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Bob goes bankrupt. He has several creditors and a small amount in savings. He owes
XYZ Bank $200,000 for which he used his home as collateral. XYZ Bank properly
perfected its interest in the home. Bob additionally owes $3,000 in alimony to an
ex-wife, Sue; $50,000 in unsecured credit card bills; and $5,000 in unsecured debt to
his friend Tina. After all exemptions are satisfied, $205,000 from the sale of the home
and $5,000 in a small bank account remain for distribution to creditors. Which of the
following is true regarding priority?
a. All funds are added together and disbursed to the claimants based upon the
percentage of each creditor's claim.
b. Tina has first priority, the credit card companies are then paid, and XYZ Bank is
entitled to any remainder.
c. XYZ Bank receives $200,000 from the sale of the home, Sue receives $3,000, and
the remainder is divided between the credit card companies and Tina.
d. Tina has first priority, XYZ Bank is then paid, and the credit card companies divide
the remainder.
Answer:
Federal law provides that electronic agents may legally bind a user to click-wrap
agreements.
a. True
b. False
Answer:
The Food and Drug Administration shares with the __________ the responsibility for
regulating pesticide residues on food.
a. Department of Agriculture
b. Department of Insecticide
c. Federal Trade Commission
d. Environmental Protection Agency
Answer:
Which of the following is NOT an exception to the warrant requirement for a lawful
search?
a. A search when the owner or a person who appears to have authority voluntarily and
intelligently consents to the search.
b. A search of a residence if there is probable cause to believe evidence of a crime will
be found.
c. Anything discovered by police in plain view if the officers are legitimately on the
premises.
d. A stop and frisk of a suspect if the officer reasonably believes the suspect is
dangerous.
Answer:
Which of the following is currently the world's top carbon polluter?
a. Brazil
b. India
c. The U.S.
d. China
Answer:
Even when Congress has taken no action in regard to a matter, the __________ or
__________ Commerce Clause may impose restrictions on state action.
a. dormant; negative
b. dormant; positive
c. relative; positive
d. relative; negative
Answer:
The UCC has adopted the "mirror image" rule.
a. True
b. False
Answer:
Lawsuits under Section 10(b) must be brought within __________ of the date the
plaintiff discovered or should have discovered the facts constituting the violation or
within __________ of the date of the violation, whichever is earlier.
a. two years; five years
b. six months; one year
c. two years; three years
d. one year; two years
Answer:
The Sarbanes-Oxley Act created the Public Company Accounting Oversight Board.
a. True
b. False
Answer:
When entering into contracts with companies in other nations, a manager should
understand whether that company's laws are based civil codes, rather than on
case-by-case common law.
a. True
b. False
Answer:
Generic drugs can be approved for use on a showing that they are identical to approved
brand-name drugs.
a. True
b. False
Answer:
Which of the following agencies was created following the terrorist attacks of
September 11, 2001, to be responsible for civilian aspects of national security?
a. The Stateside Protection Commission
b. The Department of Homeland Security
c. The Department for Protection of Civilians
d. The Critical Civilian Defense and Protection Agency
Answer:
In the context of executive compensation, __________ stock usually means stock
subject to vesting restrictions.
a. regulated
b. restricted
c. illegally issued
d. kickback
Answer:
Under federal law, manufacturers, but not sellers, may be held strictly liable for a
defective product.
a. True
b. False
Answer:
In CASE 20.3 In re Citigroup Inc. Shareholder Derivative Litigation(2009), the
Delaware Chancery Court __________ the shareholders' claims, holding that the
allegations in the __________ were __________ to show that a demand on the
__________ would have been futile.
a. affirmed, complaint, sufficient, shareholders
b. dismissed, answer, insufficient, directors
c. dismissed, complaint, insufficient, directors
d. affirmed, answer, sufficient, directors
Answer:
The Clean Air Act requires that national ambient air quality standards be set without
regard for cost considerations.
a. True
b. False
Answer:
The __________ was enacted after widespread abuses in the subprime mortgage
market.
a. Walsh-Healy Mortgage Reformation and Consumer Protection Act of 2009
b. Mortgage Lending and Financial Reform Act of 2009
c. Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010
d. Financial Institution Regulatory Pronouncement and Consumer Revision Act of 2010
Answer:
In the case ofEstate of Countryman v. Farmers Cooperative Association discussed in
the text,the plaintiffs attempted to hold a member who owned 95% of an LLC
personally liable as the LLC's manager, after propane gas delivered by the LLC
exploded. How did the court rule?
a. That only the LLC could be held liable.
b. That the manager was subject to personal liability along with the LLC regardless of
whether it could be established that the manager participated in tortious conduct in
performing his duties.
c. That only the manager, not the LLC, could be held liable.
d. The manager was not shielded from personal liability if he participated in tortious
conduct while performing his duties.
Answer:
The __________ is an advocacy group that has commended Disney's new advertising
and marketing guidelines for children.
a. Alliance to Ban Advertising Targeting Children
b. Protect the Children Foundation
c. Center for Science in the Public Interest
d. Group for Ethical Marketing Practices
Answer:
Which of the following is true regarding the UCC's Statute of Frauds?
a. The writing involved must be typed, not handwritten.
b. The writing must be signed by the party to be charged, not necessarily by all parties
c. Any warranties must be included in the writing in order to be enforceable
d. The UCC's requirements regarding a writing are strict and place significant burdens
on the parties in regard to adequately including all terms of the agreement in the
writing.
Answer:
Happy City has three distributors of milk products. Sam, who owns a grocery store,
angers one of the distributors when he insists that additional milk be delivered on
Christmas Eve. He annoys another distributor when he makes a delivery driver wait to
deliver milk. The three distributors get together and discuss the fact that they like all the
other grocers in town better than Sam. One of them has an idea that they should stop
selling milk products to Sam. The milk distributors call their friends the meat
distributors and talk them into not selling meat to Sam either. Sam hears about the plot
and wants to stop it. Which of the following best describes the agreements between the
distributors of milk and meat to not sell to Sam?
a. It would likely be a boycott.
b. It would likely be a horizontal distribution agreement.
c. It would likely be a vertical distribution agreement.
d. There is no descriptive term in antitrust law since this is simply an agreement among
sellers who do not legally have to sell to any particular buyer.
Answer:
Liquidated damages are damages that:
a. punish the breaching party.
b. fluctuate with the market conditions.
c. are agreed upon.
d. none of these choices.
Answer:
The Semiconductor Chip Protection Act of 1984 created a highly specialized form of
intellectual property, called a(n):
a. registered service mask.
b. registered mask work.
c. registered certification mask.
d. registered trade mask.
Answer:
Which state court was the first to adopt the doctrine of strict product liability?
a. New York.
b. Michigan.
c. California.
d. Pennsylvania.
Answer:
Fact Pattern 9-3
Alex and Blake got into a heated argument because Alex asked Blake's girlfriend out on
a date. Blake decided that he wanted to scare Alex and drew back his fist to hit Alex. He
stopped just as he was about to strike Alex in the nose. Alex yelled out, "You didn't
scare me. I was ready for a fight!" Later, Alex decides that he would like to sue Blake
and asks your advice on issues involving assault and battery.
Refer to Fact Pattern 9-3. What would you tell Alex regarding whether he should sue
Alex for committing a battery?
a. That it appears that the necessary elements are present for him to succeed in an action
against Blake for battery so long as he can show apprehension of being struck.
b. That he could not win in an action for battery because he admitted that he was not
afraid.
c. That he could not win in an action for battery because Blake did not actually strike
him.
d. That he could not win in an action for battery because it appears that Blake's actions
were justified.
Answer:
All business leaders and academics agree that the primary ethical and legal duty of
corporations is to maximize shareholder value.
a. True
b. False
Answer:
The Council of Ministers is the legislative body of:
a. NAFTA.
b. GATT.
c. the Treaty of Rome.
d. the European Union.
Answer:
The U.S. Supreme Court ruled that sexual harassment must be committed by a member
of the opposite sex in order to be actionable.
a. True
b. False
Answer:
Policy statements issued by the EPA have the force of law.
a. True
b. False
Answer:
A number of states have enacted legislation providing that loan commitments must be
in writing to be enforceable.
a. True
b. False
Answer:
In CASE 18.2 Kelo v. City of New London (2005), the U.S. Supreme Court held that the
"takings clause" of the U.S. Constitution's __________ Amendment now means
__________ and a city can force private citizens to sell their houses and other property
to a __________.
a. First, a regulatory taking, private entity
b. Fifth, public use, public entity only
c. Fifth, economic development, private party
d. Fifth, a regulatory scheme, private party
Answer:
In general, when will the FDA require prescription use of a drug?
a. If the drug is toxic, requires a physician's supervision for safe use, or is addictive.
b. Only if the drug is toxic.
c. Only if the drug is either toxic or requires a physician's supervision for safe use.
d. Only if the drug is addictive or requires a physician's supervision for safe use.
Answer:
The party appealing a case is generally referred to as the:
a. plaintiff.
b. respondent.
c. appellee.
d. appellant.
Answer:
To which of the following is an entrepreneur likely referring when using the term
"angel" in reference to an investment plan?
a. An investment banker
b. A venture capitalist
c. Lenders of last resort who provide needed funds once it appears that an entrepreneur
who has started a company is in financial trouble
d. Family, friends, and wealthy individual investors to whom the entrepreneur first turns
to seek funds
Answer:
In regard to strict liability in tort, which of the following is true in the case of a seller of
used goods?
a. Sellers of used goods are not usually held strictly liable for goods sold.
b. A seller of used goods is strictly liable for defective repairs made by the seller.
c. A seller of used goods is usually held strictly liable only for inherently dangerous
items such as power tools.
d. A seller of used goods is usually held strictly liable only for inherently dangerous
items such as power tools or for defective repairs made by the seller.
Answer:
The general power retained by the states to protect the health, safety, welfare, and
morals of state residents is often referred to as ____ power.
a. police
b. regulatory
c. protective
d. community
Answer:
Discuss the general rule regarding when a court will entertain an appeal to an
administrative process and the reason for the rule.
Answer:
Several commentators have criticized the Bankruptcy Code as too easily excusing
individuals and businesses from honoring their lawful obligations. From a societal
standpoint, do you believe that the Bankruptcy Code plays a positive role in social and
economic relationships? What changes, if any, would you recommend?
Answer: Students will vary in answers.
Set forth the Clean Air Act's four types of air quality goals.
Answer:
Susan goes to work for Fashion Company, a U.S. company that has a branch in a
repressive Middle Eastern country. Susan agrees to transfer to the Middle Eastern
country. After working there for several months she notices that men who are less
qualified are promoted to managerial jobs for which she has applied. Susan tells her
supervisor, Will, that she is going to sue the company under Title VII because she is
being discriminated against on the basis of her sex. He tells her to forget it because Title
VII does not apply outside the U.S. He also tells her that even if he wanted to promote
her, which he does not, the law in the Middle Eastern country prohibits the promotion
of women into managerial positions. Susan tells him that he is nuts because she is fully
protected as a U.S. citizen working for a U.S. company. Who is right and why?
Answer:
What is a poison pill? What factors favor keeping a poison pill in place?
Answer:
Set forth what is prohibited by RICO and what must be shown to establish a violation
of the Wire and Mail Fraud Acts. Reference in what manner the U.S. Supreme Court
has construed the term "fraud" in relation to the Wire and Mail Fraud Acts.
Answer:
Under what circumstances will a successor corporation be held liable in a product
liability action under the traditional successor liability rule?
Answer:
Identify and discuss the two elements focused on in relation to procedural
unconscionability.
Answer:
Assume that after paying a large fine, a company survives charges of illegal activity. In
what ways does illegal conduct put a company at a competitive disadvantage?
Answer:
Explain the "commercial activity" exception to the Foreign Sovereign Immunities Act.
Answer:
Define the terms security interest, dragnet clause, and perfection. What are the methods
of perfecting a security interest?
Answer:
Maurice is a fairly new director at ABC Corp. Peg, another director, tells him that she
believes that the company is in Revlon mode and that the directors should act
accordingly. What is Peg referencing?
Answer:
Discuss the elements that are considered in determining whether a worker is an
employee or an independent contractor.
Answer:
What standards are applied in regard to judicial review of ERISA decisions by plan
administrators?
Answer:
What does Section 201 of the UCC provide regarding a Statute of Frauds?
Answer:
TheGulf Oil Corp. v. Gilbertdiscussed the text, addressed the question of forum non
conveniens. What factors did the U.S. Supreme Court set forth that courts should
consider in deciding whether to dismiss a case based on forum non conveniens?
Answer:
Molly wants to buy a vacant lot that is for sale in her neighborhood. The problem is that
she had a skirmish with the current owner, Ben, over his dog barking at all hours of the
night. Molly asks Sam if he will purchase the lot on her behalf without telling Ben that
she will be the true owner. Sam agrees and reaches an agreement with Ben. A few
months after the purchase, Molly begins to do some work on the lot. Ben sees her and
asks what she is doing. Molly tells him that she was the true purchaser. Ben becomes
furious and yells at her that he will have the sale rescinded and sue both Molly and Sam
for fraud. What will be the likely result if Ben sues Molly and Sam?
Answer:
