropriate to grant a judgment for the other side. False Venue is the term for the subject matter of a case. False LCD TV Company, a firm in Minnesota, advertises on the Web. A court in North Dakota would be most likely to exercise jurisdiction over LCD if the firm conducted substantial business with North Dakota residents through its Web site. A brief includes a statement of the applicable law in a case. True. The United States Supreme Court has appellate authority over all cases decided in the state courts. False Testimony given in court about what someone heard someone else say (hearsay) is not admissible as evidence. True. Net Corporation files a suit against Omega, Inc., alleging that Omega breached a contract to sell Net a computer system for $100,000. Net is the plaintiff. The Montana Supreme Court decides the case of National Co. v. Overseas Corp. Of nine justices, six believe the judgment should be in National's favor. Justice Peel, one of the six, writes a separate opinion. The four justices who believe the judgment should be in Overseas's favor join in a third separate opinion. These opinions are collected and published in volumes called reporters. Damages is a modern form of the traditional "remedies at law." True. In a suit against Kit, Leo obtains specific performance. This is an equitable remedy only.

As a judge, Jay applies common law rules. These rules develop from decisions of the courts in legal disputes. The Montana Supreme Court decides the case of National Co. v. Overseas Corp. Of nine justices, six believe the judgment should be in National's favor. Justice Peel, one of the six, writes a separate opinion. The four justices who believe the judgment should be in Overseas's favor join in a third separate opinion. Peel's opinis known as a concurring opinion. Uniform laws apply in all states, including those in which the laws have not been adopted. False A reference to "28 U.S.C. Section 1332" means that a statute can be found in section 1332 of title 28 of the United States Code. True. In Abel v. Baker, a state supreme court held that a minor could cancel a contract for the sale of a car. Now a trial court in the same state is deciding Charles v. Delta, a case with similar facts. Under the doctrine of stare decisis, the trial court is likely to allow the minor to cancel the contract. In some cases, a jury verdict will specify the amount of the damages to be paid by a losing party. True. Boyd files a suit in a federal district court against Cathy. Cathy loses the suit, appeals to the U.S. Court of Appeals for the Second Circuit, and loses again. Cathy asks the United States Supreme Court to hear the case. The Court is not required to hear the case. Concurrent jurisdiction exists when both federal and state courts have the power to hear a particular case. True. Diners Corporation files a suit against Eateries, Inc. After Diners' attorney's presents the plaintiff's case, the attorney for Eateries can file a motion for a directed verdict or present the defendant's case. Testimony given in court about what someone heard someone else say (hearsay) is not admissible as evidence. True. Cy files a suit against Digby Corporation. Digby responds that it appears from the pleadings the parties do not dispute

the facts and the only question is how the law applies to those facts. Digby supports this response with witnesses' sworn statements. This is a motion for summary judgment. All-USA Imports, Inc., disputes the use of "all-usa.com" as a domain name by All-USA Overseas Exports, Ltd., and files a suit to resolve the dispute. Service of process must be by whatever means is reasonably calculated to do the job. Diners Corporation files a suit against Eateries, Inc. The attorney for Eateries also questions Floyd (witness for the plaintiff) after the Diners Corporation's lawyers have questioned him. This is a cross-examination. Indelible Fabrics, Inc. (IFI), makes "Jean's Denim," a famous brand of clothing. Without IFI's consent, Kopy Company (KC) begins to use "jeansdenim" as part of a domain name. IFI files a suit against KC and engages in service of process. Service of process must provide notice and an opportunity to respond. Establishing which duties take priority over others determines a firm's views on corporate social responsibility. True. Dion, an accountant for Engineering Associates, Inc., attempts to apply the duty approach to ethical reasoning in conflicts that occur on the job. This approach is based on the idea that a person must avoid unethical behavior regardless of the consequences. In ethical terms, a cost-benefit analysis is an assessment of the negative and positive effects of alternative actions on individuals. True. In the interest of preserving personal freedom, the law codifies ALL ethical requirements. False Kit follows certain religious principles. With respect to the behavior of Kit and other adherents of her religion, its principles are most likely absolute. Rob, the owner of Super Stores, Inc., adheres to the "principle of rights" theory. Under this theory, a key factor in determining whether a business decision is ethical is how that decision affects the rights of others. Holly, a lawyer on the staff of International Group, applies the utilitarian theory of ethics in business contexts. Utilitarianism focuses on

the consequences of an action. Global Distribution Corporation suggests that its employees apply the "categorical imperative" to ethical issues that arise at work. This requires that the employees weigh the consequences that would follow if everyone acted the same. Lia works for Media Marketing Company. Her job includes putting "spin" on the firm's successes and failures. In this context, ethics consist of questions of rightness and wrongness. Alternative dispute resolution methods are generally less expensive and time consuming than actual litigation. True. Global Enterprises, Inc., uses the services of the Internet Corporation for Assigned Names and Numbers (ICANN). ICANN's purpose is to oversee the distribution of domain names. Faraway Sales Corporation, a U.S. firm, and Globe Transport, a Dutch firm, enter into a contract that includes an arbitration clause. This clause provides that the arbitrator could be any mutually agreeable third party. "Assisted negotiation" describes proceedings for minors and other parties who lack contractual "capacity." False Berle, a dairy farmer, and Clover Creamery, Inc., are engaged in court-annexed arbitration proceedings. The award will be binding on neither Berle nor Clover. South Carolina enacts a statute to impose a prison term, without a trial, on all street vendors who operate within the state. A court would likely hold this to be unconstitutional under the due process clause. The state of New York regulates private activities to protect or promote the public order, health, safety, and general welfare under its police powers. Review of a law on a substantive due process basis and review of a law on an equal protection basis considers some similar questions. True. Any law that distinguishes between or among individuals violates the equal protection clause.

False Beachside City enacts an ordinance that bans the distribution of all printed materials on city streets. Carl opposes the city's latest "revenue-enhancing" measure and wants to protest by distributing handbills. In his suit against the city, a court would likely hold the printed-materials ban to be unconstitutional under the First Amendment. The extent of implied authority is generally broader for agents than for partners. False Jim and Kyle are partners in J&K Sales, which exports technical equipment under a three-year partnership agreement. The U.S. government declares that the equipment can no longer be exported. J&K dissolves immediately unless the partners change its business. Jody owns KuppaJava Kiosks, a sole proprietorship. Jody's liability is unlimited. A partner may use and possess partnership property for any purpose. False Fay is admitted to Global Associates, an existing partnership. A partnership debt incurred before the date of her admission comes due. Fay is only liable for the debt up to the amount of his capital contribution. Energy Unlimited, LP, is a limited partnership to which its partners, including Fink, have contributed capital. Energy's creditors include Graves Engineering, Inc. On Energy's dissolution, its assets will be distributed to pay Graves first. In a limited liability partnership, a partner can be exempt from personal liability for partnership obligations. True For purposes of suing or being sued, a limited liability company is a legal entity apart from its owners. True A limited partner who gives a general partner advice on matters relating to the management of the partnership cannot be liable as a general partner. False Lui is considering forms of business organization for a chain of Magic Trix novelty stores. One advantage of the limited liability company form, with respect to tax options, is its

flexibility. CPA Accounting, LLC, is a limited liability company. If the law in CPA's state is like the law in most states, unless the members have agreed otherwise, participants in the firm's management will be considered to include all members. Unlike a director, an officer is not expected to be informed on corporate matters. False A state constitution may restrict a corporation's implied powers. True Eager Beaver Corporation fails to hold its organizational meeting to adopt bylaws. Under this circumstance, Eager Beaver is most likely a de facto corporation. Directors are required to exercise a reasonable amount of supervision over the corporate officers. True Frawsty Corporation distributes beverages in the greater Northwest. Frawsty's board of directors can delegate some of its functions to Frawsty's officers. Directors are rarely compensated and cannot set their own compensation. False An agent owes his or her principal a duty to act in good faith True If a principal does not ratify an unauthorized contract, the principal is not bound. True Ruby indicates that she is acting as an agent on behalf of an unidentified client when she enters into a contract with Saldana. The unidentified client is a partially disclosed principal. An independent contractor is an employer who controls his or her agent's performance. False Express authority is authority declared in clear, direct, definite terms True

Dan, an agent for Eve, signs an agreement with Fred on Eve's behalf but neglects to tell Eve that the agreement requires the payment of a certain tax. The government prosecutes Eve for failing to pay the tax. Eve is liable, because Dan's knowledge is imputed to Eve. A principal is liable for harm caused to a third party by an agent who commits a tort while acting in the scope of his or her employment True An attempt to monopolize a market can violate antitrust law True Jett Fuel Corporation conditions future shipments of its products to Kondor Airlines, Inc., on Kondor's agreement not to buy products from Lite Kerosene Company, Jett's competitor. This is exclusive dealing. Fairway Products, Inc., and Golly Clubs Corporation lobby the Consumer Product Safety Commission to repeal a rule regulating the manufacture of golf clubs and other golfing products. This joint effort is probably exempt from antitrust enforcement. Market power is the extent to which a firm can exclude competition. True Futuro Products, Inc., has exclusive control over the market for its product. Futuro's market power is subject to evaluation under the Sherman Act. A firm can have monopoly power without violating antitrust law. True Health World Corporation may be engaging in conduct that violates the Sherman Act. To bring an action against the firm requires that its conduct have a significant impact on interstate commerce. Rally Speedboat Corporation refuses to sell its products to Sporty Weekends, Inc., a recreational water products dealership. This is a unilateral refusal to deal. Market share and market concentration are the only factors for analyzing the anticompetitive effects of a merger. False Crop Yield Corporation, Dextros Harvest Company, and Equip Enterprises, Inc., are farm-equipment distributors that control 90 percent of the market for their products in a certain geographic area. The firms agree to sell their products for the same prices. This is a price-fixing agreement. Velvet Chassis, Inc., a manufacturer of vehicle parts, refuses to sell to We-Fix-It, Inc., a national vehicle service firm. Velvet Chassis convinces Xpert Motor Parts Company, a competitor, to do the same. This is a group boycott. A market division by class of customer between rival firms does not violate antitrust law. False Della, an officer for Energy Petrol Corporation (EPC), buys 100 shares of EPC stock. One week later, EPC announces

that it will merge with a competitor, Fuel Oil Company, and the price of EPC stock increases. One month later, Della sells her shares for a profit. Under Section 16(b) of the Securities Exchange Act of 1934, Della would not be liable if, after buying the stock, she had waited more than six months to sell it. Nouveau Riche Corporation, and its officers, directors, and shareholders, buy and sell securities. SEC Rule 10b-5 applies to the purchase or sale of any security. Country Golf Club, Inc., wants to issue stock of $1 million in a single offering. Country does not have to provide any investors with any material information about itself, its business, or its securities is all investors are accredited. Scienter is a requirement for liability under Section 10(b) of the Securities Exchange Act of 1934 True Hobie, the chief executive officer of Ideal Gamers, Inc. (IGI), intentionally understates the amount of IGI's debts in information provided to investors as part of an issue of IGI stock. Jack buys the stock and suffers a loss. Hobie may be subject to government prosecution and Jack's suit.

An agent owes his or her principal a duty to act in good faith True A principal is liable for harm caused to a third party by an agent who commits a tort while acting in the scope of his or her employment True Except in limited circumstances, a principal is not usually liable for an agent's crime simply because it was committed while the agent was acting within the scope of employment. True Agency relationships exist only outside employment relationships False Ozzy is an officer of Prudent Financial Corporation. Ozzy serves in a representative capacity for Prudent Financial's owners. With respect to binding Prudent Financial to contracts, Ozzy is an agent and has the authority. Based on Nan's conduct, Odel reasonably believes that Poppy has the authority to act on Nan's behalf even though Poppy does not have the actual authority to do so. In this circumstance, Poppy has apparent authority. Under the doctrine of respondeat superior, an agent is liable for the principal's negligence. False Cooperative research by small-business firms is exempt from antitrust law. True An attempt to monopolize a market can violate antitrust law. True

Fairway Products, Inc., and Golly Clubs Corporation lobby the Consumer Product Safety Commission to repeal a rule regulating the manufacture of golf clubs and other golfing products. This joint effort is probably exempt from antitrust enforcement. Acquiring monopoly power through anticompetitive means violates antitrust law. True Industrial Coatings Corporation has exclusive control over the market for its product. Under the Sherman Act, this is a violation if it acquired this power through "anticompetitive means." North Mining Company and South Excavation Company agree to abide by the decisions of East Coast Financial Corporation as to their respective levels of production, markets, and prices, effectively reducing competition and increasing profits. This is most likely an illegal restraint on trade. Lightning ATVs, Inc., makes Lightning-brand all-terrain vehicles and accessories, which are distributed to authorized dealers, including Macho Motors, Inc. Macho operates dealerships in several locations. Lightning imposes territorial restrictions on Macho to insulate other dealers from direct competition. This is a vertical restraint. Nano Software, Inc., conditions the sale of its OfficeBooks product on Payroll Personnel Company's agreeing to buy QuikReVu, Nano's photo-editing product. This deal i legal, depending on its purpose and the effect on competition. A merger between firms that compete with each other in the same market is a vertical merger. False A vertical restraint is an agreement that restrains competition between firms operating at different levels of the market structure. True Complete Circuit Electronics, Inc. (CCE), and Deal Direct Corporation (DDC) are the two leading discount electronics firms serving North and South Dakota. Competition between the firms leads to greater marketing expenses. The firms agree that CCE will sell its products only in North Dakota and DDC will sell its products only in South Dakota. The agreement between CCE and DDC violates the Sherman Act. Zippy Moto-Bikes, Inc., wants to prevent discount dealers that carry its products without providing warranty services from cutting into the business of full-service dealers. Zippy's decision to restrict discount dealers to one type of market and full-service dealers to another is subject to evaluation under the rule of reason. Scienter is a requirement for liability under Section 10(b) of the Securities Exchange Act of 1934. True New Discoveries Corporation, and its officers, directors, and shareholders, buy and sell securities. Section 10(b) of the Securities Exchange Act of 1934 applies to the purchase or sale of any security. Della, an officer for Energy Petrol Corporation (EPC), buys 100 shares of EPC stock. One week later, EPC announces that it will merge with a competitor, Fuel Oil Company, and the price of EPC stock increases. One month later, Della sells her shares for a profit. Under Section 16(b) of the Securities Exchange Act of 1934, Della would not be liable if, after buying the stock, she had waited

more than six months to sell it. Willful violations of the Sarbanes-Oxley Act of 2002 may be subject to criminal prosecution. True Willful violations of the Securities Act of 1933 may be subject to criminal prosecution. True "Pumping and dumping" occurs when a person buys shares, combines them with shares of the same stock that he or she already owns, and sells them all together. False