Oxtron, Inc. is considering establishing a program that actively encourages ethical
behavior. What reasons would support Oxtron’s adoption of an ethics program?
Lance sued Mega Corp. for negligence, and a jury awarded him $1.2 million. Mega
Corp. filed a motion for judgment NOV, and that motion was denied by the trial court.
Mega Corp. then appealed the case. Discuss a judgment NOV and when it is
appropriate for a judge to grant such a judgment.
ATC, Inc. offered health insurance benefits to unmarried same-sex domestic partners
but not to unmarried, cohabiting heterosexual couples. Ray, an employee of ATC, Inc.,
challenged the benefit plan, claiming that it was in violation of Title VII of the Civil
Rights Act. Under the Civil Rights Act, an employer may not discriminate against any
individual on the basis of sex. Discuss the tools that a court may use in interpreting the
Civil Rights Act.
Jackie purchased a condominium. When she bought it, she realized the homeowner’s
association had a variety of rules and regulations that she would need to follow. One
regulation was that no children were allowed to live in the complex. Two years after
buying the condominium, Jackie gave birth to a child. She was immediately served with
papers notifying her to move out of the complex. Discuss the constitutionality of the
homeowner association’s action.
As assistant manager of a discount department store, you have been asked to review the
store’s policy concerning shoplifters. (a) Discuss the legal standard used in most states
governing the detention of suspected shoplifters. (b) In reviewing the store’s policy,
discuss some of the items that you will consider.
On Monday, Travis took his four-wheeler to Repparts Equipment & Service for repair
because the steering was not working properly. On Friday he called Repparts to see if
his four-wheeler was ready because he wanted it for a weekend trip. Repparts said they
had done the major repairs but that the steering system still needed some work and they
needed another few days to finish the repairs. Travis told them he would pick the
four-wheeler up and use it for the weekend and then bring it back to have them finish
their work. While riding with friends on the weekend, Travis ran into someone because
the steering stuck and he couldnt swerve to avoid them. Discuss how a court would
determine causation in a negligence suit against Travis.
Dan was arrested and taken to an interrogation room for questioning. After signing a
statement waiving his Miranda rights, he agreed to answer questions without a lawyer.
After about ten minutes, he told the officers he changed his mind and wanted to talk to a
lawyer before answering any more questions. The officers left the room and then came
back in. They told Dan that his partner was confessing to the crime and that, “If your
partner confesses first and makes a deal, you’re the one who’s going to go down for
this.” Dan looked at them without saying anything. After a minute, the officer began
questioning Dan again and he confessed to the crime after about an hour. Is this
confession admissible?
Identify the term for and discuss the legality of a governments taking of property owned
by foreign investors. Discuss what action a company might take if it wants to do
business abroad but is concerned about losing its property to a foreign government.
Rameriz and Cox enter a contract obligating Cox to supply Rameriz with 2,000 bushels
of corn by the end of September. Weather conditions are poor and Cox is unable to
grow that much corn himself, but could obtain enough to make up the required
difference at a financial loss. Discuss the general purpose of contracts and the result of
seeking enforcement of this contract both in a court exercising judicial restraint and in a
court practicing judicial activism.
Discuss the effect of the Uniform Commercial Code on the law of sales contracts in the
area of open terms.
A common problem in cases of express warranty is being able to separate statements
that create express warranties from statements that do not. Discuss what type of
statements create an express warranty and four indications that a statement is likely to
create an express warranty.
Explain the concept and significance of identification of goods. Discuss how
identification takes place.
Discuss the importance of the UCC to the law of sales. Include who created the UCC,
how it becomes law, and the stated purposes of the statute.
Outline the parts of a typical contract.
Discuss the purpose of an injunction and how the two types of injunctions covered in
the textbook are used.
Name and describe the types of conditions, explain how conditions are created, and
discuss whether it is important to identify the type of condition in a contract.
Andrew Durham was injured in a job-related accident that resulted in a workers’
compensation settlement agreement with the employer’s insurance carrier, Traveler’s
Indemnity Company. The settlement agreement required Traveler’s to pay Durham
$2500 per month for the rest of his life. To finance its obligation, Traveler’s purchased
an annuity in its name. The settlement agreement required Traveler’s approval or
consent prior to an assignment of the annuity payments. Durham later decided to open a
business and went to a credit union for a $214,000 loan. The credit union loaned the
money, taking a security interest in Durham’s monthly annuity payments. Traveler’s
consent was never secured. Was this a valid assignment?
Explain the reason behind having a statute of frauds and give arguments for and against
having such a statute.
Explain the reason behind having a statute of frauds and give arguments for and against
having such a statute.
Larson put his home on the market for sale. His good friend Bill came to look at the
home for possible purchase or rental. Bill noticed a crack in the ceiling and inquired
about it to Larson. Larson said that there had been a water leakage problem in the area
but it had been fixed two years ago and had not leaked since. Bill made a written offer
on the house which was accepted in writing by Larson the next day. On the day prior to
closing, Bill went to make a final inspection. Bill observed water leaking through
another crack in a ceiling of the house and in the garage. The next day, Bill informed
the real estate agent that he was rescinding the contract because of the leaks. Larson
subsequently rented the property to another party. A couple of months later, Larson filed
a suit seeking a court order to make Bill purchase the house or in the alternative for
money damages. Bill defended by claiming that Larson either defrauded him or there
was a mutual mistake and asked for the return of his earnest money and/or damages for
fraud. The trial court found there was no evidence to find fraud on the part of Larson
because the roof had been previously fixed and the two parties had been good friends.
What is the appropriate remedy when a court concludes that there has been a mutual
mistake of material fact?
Cherise contacted her insurance agent and said she was interested in purchasing several
life insurance policies: (a) a policy on her own life for $100,000, naming her son and
daughter as beneficiaries; (b) a policy on her neighbors life for $100,000, since she had
observed him engaging in reckless behavior, naming herself as beneficiary; (c) a $5,000
policy on another neighbor to cover a loan Cherise made to him, naming herself as
beneficiary; and (d) a $250,000 policy on her business partner, naming herself as
beneficiary. Discuss the legality of each of these potential contracts.
Shelby hired Evan to drill a well on her property for $3,000. They both thought the soil
and subsoil were normal for the area, but after he started drilling, Evan found a layer of
rock that required him to purchase a special drill and required an extra ten hours of
work. Evan demanded an extra $1,000 to complete the job. Discuss whether Shelby is
liable for the additional $1,000.
Ken decided to open a retail boat dealership. He expects that many of his sales will be
credit sales. What should Ken do to protect his interests in the collateral in the credit
sales that he makes?
Buddy was hired to play drums for a rock group scheduled to tour the Midwest. Part
way through the tour, Buddy was tragically killed in a plane crash. The tour had to be
discontinued until a new drummer could be found. The band lost money on the tour. Is
Buddy’s estate or agent responsible for the loss to the band?
Griffith Manufacturing ships 40 crates of goods by Trusty Shipping, a common carrier.
Trusty offers Griffith a shipping rate of $725 for a limited liability of $5,000 or a rate of
$975 for full liability for any harm to the goods. Griffith chooses the $725 rate. In
transit, Trustys driver has an accident during an ice storm and all of Griffiths goods are
destroyed, causing a loss of $12,000. If Griffith sues Trusty:
a. Trusty will be liable for only $5,000 because a common carrier is allowed to limit its
liability by contract.
b. Trusty will be liable for the full $12,000 because common carriers have strict
liability.
c. Trusty will automatically be liable for the full $12,000 under the Carmack
Amendment.
d. Trusty is subject to normal bailment rules and can escape liability for any damage to
the goods by proving that it exercised due care of the property and that the loss was
caused by an act of God.
Farmers Fortune Insurance has a contract with Farmer Fran to insure her crops against
insect damage. The contract does not specify which insects are covered or how much
damage is necessary to make a claim. The contract will probably be enforced in favor
of:
a. Farmer Fran.
b. Farmers Fortune Insurance.
c. Neither side, as it is ridiculous to try to insure against insects.
d. Cannot determine… would have to go through litigation to decide.
Adam claimed that N & A, its accounting firm, negligently prepared an audit. To hold
the accounting firm liable, which of the following elements must be established?
a. Scienter or guilty knowledge.
b. A fiduciary relationship.
c. Failure to exercise due care.
d. An executed engagement letter.
The type of product that prompted passage of the Consumer Product Safety Act was:
a. automobiles.
b. children’s toys.
c. refrigerators.
d. food products.
In the Tannenbaum v. New York Dry Cleaning, Inc. case:
a. there was a bailment for hire, and the fact that the bailee was unable to return the
bailed item except in a damaged condition created an irrebuttable presumption that the
damage to the item was attributable to the bailees negligence.
b. the court stated that a company cannot, under New York law, use an exculpatory
clause to relieve itself from liability for the consequences of its own negligence.
c. the court found that the claimant was not bound by the terms of the dry cleaning
companys limitation clause because, even if it applied to the situation before the court,
the claimant had not read the clause nor had he assented to its terms.
d. the court found that the claimant was negligent in not reading the limitation clause on
the back of his claim ticket, so he could not recover the cost of his shirt.
To be valid, a noncompete clause must be:
a. ancillary to a legitimate bargain.
b. reasonable in time, geographical area, and scope of activity when ancillary to the sale
of a business.
c. necessary to protect trade secrets, confidential information, or customer lists
developed over an extended time when ancillary to an employment contract.
d. All of the above.
A check was indorsed as follows:
Which of the following will discharge all of the indorsers?
a. Notice of dishonor.
b. The “without recourse indorsement within the chain.
c. Insolvency of drawer.
d. Certification of the check.
By definition, a sale under Article 2 of the UCC requires:
a. that the parties involved be merchants.
b. that the product involved be goods, services, or a mixture; that the sale be between or
among merchants; and that the sale take place in the normal course of business for that
industry.
c. that title to the goods pass between the seller and the buyer and that a price be paid
for the goods.
d. that the service being sold cannot be a gift or a bailment.
Stuart is vying for a promotion, but faces competition from a co-worker, Brenda.
Without authorization, Stuart accesses stored company records and discovers an
unfavorable e-mail message Brenda had written about the company. Stuart sends the
message to his supervisor in hopes of keeping Brenda from getting the promotion.
Discuss whether Stuart has violated any statute and, if so, what sanctions he may face.
Charles and Ellen, an unmarried couple, run an ice cream store. The business is not
incorporated and they have filed no formation papers with the state. Their business is a:
a. sole proprietorship.
b. partnership.
c. joint venture.
d. limited liability company.
Wayne is renting an efficiency upstairs from Fields. Wayne decides to go to Europe for
four months and lets his friend, Charlie, live in his apartment while he is away, with the
understanding that Charlie will pay the rent. Wayne has:
a. assigned the apartment, but Wayne is still liable for the rent.
b. sublet the apartment, but Wayne is still liable for the rent.
c. assigned the apartment, but is not liable for any unpaid rent during Charlie’s
occupancy.
d. sublet the apartment, but is not liable for any unpaid rent during Charlie’s occupancy.
Which of the following is NOT a true statement about fraud?
a. The plaintiff must prove that the defendant has knowledge of the falsity of his or her
statement.
b. It is necessary for the plaintiff to show that he or she has suffered some type of
detriment or injury because of his or her reasonable reliance on the defendant’s false
statement.
c. The defendant made the statement with the intent to induce the plaintiff to enter into
the contract.
d. The plaintiff must show that although the defendant acted in good faith, the statement
was material because the defendant expected the plaintiff to rely on it and enter into the
contract.
Diane, a police officer, stops Tim’s car for a traffic offense. While talking to Tim, she
shines a flashlight into the passenger compartment of Tim’s car and sees evidence of
drug paraphernalia. Which statement is correct?
a. Diane may search the passenger compartment of the car and any place else in the car,
including the trunk, without Tim’s consent.
b. Diane may search the passenger compartment of the car without Tim’s consent;
however, she may not search the trunk of the car without his consent or without a search
warrant.
c. Diane may not search the passenger compartment of the car (nor any place else)
without Tim’s consent or a search warrant. However, she can require Tim to remain
parked until the search warrant is brought to her.
d. Under the above circumstances, Diane can write Tim a traffic citation but cannot
search the vehicle.
MoneyMaker Toy Company violated the safety standards set forth by the Consumer
Product Safety Commission when it produced a toy gun that caused injury to hundreds
of children. Because of MoneyMakers actions:
a. the CPSC can impose civil penalties on the company.
b. the CPSC can impose criminal penalties on the company.
c. users can sue for damages, including attorneys fees, if MoneyMaker knew it was
violating a consumer product safety rule when it produced the guns.
d. All of the answers are correct.
Imogene takes her diamond solitaire ring to Sparkle Jewelry Shop to have the prongs
holding the diamond retipped and have the ring cleaned. The clerk at Sparkle says she
will have to leave the ring and that it should be ready in about a week. When Imogene
returns in a week to get her ring, she finds out that the ring has been sold. Which of the
following is true?
a. Sparkle Jewelry Shop had the power to transfer all of Imogene’s rights in the ring to a
good faith buyer in the ordinary course of business.
b. This situation was a theft of the ring by Sparkle, and Sparkle must retrieve the ring
and return it to Imogene.
c. The buyer of the ring must return it to Imogene since the buyer did not fully
investigate whether Sparkle had good title to the ring.
d. Imogene has lost title to her ring and has no recourse since she is responsible for
investigating the merchant’s integrity before leaving her property.
The doctrine of precedent requires:
a. that the victim testify.
b. that the defendant testify.
c. a 12-member jury of the defendants peers.
d. judges to base rulings on previous cases.
When courts consider economic duress, they consider all the following factors
EXCEPT:
a. relative bargaining power.
b. financial distress.
c. legitimate business actions.
d. relative size of the contract.
In the late 1960s a shareholder of the company that owned the Chicago baseball team
sued the company because the directors refused to install lights in Wrigley Field. The
court decided that the directors:
a. had a rational purpose for not installing lights and were not liable for doing anything
improper.
b. were not protected by the business judgment rule.
c. had not acted with any rational purpose and were liable to its shareholders for
damages caused by their actions.
d. had the right to make decisions for the team without any concern for the desires of
the shareholders.
A union declares its workers are going on strike. The employer states the collective
bargaining agreement is still in force for another eight months and that it contains a
no-strike clause. The union claims the CBA’s no-strike provision is not binding since
new union leadership is in place. Which of the following statements is correct?
a. The union can strike since new leadership is now in control.
b. The union can strike since no-strike provisions have been ruled by the courts to be
unenforceable.
c. The union cannot strike, as strikes to exert economic pressure on management are
prohibited by the NLRA.
d. The union cannot strike because of the no-strike clause in the contract.
Fresh Air, a nonprofit environmental organization, believes that Cincy Co. is violating
the Clean Air Act. The EPA has not taken any action against Cincy Co. Fresh Air:
a. can file a citizen suit against the EPA.
b. can file an executive order with Cincy Co.
c. cannot file a lawsuit but can ask an administrative law judge to hear its complaint.
d. cannot file a lawsuit but can lobby Congress to force the EPA to act.
Rayco Ski Shop purchased 500 pairs of skis from Skitron. Rayco is located in
Colorado. Skitron’s business is in Tennessee. The purchase order included the following
term: “F.O.B. Colorado.” The contract makes no mention of risk of loss or title. The
contract can be described as a:
a. shipment contract.
b. destination contract.
c. bulk transfer.
d. sale on approval.
On the day a tender offer begins:
a. greenmail must be sent to the SEC.
b. a bidder must file a disclosure statement with the SEC.
c. assets of the target corporation must be locked up until an inventory is completed.
d. the SEC issues a binding order to the target company to file audited financial
statements to the bidder.
Sam, the chief executive officer of Boch Industries, was criminally prosecuted for
violating the Resource Conservation and Recovery Act. Which of the following is
correct concerning the penalties?
a. Sam cannot be punished because he was acting for Boch Industries. Boch Industries
faces criminal fines.
b. Sam faces criminal fines as well as imprisonment.
c. Sam faces only criminal fines.
d. The only remedy Sam faces is an injunction to prevent further violations.
Bryson Hardware accepted delivery of the 50 door handles it ordered. If it later finds
the handles do not conform to the contract specifications, it may return the goods only
if:
a. it shows the handles are nonconforming.
b. it shows that the defects substantially impair their value.
c. it can prove it is commercially impracticable for it to keep the goods.
d. the documents of title are in order.
A company’s collective bargaining agreement has expired and negotiations are
underway for a new one. After one exhausting session, union leaders have decided
management will not bargain in good faith. The union declares it will be going out on
strike the following midnight if an agreement is not reached. The union:
a. is allowed to go out on strike the following midnight.
b. must give the employer at least seven days’ notice before going out on strike.
c. must give the employer at least 30 days’ notice before going out on strike.
d. must give the employer at least 60 days’ notice before going out on strike.
Sam, the seller, enters into a contract agreement to buy Betty Lou’s house on the
condition that he is able to secure financing at or below 6% per year. This is a:
a. condition precedent.
b. condition subsequent.
c. novation condition.
d. concurrent condition.
The federal judicial branch of the U.S. government:
a. interprets statutes.
b. passes statutes.
c. issues executive orders.
d. creates administrative agencies.
Maxine lost her job as an electrical engineer with a large company which had provided
health insurance benefits for Maxine and her family. She now:
a. must try to find insurance on her own or try to find another job with health insurance
benefits.
b. is protected under COBRA, which allows her continued health insurance coverage
for 18 months as long as she pays the cost.
c. is protected under COBRA, which requires her employer to continue her health
insurance coverage for six months under whatever copayment arrangements she had
while she was employed.
d. has some protection under the NLRA, which requires her employer to pay for
continued health insurance for three months following her termination if she did not
leave the company voluntarily.
Which of the following statements about torts is correct?
a. A tortious act is always a criminal act.
b. A criminal act is always a tortious act.
c. A tortious act may also be a criminal act.
d. All the above are correct.
Kian is the chief financial officer of Yonkka, Inc. He is also a member of Yonkka’s
board of directors. Kian is:
a. an inside director.
b. an outside director.
c. holding an illegal position.
d. a public director.
Once a provision is in the corporate charter, it can only be changed by:
a. a vote of the shareholders.
b. filing an amendment with the Secretary of State.
c. Both a and b are necessary to change a corporate charter.
d. Neither a nor b is necessary to change a corporate charter. The board of directors
merely needs to file a change of charter form.
M & E contracted to sell 500 music stands to Coda, Inc. M & E shipped the stands in
accordance with the agreement. Coda paid for the stands as promised. The contract
between M & E and Coda is discharged by:
a. full performance.
b. agreement.
c. rescission.
d. accord and satisfaction.
Linda agrees to buy Missy’s Greyhound race dog for $2,000. Linda is to deliver the
money and take possession of the dog the next morning. That night, running his best
race ever, the dog runs away from Missy, never to be seen again.
a. Linda must give $2000 for the dog, but only if the dog was insured.
b. Linda must give $2000 for the dog, but only if Missy can find a replacement dog
within a reasonable time.
c. Linda must give $2000 for the dog.
d. None of the above; the contract duties are discharged.
At the time a check is issued, primary liability falls on:
a. the maker.
b. the drawer.
c. the drawee.
d. None of the above.
Laura, a brain surgeon, committed a negligent act when she ran a red light and injured
Randy, a pedestrian crossing the street. Randy was a mentally impaired adult.
a. The “reasonable person standard does not apply to Laura since she is an extraordinary
person.
b. Both Lauras and Randy’s conduct will be based on the “reasonable person” standard.
c. None of these answers are correct.
d. The “reasonable person” standard does not apply to Laura nor Randy given their
respective degrees of extreme intelligence (one high and one low).
A defendant who engages in setting off fireworks at a fully licensed Fourth of July
show is liable for harm that results from the activity only if the plaintiff proves the harm
was foreseeable
Kirk purchases a sailboat on credit from Lakefront Sales, and Lakefront keeps a
security interest in the boat. Lakefront then assigns the security interest to First Finance
Co. Explain what having a security interest means. Under the UCC, what defenses can
Kirk assert against First Finance?
When promissory estoppel is used by the courts, it is because there is NOT an
enforceable contract present.
It is legal for a private employer to use lie detector tests as part of its usual hiring
process.
Regardless of the language of the contract, title to goods passes to the buyer at the time
and place at which the seller physically delivers the goods.
Judicial review is the power of the federal courts to declare a statute or governmental
action void.
The First Amendment guarantee of freedom of speech is an absolute right.
The two principal requirements of the Foreign Corrupt Practices Act involve bribes and
grease payments.
Identify four circumstances that might persuade a court to pierce the corporate veil.
The Magnuson-Moss Warranty Act only covers face-to-face sales, not catalog or
Internet sales.
Any securities offerings covered by the NSMIA must comply with state securities laws.
A party injured by fraud generally has the choice of suing for damages or rescinding the
contract.
A person cannot be held liable on a negotiable instrument unless that person has signed
the instrument.
Entrapment can be a valid defense to a criminal act.
If Gloria threw a rock which hit Merle, she is liable for an intentional tort of battery
only if she intended to injure or harm Merle.