Thor Power Products Corporation permits its directors to be elected by cumulative
voting. This
a. allows minority shareholders to be represented on the board.
b. assures directors that they will be selected by their peers.
c. guarantees Thors executive officers of the final choice.
d. ensures against persons who may “cloud the corporate direction.
Jock hires Kym to act as his agent to purchase Lifetime Gym & Fitness, Inc. Jock tells
Kym to reveal that she is buying the firm on behalf of a third party and to tell Lifetimes
seller who that third party is. Jock is
a. a disclosed principal.
b. an apparent principal.
c. an undisclosed principal.
d. a partially disclosed principal.
Fits Like A Glove Shoes, Inc., and Retail Footwear Stores enter into a contract for a sale
of shoes. The contract indicates that the price includes transportation costs to a specific
destination by including the term
a. C.I.F.
b. delivery ex-ship.
c. F.A.S.
d. F.O.B.
A contract between E-Debits, Inc., and First Credit Corporation includes a provision
excluding liability as a result of fraud. This provision is
a. enforceable because the parties are protected from liability.
b. enforceable because the parties consented to it.
c. enforceable if the parties have equal bargaining power.
d. not enforceable.
Omni Corporation is a Pennsylvania-based firm that does business throughout the
United States. With respect to this circumstance, the UCC has been adopted by, and
applies in,
a. a few of the states.
b. all of the states, in whole or in part.
c. half of the states.
d. none of the states, to date.
VuTech Company agrees to sell digital video equipment to Home & Business Stores,
Inc., for Home & Business to market to its customers. Their contract will not be en-
forceable unless it includes
a. the duration of the deal.
b. the price of the goods.
c. the quantity of the goods.
d. the requirements of Home & Businesss customers.
Gas Up, Inc., designs, makes, and sells a fuel injection system that copies Hybrid
Corporations design without Hybrids permission. This is most likely
a. copyright infringement.
b. patent infringement.
c. trademark infringement.
d. a theft of trade secrets.
Dyan executes her will to give “to my nephew Esau my stock in Fargo, Inc. Later, Dyan
writes separately, with the same formalities required for a will, to leave the stock to her
niece Ginny and cash to Esau. This writing
a. does not affect the wills gift of the stock to Esau.
b. requires a gift of the stock in equal shares to Esau and Ginny.
c. revokes the whole will, which must be redrafted.
d. revokes the wills gift of the stock to Esau.
Sustainable Café LLC is a limited liability company. Like any other LLC, unless
Sustainable Café chooses otherwise, the firm will be taxed as
a. a corporation.
b. a sole proprietorship.
c. a partnership.
d. none of the choices.
Jack promises to buy Kriss computer for $400. Jack is
a. an executor.
b. an offeree.
c. a promisee.
d. a promisor.
Bild-It-Rite Corporation is a public company that is preparing to issue securities that do
not qualify for an exemption from registration. This means that Bild-It-Rite must
a. file a registration statement with the SEC.
b. issue the securities through an online registration site.
c. refrain from issuing the securities to unregistered investors.
d. register the securities with a national stock exchange.
Clyde issues a check payable to Discount Mart. Elle, Discounts cashier, forges the
stores indorsement and deposits the check in her bank account. Clydes bank, First State
Bank, pays the check. Clyde can recover from
a. Elle, but not First State Bank.
b. First State Bank, which cannot recover from Elle.
c. First State Bank, which can recover from Elle.
d. no one.
Flite-Craft Corporation makes and sells aircraft parts. In most states, the minimum
number of directors that must be present before Flite-Crafts board can transact its
business is
a. all of the directors authorized in the articles or bylaws.
b. a majority of the number authorized in the articles or bylaws.
c. any odd number.
d. one.
Trudy forges Umas signature on a check “payable to the order of Trudy drawn on Umas
account in Verity Bank. Most likely, if the bank pays the check
a. the Federal Reserve will reimburse all parties for their costs.
b. the loss will be apportioned among all of Veritys customers.
c. Uma will be liable for the amount.
d. Verity will have to recredit Umas account.
The state legislature of Iowa enacts a transportation statute that impinges on interstate
commerce. This statute will be
a. balanced in terms of Iowas interest in regulating a certain matter against the burden
placed on interstate commerce.
b. balanced in terms of the burden on Iowa against the merit and purpose of interstate
commerce.
c. struck down.
d. upheld.
Congressman Walden and other politicians want to prohibit the import of certain
agricultural products that pose a danger to domestic crops. With respect to these
products import, Congress can
a. do nothing.
b. impose quotas, but not tariffs.
c. impose tariffs, but not quotas.
d. prohibit the imports.
Karson orally agrees to pay Jaime to plant and harvest a quarter of Karsons farm
acreage for four corn-planting seasons. After Jaime prepares the land and plants the first
crop, Karson says that their deal is off. Jaime can most likely recover
a. in quasi contract.
b. in reformation.
c. in restitution.
d. on the parties existing contract.
Business Markets Coalition (BMC), a political lobbying group, wants a certain policy
enacted into law. If BMCs policy conflicts with the U.S. Constitution, a law embodying
it can be enacted by
a. any state legislature and Congress.
b. any state legislature but not Congress.
c. Congress but not any state legislature.
d. none of the choices.
Whit is a director of Vids Corporation. With respect to policymaking decisions
necessary to the management of corporate affairs, Whit and the other Vids directors
have responsibility for
a. all of the decisions.
b. only the decisions referred to them by the shareholders.
c. only the decisions referred to them by the officers.
d. none of the decisions.
Ray signs a promissory note for $10,000 in favor of State University (SU). The note
does not specify the date of its payment. Ray defaults. In SUs suit to collect on the note,
the court will most likely rule in favor of
a. Ray, because SU assumed the risk that the note would not be paid.
b. Ray, because the note is not payable at a definite time or on demand.
c. SU, because the note is an unconditional promise to pay the holder.
d. SU, because there is a uniform “default time for repayment when a date is not
specified.
Paris knowingly divulges to Media Exposure magazine information about Randys
e-money payments to City Bank. The payments were in transmission to City Bank
when Paris, without the consent of Randy or City Bank, discovered and revealed them.
This may be a violation of
a. the Electronic Communications Privacy Act.
b. the Federal Reserve Boards Regulation E.
c. the Right to Financial Privacy Act.
d. the Uniform Electronic Transactions Act.
Bartleby owes $5,000 to Countryside Credit Union. As a prejudgment remedy to collect
the debt, Countryside could use
a. attachment.
b. contribution.
c. execution.
d. subrogation.
Heavy Hauling, Inc., is a public company whose shares are traded in the public
securities markets. Under the Sarbanes-Oxley Act of 2002, to ensure that Heavy
Haulings financial results are accurate and timely, the firms senior officers must set up
and maintain
a. internal “disclosure controls and procedures.
b. external “release and reveal timetables.
c. personal “peruse and review liability policies.
d. public “information and discussion forums.
Olga, a salesperson for Pre-owned Cars & Trucks, Inc., tells Quincy, “This is the best
car Ive ever seen. This statement is
a. an express warranty.
b. an implied warranty.
c. a warranty of title.
d. puffing.
Bret enters into a contract with Collegiate University over the Internet to take an online
course titled “Internet Law. This is an e-contract because
a. the contract was entered into over the Internet.
b. the contract was formed between a student and a university.
c. the contract will be performed online.
d. the subject matter of the contract is “Internet Law.
Pam contracts to buy a Quotient-brand computer set-up from Regal Systems for $1,000,
but Regal fails to deliver. Pam buys the computer elsewhere for $1,500. Pams measure
of damages is
a. $500 only.
b. $500 plus incidental damages.
c. incidental damages only.
d. $0.
Neil represents himself as a contractor in Ohio, but he is not licensed in that state. A
contract between Pam and Neil by which Neil agrees to build a warehouse for Pam in
Ohio is
a. enforceable only if Pam does not object after learning of Neils status.
b. enforceable only if Pam knows that Neil is unlicensed.
c. enforceable only if the outcome is successful.
d. not enforceable.
Ryan, the owner of SuperMart Stores, Inc., adheres to the “principle of rights theory.
Under this theory, a key factor in determining whether a business decision is ethical is
how that decision affects
a. the right determination under a cost-benefit analysis.
b. the rights of others.
c. the “right thing to do.
d. the right to make a profit.
Dru signs a check “pay to the order of Eppie drawn on Drus account in First Federal
Bank. Greta forges Eppies indorsement. First Federal pays the check. Most likely
a. Dru will be liable for the amount.
b. Eppie will have to pay Dru for the amount.
c. First Federal will have to recredit Drus account.
d. the Federal Reserve will reimburse all parties for their costs.
Fact Pattern 2-1
Java Cafes, Inc., and Kaffe Import Corporation dispute a term in their contract.
Refer to Fact Pattern 2-1. The least expensive method to resolve the dispute between
Java and Kaffe may be
a. arbitration because the case will be heard by a mini-jury.
b. litigation because each party will pay its own legal fees.
c. mediation because the dispute will be resolved by a non-expert.
d. negotiation because no third parties are needed.
SEC Rule 10b-5 prohibits the commission of fraud in connection with the purchase or
sale of any security.
Voir dire is a process for presenting evidence in a case.
Only outsiders who would ordinarily be deemed fiduciaries of the corporations in
whose stock they trade can be liable for insider trading.
In May 2012, National Biotech Corporation generally advertises that it will make a $4
million offering of stock in June. National makes the offering as advertised and, ten
days after the first sale, notifies the Securities and Exchange Commission (SEC). All
buyers of the stock are given material information about the company, its business, and
the stock. Before the end of the year, the offering is completely sold out. The buyers
include forty unaccredited investors and fifty accredited investors. National does not
register the offering. The SEC files a suit against National, seeking civil sanctions on
the ground that this offering was not exempt from registration. National argues that the
applicable exemption is Rule 505 of Regulation D of the Securities Act of 1933 and that
because of this exemption, any resale of the stock is also exempt. Who is correct?
If a customers debit card is lost or stolen, the customer will not be liable for any
unauthorized use of the card.
A court cannot exercise jurisdiction over an out-of-state defendant who has only done
business in the state over the Internet.
If no harm results from an allegedly negligent act, there is no liability.
Guy is Hot Java Companys majority shareholder. Guy decides to sell his Hot Java
stock. The sale will be an effective transfer of the control of the company. Does Guy
owe a duty to Hot Java or its minority shareholders in this situation?
Only the manufacturer of a defective product can be strictly liable for an injury or
damage caused by the product.
Once a dissenting shareholder elects appraisal rights, the shareholder loses his or her
shareholder status.
A manufacturers liability to an injured party on a strict product liability theory is limited
to a refund or a replacement of the defective product.
A person acquires title to fungible goods by mixing them.
Incorporators appoint a corporations first board of directors.
Under the Americans with Disabilities Act of 1990, a person with a mental impairment
that ‘substantially limits everyday activities is not disabled.
A failure to return personal property is conversion even if the rightful owner consented
to the initial taking.
A tenant is not responsible for any damage to leased premises.