In studying the legal environment of business, Professor Dooleys students also review
ethics in a business context. Ethics includes the study of what constitutes
a. fair or just behavior.
b. financially rewarding behavior.
c. legal behavior.
d. religious behavior.
Canada and the United States are signatories of the Berne Convention. Doug, a citizen
of Canada, publishes a book first in Canada and then in the United States. Dougs
copyright must be recognized by
a. all of the signatories of the Berne Convention.
b. Canada and the United States only.
c. Canada only.
d. none of the signatories of the Berne Convention.
Via the Internet, Rocky sabotages the computer system of Quik Chikn Company, a food
manufacturer, with the purpose of altering the levels of ingredients of the companys
products so that consumers of the food become ill. Rocky is
a. a cyberterrorist.
b. a botnet.
c. a virus.
d. a worm.
Ozzy is an officer of Prudent Financial Corporation. Ozzy serves in a representative
capacity for Prudent Financials owners. With respect to binding Prudent Financial to
contracts, Ozzy is
a. an agent and has the authority.
b. an agent but does not have the authority.
c. not an agent and does not have the authority.
d. not an agent but does have the authority.
Fact Pattern 15-2
Tom draws a check, on his account in State Bank in New York, payable to Digital
Media, Inc., in San Francisco. Digital deposits the check in its account at First National
Bank. First National deposits the check in the Federal Reserve Bank of San Francisco,
which transfers it to the Federal Reserve Bank of New York. That Federal Reserve Bank
sends the check to State Bank.
Refer to Fact Pattern 15-2. Digitals bank is
a. the cashing bank.
b. the depositary bank.
c. the intermediary bank.
d. the payor bank.
Moby leases from National Theater Corporation a theater in which to stage a series of
concerts. Ollie buys a ticket to the series. What distinguishes Moby, a tenant, from
Ollie, a licensee, is
a. the exclusivity of possession.
b. the quiet enjoyment of rights.
c. the temporary nature of possession.
d. the title to the property.
Expert Stitching Corporation enters into a contract to sell denim clothing to Fine
Fashion Company, which in turn sells a pair of jeans to Grady, a consumer. In contrast
to standards that apply to consumers, the UCC imposes on merchants
a. less strict legal standards.
b. special business standards.
c. stricter ethical standards.
d. the same overall standards.
KupaJava hires Lola to manage one of KupaJavas seven drive-through coffee stands.
KupaJava agrees to pay Lola a salary, plus commission. KupaJava stipulates the
standards that should be observed, the goals that should be attained, and the methods
that should be used. Lola is most likely KupaJavas
a. employee.
b. independent contractor.
c. principal.
d. work for hire.
Frostys Appliance Store advertises freezers at a “Special Low Price of $299. When
Garth tries to buy one of the freezers, Huey, the salesperson, tells him that they are all
sold and no more are obtainable. Huey adds that Frostys has other freezers for $2,299.
This is
a. a legitimate sales technique.
b. bait-and-switch advertising.
c. counteradvertising.
d. puffery.
Any decision by the management of Fast-Food Franchise Corporation may significantly
affect its
a. operators only.
b. operators, owners, suppliers, the community, or society as a whole.
c. owners only.
d. suppliers, the community, or society as a whole only.
Bubbly Soda Company hires Carlo to work on Bubblys shipping dock, checking
outgoing loads and dispatching Bubblys drivers. With respect to Carlo, Bubbly is most
likely
a. an employee.
b. an agent.
c. an independent contractor.
d. a principal.
Rita is a surety for Sues loan from Total Finance Company. Ritas right to ‘step into the
shoes of Total Finance, after paying Sues debt, and exercise any of the Total Finances
rights against Sue is the right of
a. contribution.
b. redemption.
c. reimbursement.
d. subrogation.
Lather Up Soap Products Company grants its agent Kathy an exclusive territory in
which to sell Lather Up products. The firm cannot compete with Kathy in that territory
under the principals duty of
a. avoidance.
b. cooperation.
c. indemnification.
d. reimbursement.
Sid borrows Tonys paint sprayer to paint his house. Uma allows Vic to store his
posthole digger in her shed. The party with a right to use the bailed property is
a. neither Sid nor Uma.
b. Sid and Uma.
c. Sid only.
d. Uma only.
Dion, an accountant for Entertainment Sports, Inc., attempts to apply a duty-based
approach to ethical reasoning in conflicts that occur on the job. This approach is based
on the idea that a person must
a. achieve the greatest good for the most people.
b. avoid unethical behavior regardless of the consequences.
c. conform to societys ethical standards.
d. place his or her employers interest first.
Spencer Hydraulics Corporations ethics committee is asked a business ethics
questionshould the firm bid low to obtain a contract that it knows it can fulfill only at a
higher price? A practical method to investigate and solve this question involves all of
the following steps except
a. absolution.
b. decision.
c. inquiry.
d. justification.
On May 1, Doug signs a check that is payable to the order of Extra Credit Corporation
and that is dated July 1. This check is
a. negotiable.
b. nonnegotiable, because it is payable to Extra Credit Corporation.
c. nonnegotiable, because it is postdated.
d. nonnegotiable, because it is signed by Doug.
Earl holds 1,000 pounds of perishable fruit in storage for Fresh Food Corporation. Fresh
Food does not pay for the storage. Earl sells the fruit to Green Grocers, Inc. This sale
represents
a. a breach of contract.
b. a mitigation of damages.
c. rescission and restitution.
d. specific performance.
Lauren owns a 1967 Ford Mustang, which Mike customizes and details to Laurens
specifications. The car earns several awards at regional vehicle customizing
competition shows. The result of Mikes efforts is
a. accession.
b. acquisition.
c. conversion.
d. resolution.
Suisse Internationale, a Swiss maker of athletic equipment, enters into a price fixing
agreement with Total World Sports, a U.S. wholesaler of Suisses products. U.S. courts
will apply U.S. antitrust laws if
a. the agreement was made in Switzerland.
b. the agreement was made in the United States.
c. the price fixing has a substantial effect on U.S. commerce.
d. the Swiss government agrees to be sued in the United States.
Eli obtains a consumer loan from First State Bank at an interest rate that exceeds the
states maximum. First State has
a. calculated the optimum rate that the market will bear.
b engaged in a restraint of trade.
c. underestimated the risk of the loans nonpayment.
d. violated the usury laws.
Phil invents “PhutureNow, new Web site design software, and applies for a patent. If
Phil is granted a patent, his invention will be protected
a. for ten years.
b. for twenty years.
c. for the life of the inventor plus seventy years.
d. forever.
Elmo pays First National Bank $1,000 plus a service fee to draw a check on itself made
payable to Go Delivery Service. This is
a. a cashiers check.
b. a certified check.
c. a trade acceptance.
d. a travelers check.
Mayfair Company offers to sell a certain mall to Galleria Stores, Inc., for a certain price
if it accepts before 10 a.m. Monday. A contract is formed if Gallerias acceptance is
received
a. before 10 a.m. Monday.
b. before midnight Monday.
c. before twenty-four hours of 10 a.m. Monday.
d. within a reasonable time of 10 a.m. Monday.
The Uniform Electronic Transactions Act (UETA) covers only e-records and
e-signatures relating to a transaction.
An Iowa state statute requires amusement parks to maintain equipment in specific
condition for the protection of patrons. Jacks Fun Park fails to maintain its equipment.
Key, a patron, is injured. Jacks has committed
a. a dram shop act.
b. contributory negligence.
c. negligence per se.
d. res ipsa loquitur.
Uri and Vicky orally agree on the sale of Uris Nite Club to Vicky and note terms on a
pair of the Clubs napkins, which they both sign. A written memorandum evidencing an
oral contract that would otherwise be unenforceable must contain
a. every term.
b. the essential terms.
c. the preliminary terms.
d. the qualitative terms.
Carl sells Direct Marketing Enterprises, a sole proprietorship, to Erv. This is a transfer
of
a. a license.
b. a trade name.
c. the formula to make a product.
d. the ownership of the business.
Nina wants to transfer a check to Opie. The check is not defective if it
a. has an obvious irregularity on its face.
b. has been previously honored.
c. is incomplete so that an element of negotiability is lacking.
d. is overdue.
Genuine Seed Company and Hillside Farmers Cooperative enter into a contract for a
sale of hybrid seeds. Under the perfect tender rule, Genuine Seed must ship or tender
seeds to Hillside that
a. approximately conform to all of the details of the contract.
b. entirely conform to the contract except in one or two details.
c. exactly conform to the contract in every detail.
d. substantially conform to the contract in most details.
International Software, Inc., conditions the sale of one of its products on Nationwide
Office Systems agreeing to buy another of Internationals products. This deal is
a. legal, depending on its purpose and the effect on competition.
b. legal, depending on production and transportation costs.
c. legal under any circumstances.
d. not legal under any circumstances.
Sid and Tony enter a contract for a sale of Sids collection of electric guitars. Before the
time for performance, Sid tells Tony that he does not want to deliver the guitars.
Anticipatory repudiation is
a. a breach of contract.
b. a compromise between two parties who are unable to perform.
c. a remedy available only to a breaching party.
d. a remedy available only to a nonbreaching party.
Clean Machines Company makes washing machines. Over the phone, Clean offers to
sell Dealers Appliance Outlet one hundred model EZ2000 washers at a price of $150
per unit. Clean says that it will keep the offer open for ninety days. Dealers responds
that within two or three weeks it will decide whether to accept. One week later, Clean
faxes, and Dealer receives, notice that the offer is withdrawn. Dealer immediately
phones Clean to accept the $150-per-unit offer. When Clean refuses to deliver at that
price, Dealer files a suit. Clean asserts, first, that there is no contract and, second, that if
there is a contract, it is unenforceable. Discuss Cleans assertions.
An agency can terminate once its purpose is achieved.
If an action is ethical from an outcome-based perspective, it is always ethical from a
duty-based perspective.
UCC Articles 3 and 4 govern checks.
A director is a fiduciary of a corporation.
Misstatements or misrepresentations in an application for insurance can void a policy.
Employer who willfully violates safety regulations can be prosecuted under state
criminal laws.
Trademark dilution requires proof that consumers are likely to be confused by the
unauthorized use of the mark.
It is not identity theft to use a fabricated identity to access online funds.
Under the doctrine of comparative negligence, both the plaintiffs and the defendants
negligence are taken into consideration.
Acquiring monopoly power through anticompetitive means violates antitrust law.
A partner owes a partnership and its partners a duty to engage in gross negligence and
reckless conduct.
A person can reproduce copyrighted material for purposes such as teaching, including
multiple copies for classroom use, without paying royalties.
A third partys right to control the details of performance of a contract indicates that the
third party is an intended beneficiary.
To determine whether a duty of care has been breached, a judge asks how he or she
would have acted in the same circumstances.
In Case 5.1, The Coca-Cola Co. v. The Koke Co. of America, the United States
Supreme Court upheld an injunction prohibiting competing beverage companies from
calling their products “Koke.
A power of attorney is a written document.
A customer must examine a bank statement and report any discovered forged signature
to recover from the bank for the forgery.
A transfer by negotiation can make it possible for a holder to receive more rights in the
instrument than its prior possessor had.