In a derivative lawsuit, any proceeds awarded by the court must be paid to the
corporation, not the shareholders themselves.
a. True
b. False
Which of the following is TRUE in cases based on claims of disparate treatment?
a. The plaintiff must prove that the defendant intentionally discriminated.
b. The defendant must have made a disparaging remark about the plaintiff.
c. The defendant must prove that the plaintiff is not qualified for the position.
d. The plaintiff must prove that he or she was discriminated against because of his or
her education level.
Kyle, Pedro, and Madeline form a partnership. There is no agreement as to the duration
of the partnership. The partnership is a partnership at will.
a. True
b. False
Under corporate law, a corporation that officially states its purpose is “to engage in any
lawful activity for which corporations may be organized under the General Corporation
Law of Idaho” is too broad. A corporation’s purpose must be more narrowly defined.
a. True
b. False
A partner always has the right, though not the power, to leave a partnership.
a. True
b. False
Billy owes a liquidated debt of $3000 to Rayna, his personal weight trainer. Billy sends
Rayna a check for $300 on which he has marked, “Payment in Full.” If Rayna cashes
the check she will not be able to successfully sue Billy for the remainder of the debt.
a. True
b. False
A manager used her position in the company to develop a new business the company
might have pursued on its own. This is a breach of the
a. duty of care.
b. duty of non-competition.
c. duty of loyalty.
d. duty of recognition.
Kaiya is a sales representative of TriColor. Kaiya owes a fiduciary duty to TriColor.
a. True
b. False
Mike sold his car to Beth, who was to pick the car up at Mike’s house and pay for it
then. In fact, when Beth arrived she discovered Mike’s home and the car destroyed by a
fire the night before. The risk of loss falls on
a. Mike because Beth had not taken possession of the car.
b. Beth because Mike was ready, willing, and able to tender the car.
c. Beth because under the UCC, the buyer bears the risk of loss.
d. Mike, because as a merchant he is responsible for the car.
Which of the following is a requirement for an involuntary Chapter 7 bankruptcy
petition?
a. The debtor must owe at least $150,000 in unsecured claims to the creditors who file.
b. The debtor must have at least three creditors sign the petition if the debtor has 12 or
more creditors.
c. The creditors must have tried to help the debtor overcome the financial difficulties.
d. The debtor must have a majority of the creditors file the petition.
Generally speaking, an employer does not have to give workers a day off on their
religious Sabbath if doing so would cause an undue hardship for the employer.
a. True
b. False
What phrase explains how a requirements contract can be valid?
a. “will buy 100 percent of output
b. “willing to accept the entire quantity
c. “no consideration needed
d. “in good faith
Alfred has been working for Canyon, Inc. for 12 years, with regular positive
performance reviews and promotions. Roger has only been working for Canyon for 3
years. Alfred also has more management qualifications, yet when a management
position is open, Alfreds supervisor advises that Alfred should NOT be promoted to that
position. His reason is that he has recently learned that Alfred regularly attends a
Narcotics Anonymous support group. Although Alfred has been clean for 16 years,
there is fear that he could relapse. What is true?
a. Canyon is allowed to make past drug abuse a barrier to managment positions.
b. Although Canyons behavior is unethical, it is not prohibited.
c. Canyons behavior is prohibited by the Americans with Disabilities Act.
d. Canyons behavior is not prohibited by the Americans with Disabilities Act, but it is
prohibited by Title VII of the Civil Rights Act.
Ahmi was a witness in a lawsuit. When asked why he fired Rana, Ahmi replied, “Rana
was fired for willful misconduct.” Indeed, Rana had not engaged in any misconduct.
Rana will be able to successfully sue Ahmi for defamation based on what Ahmi said in
court.
a. True
b. False
Abby hires a contractor to make repairs on her house. Before the repairs are finished,
Abby dies. Her good friend, Clay is appointed executor of Abby’s estate. Clay orally
promised that if the estate could not pay the repair bill, he would pay it even though he
does not live in the house and has no entitlement under Abby’s estate. If the contractor’s
bill does not get paid, who can the contractor collect from, if anyone?
a. The contractor can collect from either the estate or Clay.
b. The contractor can collect from the estate only.
c. The contractor can collect from Clay only.
d. The contractor must collect from the estate first, and then collect any deficiency from
Clay.
No formal steps are necessary to create a sole proprietorship.
a. True
b. False
Lawyers prefer to negotiate touchy subjects as they arise rather than address them at the
beginning of a relationship.
a. True
b. False
Nominal damages are awarded in contract cases in which a damage amount was named
in the contract.
a. True
b. False
Mentally infirmed Sasha contracts to purchase a piano for $2,500 in 60 monthly
installment payments. Six months later she tries to void the contract on grounds of
mental impairment. A court will
a. normally void the contract without requiring anything further on Sashas part.
b. normally void the contract but will require Sasha to return the piano.
c. ordinarily not void the contract unless Sasha had a court-appointed guardian at the
time she entered into the contract.
d. not void the contract unless Sasha agrees to have the court appoint a guardian for her.
Costs to store a vehicle for a short period of time after an auto dealer fails to complete
the contract to purchase the vehicle would be considered
a. compensatory damages.
b. incidental damages.
c. consequential damages.
d. punitive damages.
An agreement to settle a debt for less than the sum claimed is referred to as
a. a promisory estoppel.
b. an accord.
c. a satisfaction.
d. rescission.
Expectation interest can best be described as money spent in reliance upon the
agreement.
a. True
b. False
The start of the bankruptcy process is
a. the submission of a plan of repayment.
b. the bankruptcy courts issuance of an order for relief.
c. a meeting of creditors.
d. the appointment of a trustee.
Secondary boycotts
a. are generally legal provided the boycott is peaceful.
b. are generally legal provided the boycott does not involve public employees such as
nurses or school teachers.
c. are not expressly permitted nor prohibited under federal law.
d. are generally illegal.
In business law, a lawyers primary job is to represent the client in contract litigation.
a. True
b. False
Travis had too many beers at the baseball game. Ed realized Travis was so intoxicated
he wouldnt know what he was doing, so he got Travis to sign a promise to sell his
motorcycle to Ed for $50. When Travis gets sober, he can attempt to void the contract.
a. True
b. False
Psychologist Holtz is working with a patient, Rebecca, who has expressed the intention
to seriously harm two of her acquaintances. If you apply the principle set forth by the
Supreme Court of California in the Tarasoff v. Regents of the University of California
case, Psychologist Holtz
a. has, because of the bystander rule, no duty to warn the foreseeable victims about
Rebeccas expressed intention to harm them.
b. has a duty to exercise reasonable care to protect foreseeable victims of Rebeccas
violence.
c. is in a special relationship with patients, and this relationship creates a privilege of
confidentiality between the communicants.
d. will be held to a strict duty of care and will be held liable for any victims injuries if
Holtz failed to warn them of Rebeccas potential violence toward them.
Gary, Louise, and Brian, who own competing gas stations in town, happen to see each
other at a restaurant one morning and have breakfast together. While talking, they
decide to set their gas prices at the same amount. They have committed an illegal act
only if the agreed price is unfair to consumers.
a. True
b. False
Which of the following is a possessory interest in land?
a. Fee simple absolute
b. Easement
c. Profit
d. License
Terminating a corporation is a three-step process: dissolution, winding up, and
termination.
a. True
b. False
Of all forms of dispute resolution, which one probably offers the strongest “win-win”
potential because its goal is voluntary settlement?
a. litigation
b. arbitration
c. jurisdiction
d. mediation
Paul and Diana are married and own a home. Both of their names are on the mortgage.
This is an example of
a. a tenancy in kind.
b. a tenancy at will.
c. a concurrent estate.
d. a shared estate.
Andy wants to start his own business. He has decided to rent space in a ‘strip mall” and
open a pet shop. Additionally, he will provide dog grooming services. He figures he can
do almost everything himself, though he will need to hire a part-time employee on an
“as needed” basis. His friend, Lacy, has agreed to work when needed.
Andy is considering operating his business as a sole proprietorship. What are the
primary legal advantages and disadvantages to this form of business ownership for
Andy’s pet shop?
Smalltown has two family-owned hardware stores that have been in business for years.
Major Hardware decides that Smalltown would be a good place to build one of its
superstores. Major opens, advertising unbelievably low prices; in fact, at below cost.
Because Major owns stores nationally, it is able to keep prices extremely low until both
of the family-owned stores have to go out of business because they cannot compete.
After Major is the only hardware store in town, it raises its prices enough to make up
for its former losses and to make some additional profit. Discuss this behavior in
relation to antitrust law.
Lauren and Hayden own residential houses side by side. Between the houses is one
driveway that provides mutual access to both back yards. Lauren actually owns the
property where the driveway sits. However, Hayden has the right to use the driveway to
access his back yard. What type of easement does this situation describe, an easement
appurtenant or an easement in gross? What are the differences between the two types of
easements?
Discuss how SEC rules affect the legal and the ethical relationship between accountants
and the companies they audit.
In a construction contract, there is a $1000 per day estimate of damages for each day
that the contract runs over the completion date. The contractor is 30 days late when the
job is completed, resulting in a prospective damage award of $30,000. What is this type
of clause, and when will it be enforced?
Explain the Title VII requirements on affirmative action, and identify three sources of
affirmative action programs.
Alex worked for years for MegaCorp. During his employment with MegaCorp, he
learned a great deal of confidential information and knew that if this information got
into the hands of competitors or the general public, MegaCorp could suffer great
business losses. Alex claims that he was wrongfully fired by MegaCorp and accordingly
he believes he has no obligation to MegaCorp to keep any information he acquired with
them as confidential. MegaCorp claims that Alex is under a continuing duty to keep
confidential information secret, even though he is no longer with the company. Who is
right? Why?
Tianhui was recently hired as a sales representative by Oxtron, Inc. Before leaving on
his first sales trip, a number of the other sales representatives take Tianhui aside and tell
him that it is customary for the sales representatives to “pad” (increase) their expense
reports each month by 20%. Use utilitarian ethics to decide what Tianhui should do
about the expense report he submits to Oxtron.
Explain the concept and significance of identification of goods. Discuss how
identification takes place.
Countywide Metals is a small company that incorporates in the state in which it is doing
business and plans to offer and sell $100,000 worth of stock only to residents of the
county in which it is doing business. Discuss the requirements Countywide must meet
for registering its securities.
List and discuss the three ways to acquire control of a corporation.
Discuss exculpatory clauses, and designate when an exculpatory clause is
unenforceable.
Discuss the four most important limitations on the power of federal administrative
agencies.
Explain the reason behind having a statute of frauds and give arguments for and against
having such a statute.
Preferred Contractors was a general contractor and owner of a condominium complex
that was under construction. Barrett, a subcontractor, had been hired by Henderson
Plumbing, another subcontractor, to help it complete the plumbing work on the project.
When Henderson began using shoddy installation procedures and subsequently fell
behind the scheduled completion time for the project, Preferred Contractors urged
Barrett to correct Henderson’s mistakes and to finish the job. Barrett refused to continue
until he knew who would pay him, since he feared Henderson’s financial position was
shaky. Nonetheless, Preferred Contractors job superintendent told Barrett to go ahead
even if Barrett and Preferred Contractors had no contract because “he would use his
influence to try to help Barrett get his money.” Barrett finished the work and sent a
$7,500 bill to Henderson, which was never paid. When Barrett later sent the bill to
Preferred Contractors, these facts emerged: Preferred Contractors told him that due to
Barrett’s failure to notify Preferred Contractors promptly of Henderson’s non-payment,
Preferred Contractors had already paid Henderson in full and therefore would not pay
twice for the work. Discuss the best possible theory of recovery Barrett may argue.
Trent was the production manager at HGB, Inc. Under his supervision, HGB filled in an
area of wetlands on the company’s property without a permit. Has Trent violated the
law? What penalties might he face?
Adrianna wants to purchase a ten-acre tract of land. Under what circumstances would
the seller be required to divulge information Adrianna does not possess?
What two exceptions did the UCC create for accord and satisfaction check cases?
Various agencies that have great impact on world business operate under the United
Nations. Name these organizations and describe the purpose of each.
Insurance policies often contain a covenant of good faith and fair dealing. Even if the
clause is not in the policy, often courts will imply it. Explain the covenant of good faith
and fair dealing and provide an example illustrating when an insurance company might
breach this covenant.