The __________ precludes imposing liability on directors and officers for honest
mistakes in judgment if they act with due care, in good faith, and in a manner
reasonably believed to be in the best interests of the corporation.
a. duty of diligence.
b. duty of obedience.
c. business judgment rule.
d. None of these is correct.
If Ben Stewart has a checking account at First Bank:
a. the relationship between Ben and his bank is based primarily on their contractual
agreement.
b. First Bank is a creditor and Ben is a debtor.
c. Ben is an agent of First Bank.
d. All of these.
Under the UPA, a partner’s ownership interest in any specific item of partnership
property is that of a:
a. joint tenant.
b. tenant in common.
c. tenant in partnership.
d. tenant by the entireties.
Masson Supply sells hinges to retail outlets for $1.20. If Rorsch Ltd. approaches Strunk
Hardware, one of Massons customers, and offers to sell a comparable hinge for $1.10:
a. Masson may, without violating the Robinson-Patman Act, lower its price to Strunk to
$1.10, and Masson need not lower its price to its other customers.
b. Masson may not lower its price to Strunk to $1.10 unless it lowers its price to its
other customers or it will violate the Robinson-Patman Act.
c. Masson may lower its price to Strunk to $1.05 in order to keep Strunks business,
even if Masson does not lower the price to its other customers, without violating the
Robinson-Patman Act.
d. Masson may lower its price to Strunk without also lowering its price to Massons
other customers in order to allow Strunk to meet a lower price Strunks competitor
charges when selling Rorschs hinges.
The law does not provide a remedy for the breach of an unenforceable agreement.
a. True
b. False
a. What is the liability of the partners for contracts regarding partnership business?
b. What is the liability of the partnership for torts committed by a partner while acting
in the ordinary course of partnership business? How does this compare to the liability of
a principal under respondeat superior? Explain.
Once a plaintiff has established a prima facie case of discrimination on a disparate
treatment theory, and the defendant has articulated a legitimate and non-discriminatory
reason for the discrimination, a plaintiff may still win.
a. True
b. False
Infringement of a mark occurs when:
a. a person intends to confuse purchasers.
b. it is proved that purchasers were actually confused by use of an identical or
substantially indistinguishable mark.
c. and only when, the mark is identical to another mark.
d. a person without authorization uses an identical or substantially similar mark that is
likely to cause confusion, to cause mistake, or to deceive.
In what way or ways are situational ethics and ethical relativism similar?
a. They both look to a central authority or set of rules to guide ethical decision-making.
b. They both assess each separate act according to whether it maximizes pleasure over
pain.
c. They both judge actions from the perspective of the actor.
d. All of these.
In a unilateral contract, a promise is exchanged from one party to another for a promise
to forbear to act.
a. True
b. False
Intent, as used in tort law, requires an evil motive.
a. True
b. False
A solicitation of proxies from holders of stock:
a. is comprehensively regulated by the SEC.
b. includes a request for a proxy, but not a request to revoke a proxy.
c. gives any security holder entitled to vote the opportunity to communicate with other
security holders. Upon written request, the corporation must mail the communication at
the corporations expense along with the solicitation.
d. All of these are correct.
In which of the following situations does the parol evidence rule not apply?
a. Where a typographical error occurs in the document and obviously does not represent
the agreement of the parties.
b. Where one of the parties to the contract lacks contractual capacity.
c. The parol evidence rule applies in both of the above situations.
d. The parol evidence rule does not apply in either (a) or (b).
An implied warranty is found in the language of a sales contract.
a. True
b. False
A power of avoidance held by a party may be lost if:
a. the contract is affirmed.
b. there are unreasonable delays in exercising the power.
c. the rights of third parties intervene.
d. All of these.
Moore, an employee of Lewpenski Motors, fraudulently tells Tolson, a prospective car
buyer, that the used car he is considering has never been in an accident. If Tolson buys
the car in reliance on Moores false statement, both Moore and Lewpenski Motors are
liable to Tolson for damages based on the fraudulent misrepresentation.
a. True
b. False
The principal may ratify either the entire contract or the part that is advantageous to the
principal.
a. True
b. False
Which of the following is untrue of a limited partnership?
a. Limited partnerships must be formed under a state statute.
b. Limited partners’ surnames ordinarily cannot be used in the partnership business
name.
c. Partners in limited partnerships must contribute services to the partnership.
d. Limited partners in a limited partnership are generally not responsible for the debts of
the partnership beyond their investment.
Damages a buyer may recover for loss resulting from requirements, the needs of which
the seller had reason to know at the time of contracting and which could not reasonably
be prevented by cover, are:
a. incidental.
b. consequential.
c. punitive.
d. liquidated.
The “cash flow test” for the payment of dividends and other distributions is also known
as the:
a. equity insolvency test.
b. balance sheet test.
c. surplus test.
d. net assets test.
The FTC Act contains very specific definitions of the terms “unfair” and “deceptive.”
a. True
b. False
A payment order for a wholesale funds transfer must:
a. be communicated in writing.
b. contain no condition to payment other than the time of payment.
c. be transmitted by the sender directly to the receiving bank.
d. All of these.
The Digital Millennium Copyright Act of 1998 amended the Copyright Act to create
limitations on the liability of online providers for copyright infringement when they are
engaging in certain activities.
a. True
b. False
The Foreign Corrupt Practices Act of 1977 (FCPA):
a. makes it unlawful for an American company or its agents to offer or give anything of
value to a foreign official for the purpose of influencing the official’s acts or decisions.
b. requires that American companies in foreign countries adhere to the same health and
safety standards in that country as they do in the U.S.
c. outlaws American business from engaging in business in countries, which, as
determined by the Department, have governments “repugnant to American law and
social values.”
d. None of these is correct.
A voidable title is no title.
a. True
b. False
In general, an assignment includes an implied warranty that the assignor who receives
value will do nothing to defeat or impair the assignment once it is delivered.
a. True
b. False
Paul, a contractor, has a contract to build a new office building for Bill. The contract
contains a provision requiring Paul to furnish a certificate of occupancy from the
building inspector before Bill is required to pay. This provision is:
a. an express condition.
b. an implied-in-fact condition.
c. an implied-in-law condition.
d. a condition subsequent.
The 1933 Act imposes liability for material misstatements and omissions in a
registration statement on:
a. only the directors and certain officers.
b. only the issuers.
c. experts and underwriters as well as directors, officers, and issuers.
d. the CEO only.
A modification of a preexisting contract occurs when the parties agree to change one or
more of its terms.
a. True
b. False
Which of the following may a U.S. Court of Appeals not do in ruling on a case?
a. Reverse or modify the judgment of the lower court.
b. Remand or send it back to the lower court.
c. Rehear the case by taking testimony of the witnesses.
d. Modify the judgment of the lower court.
The doctrine aimed at preventing any branch of government from gaining too much
power is:
a. judicial review.
b. federalism.
c. separation of powers.
d. preemption.
The perfect tender rule requires that the seller’s tender of performance must conform
exactly to the contract subject to:
a. installment contracts.
b. cure by the seller.
c. Both of these.
d. Neither of these.
In most of the states, a sixteen-year-old who drives a car will be held to the same
standard of care in driving as an adult for purposes of determining negligence.
a. True
b. False
How does the management structure of a closely held corporation differ from that of a
publicly traded corporation?
Taylor, who is conducting an audit of Oakwood Corporation, becomes aware of
information that indicates Oakwood was involved in an illegal payment. Discuss
Taylors responsibilities.
Bob’s brother, Steve, planned to visit over Labor Day weekend. Together they planned
to build a deck in Bob’s backyard. Bob ordered the lumber, concrete, nails, and other
supplies to be delivered on Friday. He also arranged to rent a saw for the weekend (Sat.,
Sun., and Mon.) at a cost of $20 a day. When he went to pick up the saw, the store had
already rented it. He drove all over town trying to borrow another but could only get
one for Sunday, Monday, and Tuesday at a cost of $50 per day. Because they couldn’t
work on Saturday without a saw, Bob had to hire Mac at a cost of $80 to work with him
on Tuesday and, of course, Bob had to take off from work. Calculate the damages to
which Bob is entitled. Why? Explain.
Explain the process of jury selection and the differences in challenges for cause and
peremptory challenges. In addition, discuss the implications of race-based or
gender-based exclusions from a jury.
An article appeared in the local newspaper of Midville falsely stating that the policy
chief, Wilson, was facilitating the operations of a multi-state drug ring. Explain whether
Wilson has any recourse against the paper or whether its statements are protected under
the First Amendment.
Robin owns a dog. If there are no applicable statutes, what is her liability for damage if
her dog digs up her neighbors prize roses? Would it make any difference if the animal
that destroys her neighbors flower garden is the wild orangutan she owns?
Milt built a barn for the Lowreys, but unintentionally deviated from the agreed
specifications. The contract price for Milts work was $10,500. The barn is usable, but
the damages for his deviation were $700. Identify the type of breach the courts would
probably deem Milts departure from the contract to be, and discuss the result of this
type of breach.
W & W, Inc. manufactures and sells widgets. It sells widgets to Marklin of Marklin’s
Department Store and gives him a preference in pricing that discriminates against other
retailers. Does Marklin have liability for price discrimination? Does W & W, Inc. have
liability for price discrimination? Explain.
Wurst & Wurst is the accounting firm that has been used by the Intercontinental Bank
for over twenty years. Tim approached Alfred, a Wurst partner, at a cocktail party. Tim
asked about the bank’s stability. Although Alfred knew that the bank’s stock was
overvalued because of some questionable loans, he felt a considerable amount of
loyalty to the bank for being a good customer of his accounting firm. Alfred told Tim
that Wurst had just finished an audit of the bank, and that the bank was as sound as the
Rock of Gibraltar. The next day Tim bought 1,000 shares of Intercontinental. One
month later, the bank’s losses became the subject of a major financial scandal. Tim is
angry and wants to sue. Does he have a case?
Anita is hired to manage an unincorporated dress boutique owned by Betty. The two
agree that Anita will receive one-third of the net profits, which amount is to be paid to
her on a monthly basis. Is Anita a partner? If the boutique has a loss instead of a profit,
would Anita have to share the loss? Explain.
What is the doctrine of ultra vires? What is the effect of an ultra vires contract?
In responding to the previous question (Question 5), think about and then discuss why
in your analysis the reasonable standard of care differs for the above listed categories of
individuals. Is there any logic on which to base these differences because of societal
need and expectations? Does justice demand a different result? Why would the courts
make these distinctions?
Creativ-Design, Inc. has 68% of the market share in a particular geographic region for
one of its products. Does Creativ-Design have a monopoly? Explain.
What is stare decisis? Discuss its role in the American legal system.
What is the doctrine of promissory estoppel, and when is it used?
Eve agrees to sell her boutique to Shelley for $150,000. Shelley spends $60,000 on
inventory and fixtures for the store, but then Eve repudiates the contract. Shelley is able
to sell the inventory and fixtures for $45,000. Since Shelley cannot establish her lost
profits with reasonable certainty, discuss what damages she should seek for Eves breach
of contract.
Explain the difference between lost, mislaid, and abandoned property and who has
rights to it.
You have just been asked to serve as a host for a visitor from France who is very
interested in the American legal system and the formation of law in the United States.
How would you explain the system of law in this country to your guest?