Deck 15: Legal and Ethics

Question 1

In the U. S., product liability is generally considered a strict liability offense which means that the defendant is liable when it is shown that the product was defective.

Answer 1

True

Question 2

When it comes to product liability, supply management:

A) lowers risk by ensuring that suppliers deliver defect-free goods.
B) has little or no role since this is essentially a legal action.
C) has responsibility only to the internal customer, not the final customer.
D) is liable depending on the type of warranty agreed to in the contract.
E) is responsible for establishing the cost of the actual damage.

Answer 2

A

Question 3

Which of the following is a factor in determining the validity of a contract?

A) incompetent parties.
B) offer and acceptance.
C) employment in the purchasing department.
D) amount over $500.
E) due process.

Answer 3

B

Question 4

Corporate social responsibility:

A) is another name for ethics.
B) is another name for supplier diversity programs.
C) requires sacrificing financial gain for the greater good of the community.
D) refers to individual, not corporate, decisions and actions.
E) extends beyond ethics to include community, environment, and human rights.

Question 5

When an employee who is not a legal agent of the company agrees to buy something from a salesperson and the item is received and the company pays the invoice, the employee is exercising implied authority.

Question 6

The legal authority of a salesperson normally is:

A) the same as that of a buyer.
B) to make legally-binding contracts for $500 or less.
C) to make legally binding contracts for sales over $5,000.
D) to solicit orders and get ratification and acceptance from his or her employer.
E) based on the length of time the salesperson has been employed.

Question 7

Payment made to a supplier does not automatically constitute an acceptance of the goods.

Question 8

The Uniform Commercial Code UCC) covers the purchase of goods and services, if the goods portion of the contract is more than 50 percent of the contract value.

Question 9

Reciprocity, the practice of requiring a supplier to purchase a set amount from the buying firm, is legal domestically, but not internationally.

Question 10

In many organizations, standards of conduct for purchasing personnel stress the need to avoid all appearances of impropriety.

Question 11

If a supplier fails to deliver goods which meet the contract agreement, one of the buyer's options is to reject the whole shipment.

Question 12

The Sarbanes-Oxley Act:

A) has no impact on the supply management process.
B) requires the Chief Purchasing Officer to sign off on every contract.
C) requires listing off-balance sheet items such as long-term purchase agreements.
D) requires supply management to report directly to the Chief Financial Officer.
E) affects internal accounting procedures of privately-held companies.

Question 13

If a termination for convenience clause is included in a services contract:

A) its validity depends on whether the contract is in the private or public sector.
B) it is easy to determine if it is exercised in bad faith or an abuse of discretion.
C) if exercised in bad faith, it may mean the termination is a breach of contract.
D) specifically identifies events that will trigger termination.
E) it defines what constitutes sufficient cause to terminate.

Question 14

Mediation and arbitration are examples of alternative legal means of settling disputes.

Question 15

In a contractual dispute between buyer and seller, the process of elevating the discussion from buyer and sales representative up through the organization and out to an unbiased referee is called:

A) arbitration.
B) mediation.
C) internal escalation.
D) negotiation.
E) adjudication.

Question 16

The authority that is necessary, usual, and proper to carry through to completion the express authority conferred, is called:

A) apparent authority.
B) implied authority.
C) express authority.
D) direct authority.
E) performance authority.

Question 17

Under the Uniform Commercial Code, when the buyer has examined the goods as fully as he or she has desired, there is a warranty with regard to defects which an examination ought to have revealed to him or her.

Question 18

Normally, if an offer to buy or sell is made, the contract is completed once the legal documents are in the hands of both parties.

Question 19

Commercial bribery:

A) usually involves only one company offering bribes.
B) may become an industry practice.
C) is outlawed in very few countries.
D) is outlawed throughout the West, but not in Asia.
E) legal rulings rest on the doctrine of promissory estoppel.

Question 20

When the goods fit the ordinary purpose for which goods of that description are used in the trade, there is an):

A) implied warranty of merchantability.
B) express warranty.
C) warranty of title.
D) implied warranty of fitness for a particular purpose.
E) implicit warranty.