Business Law 10 Multiple Questions

1. Several years ago in Arizona, a civil lawsuit was filed by a plaintiff who had been injured by a drunk driver. The plaintiff sued the driver, and also the fraternity that had furnished the drunk driver with alcohol the night of the automobile collision in which the plaintiff was injured. Addressing the question of whether the franternity, and not just the drunk driver, could be found liable (required to pay a sum of money as compensation) for the plaintiff’s injuries, the Arizona Supreme Court held that the fraternity could also be held liable. In so doing, the court created a rule that social hosts can be liable for the foreseeable acts of its guests who are furnished alcohol by the social organization. There had previously been no existing law in Arizona addressing that issue, and the court was addressing the issue for the first time. The rule the Court created in its decision might be considered an example of:


a) Two (but not more) of the other answer choices are correct

b) a common law precedent

c) private law

d) an administrative regulation

e) criminal law


2. New laws affecting businesses come from which of the following sources:


a) administrative agencies

b) state legislatures


c) federal legislatures
d) Three of the other three answer choices are correct.



e) Two (but not more) of the other answer choices are correct



3. In the 1980s, Congress passed a statute limiting the expenditure of federal highway funds only to those states that maintain a 21-year-old minimum drinking age. This sort of incentive is an example of:


a) Congress exceeding its Constitutional authority.

b) A statute, but not an example of regulatory action.


c) A type of regulation under Congress’s spending power.
d) An illegal attempt by Congress to exercise control over the states.



4. Regulations promulgated by the U.S. Federal Environmental Protection Agency (EPA) and the Indiana state Department of Environmental Management (IDEM) relating to air pollution standards for factories are examples of:

a) federal and state laws
b) administrative rules (regulations)


c) Two (but not more) of the other answer choices are correct.
d) suggested industry guidelines, but not requirements



e) advisory opinions, but not laws because they were not enacted by Congress



5. In the U.S. legal system, the power to declare that a local, state or federal law is unconstitutional and therefore void (should have not effect and should not be treated as a law) lies with:


a) the president

b) The other three answer choices are all correct.


c) The judiciary (Courts)
d) Congress



6. The federal Environmental Protection Agency (EPA) is an example of:

a) a combination state and federal administrative agency, because of its local field offices
b) a law enforcement agency, but not an “administrative agency”


c) a federal administrative agency
d) one part of the judicial branch of government




7. Carlos has been fined for operating an unlicensed “barber shop.” The phrase “barber shop” is not clearly defined in the statute Carlos is accused of violating (Carlos claims that he is operating a “hair salon” that is not regulated by the law in question). A court might look to which of the following to decide what “barber shop” means for purpose of deciding whether Carlos has violated the law?


a) The plain meaning of the statute

b) Prior interpretations of the statute by other courts and administrative agencies.


c) The general public purpose of preventing harm attendant to unregulated hair cutting and styling services.
d) The other four answer choices are all correct.



e) Legislative history of the statute and records reflecting the intent of legislators who enacted it.



8. In the case of Gonzales v. Raich (California residents prosecuted for growing marijuana for personal medical use), the U.S. Supreme Court addressed the “Commerce Clause” of the U.S. Constitution and noted that the Commerce Clause:

a) Must be interpreted narrowly to protect the rights of individuals and the various states; accordingly, the statute being reviewed was declared unconstitutional and was invalidated.
b) Two of the other answer choices are correct.


c) Is interpreted very broadly, such that Congress can restrict activities within a particular state that do not themselves cross state lines, so long as such activities, if repeated by others, might collectively effect interstate commerce; accordingly, the statute being reviewed was upheld.
d) Cannot be used by Congress as a means to interfere with state legislative action; accordingly, the statute being reviewed was invalidated.




9. The principle of federal supremacy means that:


a) States are only permitted to make law with regard to those matters that do not affect interstate commerce.

b) State legislatures never decide important issues relating to business; important issues like that are reserved for federal legislation passed by Congress.


c) States may legislate in many ways that significantly affect businesses, but federal laws take precedence over inconsistent state laws.
d) The U.S. Constitution puts no limits on federal lawmaking powers.



e) States may legislate in many ways that significantly affect businesses, and state laws take precedence over inconsistent federal laws.



10. If Congress disagrees with the Supreme Court’s interpretation of a federal statute, Congress:


a) May enact a new statute to achieve the originally intended purpose.

b) Two (but not three) of the other answer choices are correct.


c) Cannot repeal or amend the statute; from that point forward Congress is stuck with the Court’s interpretation.
d) May amend the statute to more clearly give it the meaning that Congress deems appropriate
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