RayCorp offers to buy out MegaCorp by paying $69 per share. LandCo, who also wants
to buy MegaCorp, offers to pay $75 per share. When the bidding process is finally over,
RayCorp has offered $85 per share and LandCo has offered to pay $90 per share.
MegaCorp agrees to sell to RayCorp on grounds that, all things considered, the takeover
by RayCorp would be better for the business. LandCo claims that MegaCorp should
have sold the company to it since it was the highest bidder. Is LandCo correct?
a. Yes. This is a breach of duty. MegaCorp must sell the company to the highest bidder;
it cannot give preferential treatment to a lower bidder.
b. No. This is covered by the Williams Act.
c. No. The directors have broad discretion in deciding to whom to sell the company.
d. No. MegaCorp is acting in good faith by considering all things, not just the offering
price of the shares.
Judicial review can best be described as the power of federal courts to
a. abstain from adjudicating major issues and to leave such matters to legislatures.
b. take it upon itself to decide issues on constitutional grounds.
c. declare a statue or governmental action unconstitutional and void.
d. take private property for public use.
Every criminal defendant has a right to a jury trial.
a. True
b. False
Wayne worked in an office. He had no criminal record, had never had a complaint made
against him about his work or his conduct, and had been a faithful employee for nearly
20 years. One day, Wayne followed his supervisor to his home and fatally shot him. The
estate of the supervisor sued the company, claiming it should have been aware of
Wayne’s growing frustration with work. The company’s best defense will be that
a. there was no way to foresee that the incident would happen.
b. the incident occurred away from the office.
c. the killing was the result of a personal conflict between Wayne and the supervisor.
d. even if the company had been aware of Wayne’s difficulty with his supervisor, Wayne
did not have any criminal history.
The section of the UCC that governs negotiable instruments is
a. Article
b. Article
c. Article
d. Article
The Sherman Act was designed to prevent extreme concentrations of economic power.
a. True
b. False
Under the Electronic Communications Privacy Act
a. violators are subject to both criminal and civil penalties.
b. violators may be subject to civil, but not criminal, penalties.
c. only the unauthorized disclosure of e-mail messages constitutes a violation.
d. only the unauthorized interception of e-mail messages by the government or an ISP
constitutes a violation.
Mitch takes his two best suits to Quality Cleaners and receives a ticket as a receipt.
Quality tells Mitch his suits will be cleaned and will be ready to be picked up on
Monday. Another customer overhears the exchange and early on Monday goes to
Quality, convinces the worker he is Mitch but that he has lost his receipt. He identifies
and retrieves the suits, which happen to fit him perfectly, too. Quality Cleaners
a. is strictly liable to Mitch for the suits.
b. is liable to Mitch only if Mitch can prove Quality was grossly negligent.
c. has no liability unless Mitch proves Quality did not use ordinary care.
d. will avoid liability if the receipt contained an exculpatory clause excluding gross
negligence.
Common law, like statutory law, is prospective.
a. True
b. False
Under SEC rules, companies
a. can require electronic delivery of proxy statements to save mailing costs and improve
operating efficiency of the corporation.
b. are required to post the information in the annual report and the proxy statement on
their Web site, file it with the SEC, and distribute it to shareholders
c. must solicit proxies because a shareholder meeting is invalid unless a certain
percentage of shareholders attend in person or by proxy.
d. must give each shareholder a proxy, but not a proxy statement or an annual report, if
the company is a public company.
During the hiring interview, Supervisor Staci told Henry that as long as he did his job as
requested, he would have a job until he retired. Courts have been willing to enforce
such an oral promise under the Truth in Hiring doctrine, even if the companys top
management did not approve the statement.
a. True
b. False
The rules set out in the UPA defining the liability of partners to outsiders can be
modified by the partnership agreement.
a. True
b. False
Under a state law, a dog owner is absolutely liable to any person who is injured by the
dog. This is an example of
a. negligence per se.
b. strict liability.
c. res ipsa loquitur.
d. negligence.
Larry has owned $5,000 of stock in E-prise, Inc. for the past 18 months. Under SEC
rules, Larry can require that one proposal be placed in the company’s proxy statement to
be voted on at the shareholder meeting.
a. True
b. False
Which of the following statements is accurate regarding a condition?
a. A condition is created only when the phrase “provided that or a similar phrase
introduces it.
b. A condition is an event that must occur before a party becomes obligated under a
contract.
c. A condition must be expressly stated in order to be enforced.
d. A condition will not be enforced by the courts unless formal language is used,
regardless of the intent of the parties to create a condition.
The Environmental Protection Agency (EPA) was created by Congress to
a. consolidate environmental regulations under one agency.
b. protect corporate investors.
c. prevent conflicts between the Departments of Commerce and Interior.
d. eliminate discrimination.
When a company dissolves, preferred stockholders typically have the right to receive
their share of corporate assets before common shareholders.
a. True
b. False
A governmental classification based on gender would be subject to strict scrutiny.
a. True
b. False
If you grant a nonpossessory interest to Eagle Logging to enter your land and remove
timber from ten acres, you have granted Eagle a profit.
a. True
b. False
Larry is a certified public accountant in a firm which audits public companies. Larry is
accused of unethical conduct. Is Larry required to abide by the ethical standards of the
Public Company Accounting Oversight Board?
a. Yes.
b. He can be held liable only if he had actual knowledge of the particular guideline he is
accused of violating.
c. No, the PCAOB establishes audit rules, not ethical guidelines.
d. No, the PCAOB has no authority over Larry.
Which of the following statements express the purpose of the Truth-in-Lending Act?
a. To require lenders to charge a “reasonable” rate of interest
b. To regulate interest rates and terms of loans
c. To provide consumers with information necessary to make the best credit decision
d. To help lenders limit state laws
In a noncompete agreement, the term “ancillary” means that
a. both parties must have a stake in the outcome.
b. the agreement is harmless to the general public.
c. the noncompetition agreement must be part of a larger agreement.
d. the noncompetition agreement is unfair to the employee, but not the employer.
In considering what is navigable waters, the Supreme Court ruled that
a. the definition of navigable watermust inclue all ponds and lakes even if they are not
connected to open bodies of water.
b. waterways confined to one state can be navigable water if pollutants can leak into
drinking water.
c. the definition of navigable water excludes intermittent streams or wetlands.
d. all waterways including wetlands, intermittent streams, and ponds are all navigable
waters.
Under the Clean Air Act
a. states and the EPA were to act as partners wherein the individual states would
formulate state implementation plans to meet primary and secondary standards created
by the EPA.
b. the EPA formulated primary and secondary standards for air pollution; however, the
individual states were not required to comply with these standards if they already had
reasonable state statutes or regulations in place.
c. the states were required to follow the guidelines established by the EPA and did not
have the authority to create their own state plans for implementing the federal
standards.
d. state laws or regulations preempt or take precedence over the guidelines promulgated
by the EPA.
The legal term for a promise in a contract is “provision.
a. True
b. False
Oxtron, Inc. substantially performed its obligations under a service contract. Oxtron is
entitled to receive
a. the full contract price.
b. substantially nothing.
c. the fair market value of its performance.
d. the full contract price minus the value of the defects.
Acme Co. offers to buy 1000 widgets from Widget World Co. The written offer
provides for 1000 at $10 per widget, to be delivered May 1. The offer has no other
provisions. Widget World sends a written acceptance. However, the acceptance also
states that if any claim arises under this contract, Widget World must be notified within
10 days. Acme does not object to this provision. Both parties are merchants. Which of
the following best describes this situation?
a. No contract exists. The purported acceptance contains additional terms, so it is a
counteroffer, which has not been accepted.
b. No contract exists. The terms materially alter the original offer.
c. A contract exists. The additional terms are not material, they are part of the contract.
d. A contract exists, but the additional terms are not part of the contract no matter what.
Per capita means each heir gets an equal share of an estate.
a. True
b. False
Rob agrees to act as an agent for Diane in selling her car. Diane has a duty of loyalty to
Rob.
a. True
b. False
If Gloria threw a rock that hit Merle, she is liable for an intentional tort of battery only
if she intended to injure or harm Merle.
a. True
b. False
Ethel’s Exercise World plans to order three weight machines from Pete’s Push, Pedal
and Pull, Inc. for a total of $15,000. Pete’s demands that Ethel’s friend, Moneybags, a
wealthy independent businesswoman (not connected with Ethel’s business in any way)
promise to pay Pete’s for the three machines if Ethel’s Exercise World does not. Which
of the promises in this problem must be in writing to be enforceable?
a. The promise made by Ethel’s Exercise World to buy the weight machines.
b. Moneybag’s promise to pay if Ethel’s Exercise World doesn’t.
c. Both Moneybag’s promise and Ethel’s Exercise World’s promise.
d. None of the promises in this problem need to be in writing.
Personal property means all property EXCEPT
a. soil, plants, and trees removed from the land.
b. minerals and crops removed from the land.
c. land and all things permanently attached to the land.
d. intangible property.