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Chapter
2
Courts
and Alternative
Dispute
Resolution
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N.B.: TYPE
indicates that a question is new, modified, or unchanged, as follows.
N A
question new
to this edition of the Test Bank.
+ A
question modified
from the previous edition of the Test Bank.
= A
question included
in the previous edition of the Test Bank.
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TRUE/FALSE QUESTIONS
A1. Federal courts are superior to state courts.
ANSWER: F PAGE: 28 TYPE: =
NAT: AACSB Analytic AICPA Legal
A2. The courts can decide whether the other
branches of government have acted within the scope of their constitutional
authority.
ANSWER: T PAGE: 28 TYPE: =
NAT: AACSB Analytic AICPA Legal
A3. Minimum contacts with a jurisdiction are never
enough to support jurisdiction over a nonresident defendant.
ANSWER: F PAGE: 30 TYPE: =
NAT: AACSB Analytic AICPA Legal
A4. Diversity of citizenship cases are
only those arising between citizens of different states.
ANSWER: F PAGE: 33 TYPE: N
NAT: AACSB Analytic AICPA Legal
A5. Concurrent
jurisdiction exists when both federal and state courts have the power to hear a
particular case.
ANSWER: t PAGE: 33 TYPE: =
NAT: AACSB Analytic AICPA Legal
A6. A court cannot exercise jurisdiction
over an out-of-state defendant who has only done business in the state over the
Internet.
ANSWER: F PAGE: 34 TYPE: N
NAT: AACSB Analytic AICPA Legal
A7. Venue is the term for the subject matter of a case.
ANSWER: F PAGE: 34 TYPE: =
NAT: AACSB Analytic AICPA Legal
A8. A justiciable controversy is a case in which
the court’s decision—the “justice” that will be served—will be controversial.
ANSWER: F PAGE: 35 TYPE: =
NAT: AACSB Analytic AICPA Legal
A9. In some states, lawyers are not allowed to represent people in small
claims courts.
ANSWER: T PAGE: 38 TYPE: N
NAT: AACSB Analytic AICPA Critical
Thinking
A10. The United States Supreme Court has original
jurisdiction in rare instances.
ANSWER: T PAGE: 39 TYPE: N
NAT: AACSB Analytic AICPA Legal
A11. A federal case typically originates in a state court.
ANSWER: F PAGE: 39 TYPE: N
NAT: AACSB Analytic AICPA Legal
A12. Alternative
dispute resolution refers to any method for resolving a dispute outside the
court system.
answer: T PAGE: 41 TYPE: =
NAT: AACSB Reflective AICPA Critical Thinking
A13. Negotiation
traditionally involves just the parties to a dispute without their attorneys.
ANSWER: F PAGE: 41 TYPE: N
NAT: AACSB Reflective AICPA Legal
A14. Negotiation
is the most complex form of alternative dispute resolution.
ANSWER: F PAGE: 41 TYPE: =
NAT: AACSB Reflective AICPA Critical Thinking
A15. No court offers mediation as an option
before a case goes to trial.
ANSWER: F PAGE: 41 TYPE: =
NAT: AACSB Reflective AICPA Legal
A16. Arbitration
that is mandated by the courts is often binding on the parties.
answer: f PAGE: 42 TYPE: N
NAT: AACSB Analytic AICPA Legal
A17. A court
will review a contract for validity even if it contains an arbitration clause.
ANSWER: F PAGE: 43 TYPE: =
NAT: AACSB Analytic AICPA Legal
A18. Most online dispute resolution services
apply general, universal legal principles to resolve disputes.
ANSWER: T PAGE: 45 TYPE: =
NAT: AACSB Technology AICPA Leveraging Technology
A19. In
early neutral case evaluation, a third party’s evaluation of each party’s
strengths and weaknesses forms the basis for negotiating a settlement.
ANSWER: t PAGE: 45 TYPE: =
NAT: AACSB Reflective AICPA Critical Thinking
A20. A
choice-of-law clause is a provision in a contract that excuses a party from
liability for nonperformance due to “acts of God.”
ANSWER: F PAGE: 46 TYPE: =
NAT: AACSB Analytic AICPA Legal
multiple
choice questions
A1. The Ohio state legislature passes a law to regulate local
delivery services. The final authority regarding the constitutionality of this
law is
a. the judicial system.
b. the president of the United States.
c. the governor of Ohio.
d. the U.S. Congress.
answer: A PAGE: 28 TYPE: =
NAT: AACSB Reflective AICPA Legal
A2. Ginger wants to file a suit against
Fred. For a court to hear the case
a. Fred must agree.
b. the court must have jurisdiction.
c. the parties must have no minimum
contact with each other.
d. the parties must own property.
answer: B PAGE: 30 TYPE: N
NAT: AACSB Reflective AICPA Legal
A3. The case of Max v. National Credit Co. is heard in a trial court. The case
of O! Boy! Ice
Cream Co. v. Pickled Peppers, Inc.,
is heard in an appellate court. The difference between a trial and an appellate
court is whether
a. a
trial is being held.
b. the
court is appealing.
c. the
parties question how the law applies to their dispute.
d. the
subject matter of the case involves complex facts.
answer: A PAGE: 32 TYPE: N
NAT: AACSB Reflective AICPA Legal
A4. Rolf, a citizen of New Mexico, wants to file a suit against
Sandy, a citizen of Texas. Their diversity of citizenship may be a basis for
a. no court
to exercise jurisdiction.
b. a federal
court to exercise original jurisdiction.
c. a state
court to exercise appellate jurisdiction.
d. the
United States Supreme Court to refuse jurisdiction.
answer: B PAGE: 33 TYPE: N
NAT: AACSB Reflective AICPA Legal
A5. Inferior Company, which is based on South Carolina, makes and
sells products that are poorly made. Jack, who is a resident of North
Carolina, buys an Inferior product and suffers an injury through its use. The
diversity of citizenship between these parties means that
a. federal and state courts have
concurrent jurisdiction.
b. federal courts have exclusive
jurisdiction.
c. no court has jurisdiction.
d. state courts have exclusive
jurisdiction.
ANSWER: A PAGE: 33 TYPE: N
NAT: AACSB Reflective AICPA Critical Thinking
A6. 3D HD TV Company, a firm in Minnesota,
advertises on the Web. A court in North Dakota would be most likely to exercise
jurisdiction over 3D HD if the firm
a. conducted substantial business with North Dakota residents
through its Web site.
b. interacted
with any North Dakota resident through its Web site.
c. only
advertised without interactivity at its Web site.
d. suddenly
removed its ad from the Internet.
ANSWER: A PAGE: 34 TYPE: =
NAT: AACSB Reflective AICPA Legal
A7. Liu
files a suit against Macro Sales, Inc., in a New Jersey state court based on a
Web site through which New Jersey residents can do business with Macro. The
court will most likely exercise jurisdiction over Macro if the interactivity of
the site is seen as
a. a “substantial enough” connection with the state.
b. “downloading” from the state.
c. not connected with the state.
d. “uploading” to the state.
ANSWER: A PAGE: 34 TYPE: =
NAT: AACSB Reflective AICPA Critical Thinking
A8. Inferior Company sells products that are poorly made. Jock, who
has never bought an Inferior product, files a suit against Inferior, alleging
that its products are defective. The firm’s best ground for dismissal of the
suit is that Jock does not have
a. certiorari.
b. jurisdiction.
c. standing.
d. sufficient minimum contacts.
answer: C PAGE: 35 TYPE: =
NAT: AACSB Reflective AICPA Decision Modeling
A9. Mariah wins her suit against Variety
Products Company. Variety’s best ground for appeal is the trial court’s
interpretation of
a. the conduct of the witnesses during the trial.
b. the
credibility of the evidence that Mariah presented.
c. the
dealings between the parties before the suit.
d. the
law that applied to the issues in the case.
ANSWER: D PAGE: 38 TYPE: =
NAT: AACSB Reflective AICPA Legal
A10. Drummond wants to make a federal case out of
his dispute with Elena. Federal cases originate in
a. federal
courts of appeals.
b. federal
district courts.
c. state
trial courts.
d. the United States Supreme Court.
answer: B PAGE: 39 TYPE: N
NAT: AACSB Reflective AICPA Legal
A11. 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
a. not required to hear the case.
b. required to hear the case because Cathy
lost in a federal court.
c. required to hear the case because Cathy
lost in a lower court.
d. required to hear the case because it is
an appeal.
answer: A PAGE: 40 TYPE: =
NAT: AACSB Reflective AICPA Legal
A12. Olivia files a
suit against Parker. If this suit is like most cases, it will be
a. dismissed
during a trial.
b. dismissed
or settled before a trial.
c. resolved
only after a trial.
d. settled
at a trial.
ANSWER: B PAGE: 41 TYPE: =
NAT: AACSB Reflective AICPA Legal
A13. Shelly and Tom
disagree over the amount of money due under their contract. To avoid involving
any third party in a resolution of the dispute, Shelly and Tom might prefer to
use the alternative dispute resolution method of
a. arbitration.
b. litigation.
c. mediation.
d. negotiation.
answer: D PAGE: 41 TYPE: =
NAT: AACSB Reflective AICPA Critical Thinking
Fact Pattern 2-A1 (Questions A14-A16 apply)
Java Cafes, Inc., and Kaffe
Import Corporation dispute a term in their contract.
A14. Refer to Fact
Pattern 2-A1. The least expensive
method to resolve the dispute between Java and Kaffe may be
a. arbitration
because the case will be heard by a mini-jury.
b. litigation
because each party will pay its own legal fees.
c. mediation
because the dispute will be resolved by a non-expert.
d. negotiation
because no third parties are needed.
answer: D PAGE: 41 TYPE: =
NAT: AACSB Reflective AICPA Risk Analysis
A15. Refer to Fact
Pattern 2-A1. If Java and Kaffe have a long-standing business relationship
that they would like to continue, a preferred method of settling their dispute
may be mediation because
a. the case
will be heard by a mini-jury.
b. the
dispute will eventually go to trial.
c. the
process is not adversarial.
d. the
resolution of the dispute will be decided an expert.
answer: C PAGE: 41 TYPE: =
NAT: AACSB Reflective AICPA Risk Analysis
A16. Refer to Fact
Pattern 2-A1. Resolving the dispute between Java and Kaffe by having a neutral
third party render a binding decision is one of the advantages of
a. arbitration.
b. conciliation.
c. intervention.
d. mediation.
answer: A PAGE: 42 TYPE: =
NAT: AACSB Reflective AICPA Risk Analysis
A17. Eden Property
Sales Corporation and Dion agree to resolve their dispute in arbitration. The
arbitrator’s decision is called
a. a
conclusion of law.
b. a
finding of fact.
c. an award.
d. a
verdict.
answer: C PAGE: 42 TYPE: =
NAT: AACSB Reflective AICPA Legal
A18. Transnational
Corporation and UniShip, Inc., agree to a contract that includes an arbitration
clause. If a dispute arises, a court having jurisdiction may
a. monitor
any arbitration until it concludes.
b. order an
arbitrator to rule in a particular way.
c. order
a party to bring the dispute to court.
d. order a
party to submit to arbitration.
answer: D PAGE: 43 TYPE: =
NAT: AACSB Reflective AICPA Legal
A19. Vince files a suit against Will. Vince and Will meet, and each
party’s attorney argues the party’s case before a judge and jury. The jury
presents an advisory verdict, after which the judge meets with the parties to
encourage them to settle their dispute. This is
a. court-ordered
arbitration.
b. early
neutral case evaluation.
c. a
mini-trial.
d. a summary
jury trial.
answer: D PAGE: 45 TYPE: =
NAT: AACSB Reflective AICPA Legal
A20. Kato and Leilani dispute the quality of a collection of sports
memorabilia sold over the Internet. They agree to resolve this dispute in
2BRNot2B.com, an online forum. Like most online forums, 2BRNot2B.com applies
a. general,
universal legal principles.
b. the
provisions of the Federal Arbitration Act.
c. jurisprudence
developed by the United Nations.
d. the
law of California (or another specific U.S. jurisdiction) .
answer: A PAGE: 45 TYPE: N
NAT: AACSB Reflective AICPA Legal
Essay
Questions
A1. Quik
Results, Inc., a Maine corporation, makes and sells Power Up!, a weight-gain
and muscle-building supplement. Orin, a citizen of New York, sees an ad for
Power Up! in WorkOut magazine and buys it in New York City
at a local health club. Within ten days of beginning to use Power Up!, Orin
suffers internal injuries. Alleging that the injuries are caused by Power Up!,
Orin files a suit against Quik in a New York state court. Quik asks the court
to dismiss the suit on the ground that it does not have personal jurisdiction
over Quik. What is the court most likely to rule and why?
ANSWER: The court will most likely refuse to dismiss
the suit and allow the action to proceed, because Quik (the defendant)
advertised and sold its product Power Up! in New York to New York residents and
thus subjected itself to being sued in New York. In other words, because Quik
purposefully availed itself of the privilege of conducting business in New
York, it had sufficient minimum contacts with the state for a New York state
court to exercise jurisdiction over Quik.
PAGE: 30–32 TYPE: =
NAT: AACSB Reflective AICPA Decision Modeling
A2. Elle
is walking to work along a sidewalk next to a road. A truck owned by Fast
Distribution Company (FDC) strikes and injures Elle, causing her injuries that
result in more than $250,000 in medical expenses. Elle is a resident of
Georgia, where the accident occurred. FDC has its principal place of business,
and is incorporated, in Delaware. In what court may Elle sue FDC?
ANSWER: Elle may sue FDC in Delaware, because FDC has its principal
place of business, and is incorporated, in that state. FDC may be sued in
Georgia, because that is where Elle’s injury occurred. FDC may be subject to
Elle’s suit in a federal court, because the parties have diversity of
citizenship (Elle is a resident of Georgia and FDC has its principal place of
business, and is incorporated, in Delaware) and the amount in controversy is
more than $75,000 (the cost of Elle’s injuries is more than $250,000).
PAGE: 32–33 type: =
NAT: AACSB Reflective AICPA Decision Modeling
Appendix
B for Unit Two
Questions
on the Features
|
N.B.: TYPE
indicates that a question is new, modified, or unchanged, as follows.
N A
question new
to this edition of the Test Bank.
+ A
question modified
from the previous edition of the Test Bank.
= A
question included
in the previous edition of the Test Bank.
|
|
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chapter 7—Insight into ethics:
some consequences of caps on medical malpractice
awards
A1. California
caps noneconomic damages in medical malpractice cases at $250,000. California
and other states hope that such limits will reduce health-care expenditures by
reducing
a. the
frequency and severity of medical malpractice claims.
b. the
frequency and severity of occurrences of medical negligence.
c. the
number of legal and financial personnel, including attorneys.
d. the
size of medical staffs, including “nonessential” personnel.
answer: A PAGE: 142 TYPE: N
NAT:
AACSB Reflective AICPA
Legal
chapter 8—shifting legal priorities for business:
THe Anti-COunterfeiting Trade agreement
A2. The Anti-Counterfeiting Trade Agreement is
most likely to establish an international governing body to be
a. subject
to the World Intellectual Property Organization.
b. under
the auspices of the World Trade Organization.
c. part
of the Internet Corporation for Assigned Names and Numbers.
d. separate and distinct from existing
groups.
ANSWER: D PAGE: 170 TYPE: N
NAT:
AACSB Reflective AICPA
Legal
chapter 9—shifting legal priorities for business:
Prosecuting white-collar crime with the
honest-services fraud law
A3. Lauren, a basketball coach at State
University, schemes to fraudulently obtain scholarships for her team’s players.
This is most likely
a. honest-services
fraud, a federal crime.
b. a
violation of collegiate athletic rules but no crime.
c. a
breach of university rules but no civil or criminal wrong.
d. unethical but no crime.
ANSWER: A PAGE: 183 TYPE: N
NAT:
AACSB Reflective AICPA
Legal
Unit
TWO—focus on legal ethics:
ethics
and torts and crimes
A4. ReadIt, Inc., develops an internationally
popular Web site, tailoring its features to the censorship requirements of
various governments. Critics charge ReadIt with “decapitating the voice of
dissent.” Ethically, the best
argument in favor of ReadIt’s policy is
a. ReadIt is merely following the lead of
governments everywhere.
b. ReadIt is only seeking profits in
lucrative markets.
c. ReadIt’s action is a common
international practice.
d. ReadIt’s approach is a move toward more
open access in the future.
ANSWER: D PAGE: 200 TYPE: N
NAT:
AACSB Reflective AICPA
Legal
A5. Movies, Inc. (MI), releases on DVD Nothing to Hide, a
film focusing on the lack of privacy in cyberspace. Owen posts online computer
code that cracks the DVD’s encryption, allowing users to make unauthorized
copies. MI files a suit against Owen. The court is most likely to rule that
a. computer
code is a form of “pure speech.”
b. the
First Amendment completely protects computer code.
c. the
First Amendment does not apply to computer code.
d. the
First Amendment protects computer code to a lesser extent.
answer: D PAGE: 203 TYPE: =
NAT:
AACSB Reflective AICPA
Legal
Courts
and Alternative
Dispute
Resolution
|
N.B.: TYPE indicates that a
question is new, modified, or unchanged, as follows.
N A
question new
to this edition of the Test Bank.
+ A
question modified
from the previous edition of the Test Bank.
= A
question included
in the previous edition of the Test Bank.
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TRUE/FALSE QUESTIONS
B1. The function of the courts is to interpret
and apply the law.
ANSWER: T PAGE: 28 TYPE: =
NAT: AACSB Analytic AICPA Legal
B2. State courts are independent of federal
courts.
ANSWER: T PAGE: 28 TYPE: =
NAT: AACSB Analytic AICPA Legal
B3. The executive branch is the final
authority concerning the constitutionality of a law.
ANSWER: F PAGE: 28 TYPE: =
NAT: AACSB Analytic AICPA Legal
B4. A
long arm statute permits a court to obtain jurisdiction over an out-of-state
defendant.
ANSWER: t PAGE: 30 TYPE: =
NAT: AACSB Analytic AICPA Legal
B5. A state court cannot exercise jurisdiction
over property located within the state’s boundaries regardless of the property
owners’ location.
ANSWER: T PAGE: 30 TYPE: =
NAT: AACSB Analytic AICPA Legal
B6. For
purposes of diversity of citizenship, a corporation is a citizen only of the
state in which it is incorporated.
ANSWER: F PAGE: 33 TYPE: =
NAT: AACSB Analytic AICPA Legal
B7. A business firm may have to comply with
the laws of any jurisdiction in which it actively targets customers.
ANSWER: T PAGE: 34 TYPE: =
NAT: AACSB Reflective AICPA Critical Thinking
B8. To
have standing to sue, a party must have been injured or have been threatened
with injury by the action about which he or she is complaining.
ANSWER: T PAGE: 35 TYPE: =
NAT: AACSB Analytic AICPA Legal
B9. Small
claims courts are inferior state trial courts.
ANSWER: T PAGE: 38 TYPE: N
NAT: AACSB Analytic AICPA Legal
B10. Courts
of appeals conduct new trials in which evidence is submitted to the court and
witnesses are examined.
ANSWER: F PAGE: 38 TYPE: N
NAT: AACSB Reflective AICPA Critical Thinking
B11. U.S. district courts have original
jurisdiction in matters involving federal questions.
answer: T PAGE: 39 TYPE: N
NAT: AACSB Reflective AICPA Critical Thinking
B12. The
United States Supreme Court can review any case decided by any of the federal
courts of appeals.
ANSWER: T PAGE: 39 TYPE: N
NAT: AACSB Analytic AICPA Legal
B13. Most lawsuits are settled or dismissed
before they go to trial.
answer: T PAGE: 41 TYPE: =
NAT: AACSB Reflective AICPA Risk Analysis
B14. In mediation, the mediator proposes a solution
that includes what compromises are necessary to reach an agreement.
answer: T PAGE: 41 TYPE: =
NAT: AACSB Reflective AICPA Critical Thinking
B15. Mediation
is adversarial in nature.
answer: F PAGE: 41 TYPE: =
NAT: AACSB Reflective AICPA Critical Thinking
B16. A
court’s review of an arbitrator’s award may be restricted.
answer: T PAGE: 42 TYPE: =
NAT: AACSB Analytic AICPA Legal
B17. Mandatory
arbitration clauses in employment contracts are generally enforceable.
ANSWER: T PAGE: 44 TYPE: +
NAT: AACSB Analytic AICPA Legal
B18. A mini-trial is a private proceeding in
which each party’s attorney argues the party’s case before the other party.
answer: t PAGE: 45 TYPE: =
NAT: AACSB Reflective AICPA Critical Thinking
B19. The verdict in a summary jury trial is
binding.
ANSWER: F PAGE: 45 TYPE: =
NAT: AACSB Analytic AICPA Legal
B20. A
choice-of-law clause designates the jurisdiction for the litigation of disputes
arising under a contract.
ANSWER: F PAGE: 46 TYPE: =
NAT: AACSB Reflective AICPA Critical Thinking
multiple
choice questions
B1. Harvey, a resident of Indiana, has an
accident with Janette, a resident of Kentucky, while driving through that
state. Janette files a suit against Harvey in Kentucky. Regarding Harvey, Kentucky has
a. diversity
jurisdiction.
b. in personam
jurisdiction.
c. in rem jurisdiction.
d. no
jurisdiction.
answer: B PAGE: 30 TYPE: =
NAT: AACSB Reflective AICPA Legal
B2. Tyler, a citizen of Utah, files a suit in
a Utah state court against Veritas Sales Corporation, a Washington state
company that does business in Utah. The court has original jurisdiction, which
means that
a. the
case is being heard for the first time.
b. the
court has a unique method of deciding whether to hear a case.
c. the
court has unusual procedural rules.
d. the
subject matter of the suit is interesting and new.
answer: A PAGE: 32 TYPE: N
NAT: AACSB Reflective AICPA Legal
B3. Lora is a resident of Illinois. Ned is a
resident of Wisconsin. They dispute the ownership of a boat docked in a
Michigan harbor. This diversity of citizenship could serve as a basis for
a. federal
jurisdiction.
b. general
jurisdiction.
c. limited
jurisdiction.
d. state
jurisdiction.
answer: A PAGE: 33 TYPE: N
NAT: AACSB Reflective AICPA
Legal
B4. Jo files a suit against Lara in a Missouri
state court. Lara’s only connection to Missouri is an ad on the Web
originating in Nebraska. For Missouri to exercise jurisdiction, the issue is
whether Lara, through her ad, has
a. a commercial cyber presence in Missouri.
b. conducted substantial business with Missouri
residents.
c. general maximum contact with Missouri.
d. solicited virtual business in Missouri.
answer: B PAGE: 34 TYPE: =
NAT: AACSB Reflective AICPA Legal
B5. Lacey files a suit in Michigan against Ned
over the ownership of a boat docked in a Michigan harbor. Lacey and Ned are
residents of Ohio. Ned could ask for a change of venue on the ground that Ohio
a. has
a sufficient stake in the matter.
b. has
jurisdiction.
c. has
sufficient minimum contacts with the parties.
d. is
a more convenient location to hold the trial.
answer: D PAGE: 34 TYPE: =
NAT: AACSB Reflective AICPA Legal
B6. Child’s Play, Inc., sells a toy with a
dangerous defect. Drew buys the toy for his son but discovers the defect before
the child is injured. Drew files a suit against Child’s Play. The firm’s best
ground for dismissal of the suit is that Drew does not have
a. certiorari.
b. jurisdiction.
c. standing
to sue.
d. sufficient
minimum contacts.
answer: C PAGE: 35 TYPE: =
NAT: AACSB Reflective AICPA Decision Modeling
B7. Kit loses her suit against Lou in a
Minnesota state trial court. Kit appeals to the state court of appeals and
loses again. Kit would appeal next to
a. a
U.S. district court.
b. the
Minnesota Supreme Court.
c. the
United States Supreme Court.
d. the
U.S. Court of Appeals for the Eighth Circuit.
ANSWER: B PAGE: 38 TYPE: =
NAT: AACSB Reflective AICPA Critical Thinking
B8. The Idaho Supreme Court rules against
Jiffy Mart in a case against Kwik Stop Stores, Inc. Jiffy Mart files an appeal
with the United States Supreme Court. The Court does not hear the case. This
a. is
a decision on the merits with value as a precedent.
b. indicates
agreement with the Idaho court’s decision.
c. means
nothing.
d. means
that the Idaho court’s decision is the law in Idaho.
answer: D PAGE: 40 TYPE: =
NAT: AACSB Reflective AICPA Legal
B9. Milo
files a suit against Otis. At the trial, each party’s attorney presents the
party’s case before a judge who hears the dispute and renders a legally
binding decision. This is
a. a
mini-trial.
b. a
summary jury trial.
c. litigation.
d. not
a legitimate form of dispute resolution.
answer: C PAGE: 41 TYPE: +
NAT: AACSB Reflective AICPA Critical Thinking
B10. Jackson
files a suit against Lance. Before going to trial, the parties, with their
attorneys, meet to try to resolve their dispute. A third party suggests or
proposes a resolution, which the parties may or may not decide to adopt. This
is
a. arbitration.
b. mediation.
c. negotiation.
d. not
a legitimate form of dispute resolution.
answer: B PAGE: 41 TYPE: +
NAT: AACSB Reflective AICPA Critical Thinking
B11. Pixie
files a suit against Quiver. Before going to trial, the parties meet, with
their attorneys to represent them, to present their dispute to a third party
who is not a judge but who imposes a resolution on the parties. This is
a. arbitration.
b. mediation.
c. negotiation.
d. not
a legitimate form of dispute resolution.
answer: A PAGE: 42 TYPE: +
NAT: AACSB Reflective AICPA Critical Thinking
B12. Owen,
in Pennsylvania, and Quonset Structures, Inc., in Maryland agree to have their
dispute resolved in arbitration according to the law of Virginia. This is a
ground for a court to
a. do
nothing.
b. review
the merits of the dispute.
c. review
the sufficiency of the evidence.
d. set
aside the award.
answer: A PAGE: 42 TYPE: =
NAT: AACSB Reflective AICPA Legal
B13. Eager
Workers Union and Factory Assembly Company have their dispute resolved in
arbitration. The arbitrator makes a mistake in a conclusion of law. This is a ground for a court to
a. do
nothing.
b. review
the merits of the dispute.
c. review
the sufficiency of the evidence.
d. set
aside the award.
answer: A PAGE: 42 TYPE: =
NAT: AACSB Reflective AICPA Legal
B14. Far
Trade Company and Global Shipping. Inc., have their dispute resolved in
arbitration. The arbitrator meets with Far’s representative to discuss the
dispute outside the presence of Global’s representative, before determining
the award. If this meeting substantially prejudiced Global’s rights, a court
will most likely
a. do
nothing.
b. review
the merits of the dispute.
c. review
the sufficiency of the evidence.
d. set
aside the award.
answer: A PAGE: 42 TYPE: =
NAT: AACSB Reflective AICPA Legal
B15. Massive
Equipment Company and Wastewater Management Corporation agree in writing to
submit a dispute to arbitration. In most circumstances, submission to
arbitration is possible
a. for
any commercial
matter.
b. for
no commercial
matter.
c. only
after a dispute
arises.
d. only
before a dispute
arises.
answer: A PAGE: 43 TYPE: N
NAT: AACSB Reflective AICPA Legal
B16. Seaside
Resort, Inc., adopts an alternative dispute
resolution (ADR) program. Tess, a current employee, signs an agreement under
which arbitration is subject to “Seaside’s rules, with the employee to bear
all costs of the proceeding.” When a dispute arises, Tess refuses to arbitrate.
Seaside files a suit to compel arbitration. The court will most likely
a. order
arbitration according to Seaside’s rules.
b. order
arbitration but suspend Seaside’s rules.
c. refuse
to order arbitration if a resolution of the dispute
is clear.
d. refuse
to order arbitration if Tess lacks the ability to pay.
ANSWER: D PAGE: 44 TYPE: N
NAT: AACSB Reflective AICPA Risk Analysis
B17. Kobe files a suit against Joanna. They meet,
and each party’s attorney argues the party’s case before a judge and jury.
The jury presents an advisory verdict, after which the judge meets with the
parties to encourage them to settle their dispute. This is
a. a
mini-trial.
b. a
summary jury trial.
c. early
neutral case evaluation.
d. not
a legitimate form of dispute resolution.
answer: B PAGE: 45 TYPE: +
NAT: AACSB Reflective AICPA Legal
B18. To resolve a dispute, Amy in Boston and
Chris in Denver utilize E-Solution, an online dispute resolution (ODR) service.
This limits these parties’ recourse to the courts
a. not
at all.
b. until
the ODR service has issued a decision.
c. with
respect to any dispute arising between them.
d. with
respect to this dispute only.
answer: A PAGE: 45 TYPE: =
NAT: AACSB Reflective AICPA Legal
B19. Pan
American Pancake House, Inc., a U.S. firm, and Wallaby Waffles, Ltd., an
Australian firm, enter into a contract that does not have a forum-selection or
choice-of-law clause. Litigation between Pan American and Wallaby over a
dispute involving this contract may occur in
a. Australia
only.
b. Australia
or the United States, but not both.
c. Australia,
the United States, or both.
d. the
United States only.
ANSWER: C PAGE: 46 TYPE: =
NAT: AACSB Reflective AICPA Legal
B20. A
clause in a contract between Tall Timber Corporation, a U.S. firm, and Wang
Woods, Ltd., a Japanese firm, specifies that disputes over the contract will
be adjudicated in the United States. This is
a. a
domestic-dispute clause.
b. a
forum-selection clause.
c. an
adjudication clause.
d. an
arbitration clause.
ANSWER: B PAGE: 46 TYPE: =
NAT: AACSB Reflective AICPA Legal
Essay
Questions
B1. MicroWare
hosts a Web site that advertises its software products, features upgrades and
“patches” for its existing software products, and accepts orders for the
products from consumers throughout the world. Mary, who owns and operates
Business Records, Inc,, a small bookkeeping and payroll business in Colorado,
orders from the Web site a copy of MicroWare’s Office Books software. Office
Books is designed to help accountants and bookkeepers keep accurate business
records. When Office Books is found to have a defect in its calculating
program, MicroWare offers a patch on its Web site to fix the problem. Mary has
already lost several customers because of the miscalculating defect, however,
and files a suit against MicroWare in a Colorado state court. Can the court
exercise jurisdiction over MicroWare? Why or why not?
ANSWER: Some courts have upheld exercises of
jurisdiction on the basis of the accessibility of a Web page. Other courts
have concluded that without more, a presence on the Web is not enough to
support jurisdiction over a nonresident. The standard that is generally
accepted for evaluating the exercise of jurisdiction based on contacts over the
Internet is a “sliding scale.” On the scale, a court’s exercise of personal
jurisdiction depends on the amount of business that an individual or firm
transacts over the Internet. A Web site that provides upgrades and “patches,”
and accepts orders from customers has a high degree of interactivity. There
may be a question as to the amount of business that MicroWare transacts with
residents of Colorado. If that business is substantial, MicroWare would likely
be subject to the court’s jurisdiction.
PAGES: 33–34 type: =
NAT: AACSB Reflective AICPA Decision Modeling
B2. Worldwide
Trucking Corporation files a suit in a state court against XL Service Company,
and wins. XL appeals the court’s decision, asserting that the evidence
presented at trial to support Worldwide’s claim was such that no reasonable
jury could have found for the plaintiff. Therefore, argues XL, the appellate
court should reverse the trial court’s decision. May an appellate court ever
reverse a trial court’s findings with respect to questions of fact?
ANSWER: An appellate court will reverse a lower court’s decision on the
basis of the facts only when the finding is clearly erroneous (that is, when it
is contrary to the evidence presented at trial) or when there is no evidence to
support the finding. Appellate courts normally defer to a judge’s decision with
regard to the facts of a case, however, for a number of reasons. First, trial
judges routinely sit as fact finders. As a result, they develop a particular
expertise in determining what kind of evidence and testimony is reliable and
what kind is not. Second, trial judges and juries have the opportunity to
observe witnesses and tangible evidence first hand. The appellate court sees
only a cold record of the trial court proceedings and therefore cannot make the
kind of judgments about the credibility of witnesses and the persuasiveness of
evidence that can be gleaned only from first‑hand experience.
PAGES: 38–39 type: =
NAT: AACSB Reflective AICPA Critical Thinking
Appendix
B for Unit Two
Questions
on the Features
|
N.B.: TYPE
indicates that a question is new, modified, or unchanged, as follows.
N A
question new
to this edition of the Test Bank.
+ A
question modified
from the previous edition of the Test Bank.
= A
question included
in the previous edition of the Test Bank.
|
|
|
chapter 7—Insight into ethics:
some consequences of caps on medical malpractice
awards
B1. Michigan
and many other states have set limits on the amount of general noneconomic
damages that can be awarded in tort cases. Noneconomic damages include damages
for
a. disfigurement.
b. lost
income.
c. medical
expenses.
d. property
damage.
answer: A PAGE: 142 TYPE: N
NAT:
AACSB Reflective AICPA
Legal
chapter 8—shifting legal priorities for business:
THe Anti-COunterfeiting Trade agreement
B2. The Anti-Counterfeiting Trade Agreement is
most likely to apply to
a. pirated
copyrighted works distributed via the Internet.
b. personal
financial information on its owner’s laptop.
c. legally
downloaded recordings on a user’s iPod.
d. a
business firm’s trade secrets
cached on the firm’s server.
ANSWER: A PAGE: 170 TYPE: N
NAT:
AACSB Reflective AICPA
Legal
chapter 9—shifting legal priorities for business:
Prosecuting white-collar crime with the
honest-services fraud law
B3. Delfino, an executive with Cartwright
Corporation, orders corporate employees to unknowingly transfer corporate funds
to Delfino’s personal account. This use of the employees’ services is most
likely
a. honest-services
fraud, a federal crime.
b. a
violation of corporate rules but no crime.
c. a
breach of workplace rules generally but no civil or criminal wrong.
d. unethical but no crime.
ANSWER: A PAGE: 183 TYPE: N
NAT:
AACSB Reflective AICPA
Legal
Unit
TWO—focus on legal ethics:
ethics
and torts and crimes
B4. Pinpoint Data Corporation buys and sells
consumers’ personal information. This may violate
a. businesses’
duties to their customers.
b. individuals’
rights to their privacy.
c. governments’
duties and rights with respect to public welfare.
d. no
rights or duties.
ANSWER: B PAGE: 200 TYPE: =
NAT:
AACSB Reflective AICPA
Critical Thinking
B5. To complain about Ultra Corporation’s
products, Toby opens a Web site with the domain name “ultracorporationsucks.com.”
Ultra files a suit against Toby. If the court rules in Toby’s favor, it will
most likely be on the basis of
a. a
likelihood of confusion.
b. a
right to privacy.
c. the
freedom of speech.
d. trademark
law.
ANSWER: C PAGE: 202 TYPE: =
NAT:
AACSB Reflective AICPA
Legal
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