LAW class quiz – 50 multiple choice questions

Chapter 1


Law is a set of guidelines that help maintain order in a society

A civilized society is one that no longer settles private disputes through private violence

This digital generation is conducting business online on a daily basis—often committing to contracts with the simple click of an “I Accept” button

In addition to studying business law involving traditional contracts, it’s important to understand the potential ramifications of online contracts

I. Legal Philosophies

  • Natural Law
  • Positive Law
  • Legal Realism

A. Natural Law

Right or Wrong

Belief that there are universal laws guided by a moral reasoning that enable all to know the difference between right and wrong

B. Positive Law

Ruling Authority

A just law is one created by the sovereign, or ruling authority

A positivist believes that there is no unjust law if it was enacted by the recognized political authority

C. Legal Realism

Decision-Maker’s Discretion

Concerned with results

Recognizes that lawmakers are influenced by many factors, and that these influences affect the decision being made

II. Eight Sources of Law

  • U.S. Constitutions
  • Federal Statutes and Treaties
  • 50 U.S. State Constitutions
  • Individual State Statutes
  • Executive Orders
  • Local Area Ordinances
  • Administrative / Regulatory Law
  • Decisions made by federal and state courts
  • U.S. Constitution

U.S. Constitution has been supreme law of the land since 1787

All federal and state laws must be consistent with the Constitution to be enforced

The first three Articles of the U.S. Constitution establish the basic structure of the federal government

Article I –

Creates the congress

Senate and House of Representatives

Vests the congress with legislative power

Article II –

Establishes the presidency and its duties

Article III –

Creates the judiciary

Each branch is responsible for a different governmental duty

Separation of powers between branches serves as a check and balance

Separation stabilizes our government

B. Federal Statutes and Treaties

Legislative branch provides the second source of law, called statutory law

THE COMMERCE CLAUSE – Article 1, Section 8, Clause 3 applies to both individuals as well as businesses. The provisions provide power to regulate Commerce with foreign nations, among several states and Indian Tribes

THE CONTRACT CLAUSE – Article 1, Section 10, Clause 1 prohibits states from enacting any law that retroactively prohibits contract rights

B. Federal Statutes and Treaties

UNIFORM LAW COMMISSION – this commission was established to create statutory laws that are uniform throughout the states

UNIFORM COMMERCIAL CODE – The UCC has become part of each state’s statutory law, and while each state has made various changes, the UCC has become relatively standardized across all 50 states

The UCC addresses topics of law involved in commercial transactions

Sales law

Commercial paper

Secured transactions in personal property

B. Federal Statutes and Treaties

TREATIES – another type of law created by the federal executive branch is the international treaty



Foreign Corrupt
Practices Act 1977 (1988)

Makes it a crime when an officer, director, employee, agent, or a stockholder acting on behalf of the business uses the mail or any means of interstate commerce to offer to pay, or actually pay, anything of value to a foreign official, foreign political party official, or foreign political candidate, when that payment is meant to influence that official in order to obtain or retain business for the U.S. company

Willful violations of the FCPA

$2,000,000 fines for business

$100,000 fines for individuals and imprisonment up to 5 yrs

C. 50 State Constitutions

Each state has their own constitution

These constitutions give each state a governmental structure that mirrors our federal government

The states derive their power to enact laws based upon the 10th Amendment to the United States Constitution

D. State Statutes

Each year legislatures add to the statutory laws of their state

These statutes are placed in codes that are compilations of statutes

When a law has been placed into one of the existing codes, that law has been CODIFIED

E. Executive Orders

EXECUTIVE ORDERS, when issued by the president, governor, or head of a local government, are another type of law issued by the executive branch as a means of enforcing existing laws

F. Local Ordinances

Statutory laws that occur at local levels are called ORDINANCES

Dog leash laws / Skateboarding

Laws dealing with signs

Land use zoning laws

G. Administrative Law

Administrative law was created by necessity in order to have a more proactive mechanism for regulating business activities

The ADMINSTRATIVE AGENCY, as part of the executive branch, appeared as Congress realized that there was a need for more specialized oversight of various society functions

H. Decisions by Federal and State Courts

Decisions by state and federal courts are a primary source of U.S. common law.

COMMON LAW is a general body of law that began in England based on court decisions, customs, and usage in the community rather than codified law

Many of today’s legal principles had their origins in the common law

Contract law

Tort law

Agency law

Common law is “judge-made”; it is considered unwritten law, while statutory law is written

Judicial Decisions

In the United States, JUDICIAL DECISIONS (case law) are produced when a judge decides a case and announces the reasoning behind the ruling

Previous court decisions have become “precedent” for deciding future cases

The legal principle governing precedent is called STARE DECISIS which provides a degree of certainty and stability to society and makes the laws predictable

Precedents are to be used when the facts of a case is similar to the precedent case

Judicial Decisions (cont.)

One limitation under Article II of the U.S. Constitution states that there must be a “case in controversy” before the legal issue may be considered…a judge is not able to call a dispute into his courtroom for resolution

Decisions rendered by appellate judges are published in a set of books called REPORTERS

RESTATEMENTS are published by the American Law Institute which provide coverage of the common law areas such as torts, contracts, agency and property

1. Judicial Stability and Judicial Flexibility

Requiring courts to follow precedent leads to judicial and societal stability

When precedent cannot be found to help resolve an existing dispute, the court will try to use a similar previous decision as a basis for logical or rational application to resolve the current dispute

“Where the reason is the same, the rule should be the same.”

Judicial flexibility helps when substantial justice might require that the court ignore or bend the precedent in order to reach a proper or just result

III. How to Find California Law

IV. Classifications of Law

  • Substantive or procedural
  • Public or private
  • Civil or criminal
  • Law vs. Equity

A. Substantive vs. Procedural

Substantive laws affect individuals by either granting them legal rights or imposing legal duties on them

Laws that prohibit the possession of illegal substances are SUBSTANTIVE in nature, since they impose a duty on individuals to not possess those illegal substances.

PROCEDURAL LAWS enforce the rights or duties granted by the substantive laws by imposing a structure that must be followed when establishing or enforcing substantive laws



B. Private or Public

The body of law governing interaction between individuals is considered PRIVATE LAW

PUBLIC LAW deals with how the government is organized and how it interacts with the people of the country

C. Civil or Criminal

CIVIL LAW is concerned with how individuals interact with each other

CRIMINAL LAW is concerned with behavior that is considered unacceptable to society at large

D. Law vs. Equity

When a person is seeking monetary damages, he is seeking a LEGAL REMEDY

A REMEDY IN EQUITY attempts to create fairness and justice for a person who has been harmed and money damages are not sufficient






V. Role of Attorneys in the Legal Process

  • Finding an Attorney
  • Fee Arrangement

A. Finding An Attorney

Recommendations from family and friends

State Bar-certified lawyer referral services

Local Bar Association


B. Fee Arrangement

CONTINGENCY FEE AGREEMENTS – the attorney agrees to take a percentage of the money you win in a lawsuit

Must be in writing and state the percentage agreed to

Agreement should contain a statement of the general nature of the legal services provided to the client

NON-CONTINGENCY AGREEMENTS – use hourly fees, fixed fees, or a retainer


Switch attorneys and have files sent over

Try fee arbitration

Report attorney to State Bar Association

Sue your former attorney

VI. Briefing a Case

Reading and Briefing a Case

Locate the NAME OF THE CASE and where to locate it, e.g.

Li v. Yellow Cab Company of California

13 Cal.3d 804,532 P.2d 1226, 119 Cal.Rptr. 858 (1975)

FACTS – summarize the facts of the case

ISSUES – determine the issues present in the case

DECISION – the court’s ruling

REASONING – the court’s reasoning is then analyzed