Yves is an accountant charged with negligence by Zesty Soup Company, a client. Yves
may successfully defend against the claim if he can show that
a. scienter was lacking.
b. he complied with all International Financial Reporting Standards.
c. the negligence was not the proximate cause of the clients losses.
d. the negligence was only contributory.
Gelato Ice, Inc., is incorporated in the state of New Jersey and is doing business in the
state of New York. In New York, Gelato is properly referred to as
a. a domestic corporation.
b. a foreign corporation.
c. an alien corporation.
d. a de jure corporation.
Kris is a member of Laboratory Services, LLC, a limited liability company. Kris can
participate in the firms management
a. only to the extent that she assumes liability for the firms debts.
b. only to the extent of her investment in the firm.
c. to any extent.
d. to no extent.
National Standard Company (NSC) products are identified with a trademark. For
several years, NSC allows others to use the mark without permission and without
protest. This may be deemed, on NSCs part,
a. abandonment of the mark.
b. anticompetitive conduct.
c. liability for misleading consumers.
d. liability for misleading competitors.
Jin, Karlo, and other consumers form Metro Purchasing Cooperative. This form of
business organization makes it possible for these individuals to
a. avoid personal liability for the acts of the cooperative.
b. obtain an exemption from state laws governing corporations.
c. pay no taxes on their business income.
d. pool their resources to gain an advantage in the marketplace.
Finance Professionals Union represents the workers of Business & Commerce Banking
Corporation. The management of the firm refuses to bargain with the union over the
economic consequences to the employees of managements decision to shut down some
facilities. This most likely violates
a. federal labor law.
b. state right-to-work laws.
c. federal wage-and-hour laws.
d. no federal or state law.
Research Statistics Corporation uses a merit system to pay its employees according to
their job performance. Suki, a female, and Troy, a male, are Research employees with
comparable jobs. Due to superior performance, Suki is paid more than Troy. This is
a. disparate-impact discrimination.
b. gender discrimination.
c. not discrimination.
d. reverse discrimination.
Ethical standards would most likely be considered violated if Retail Mart Corporation
deals with a company in a developing nation that
a. agrees to produce goods at Retail Marts desired price.
b. goes unnoticed by “corporate watch groups.
c. exploits its workers.
d. pays its workers less than the U.S. minimum wage.
Lora is a resident of Illinois. Ned is a resident of Wisconsin. They dispute the
ownership of a boat docked in a Michigan harbor. This diversity of citizenship could
serve as a basis for
a. federal jurisdiction.
b. general jurisdiction.
c. limited jurisdiction.
d. state jurisdiction.
Hydraulic Equipment Company makes its products without required pollution control
technology, causing a discharge of oily waste into the nearby Idle Lake. This activity
can result in
a. a criminal fine or imprisonment only.
b. a criminal fine, imprisonment, or an injunction only.
c. a criminal fine, imprisonment, an injunction, or damages.
d. an injunction only.
Nouveau Riche Corporation, and its officers, directors, and shareholders, buy and sell
securities. SEC Rule 10b-5 applies to
a. only the purchase or sale of a security by a financial corporation.
b. only the purchase or sale of a security involving an officer or director.
c. only the purchase or sale of a security involving a shareholder.
d. the purchase or sale of any security.
Bayside Credit Corporation lends funds to Claude, a consumer, to apply to the cost of a
boat, which is the collateral for the loan. An enforceable security interest requires
a. a written agreement and Baysides possession of the boat.
b. a written agreement or Baysides possession of the boat.
c. the boat sellers acknowledgement of the loan in writing.
d. Claudes possession of the boat.
Ella agrees to act as Fabs agent in settlement negotiations with Global Insurance
Company. Ella works out a profitable compromise for Fab, but deposits the companys
payment in her own account and refuses to give it to Fab. Fab files a suit against Ella.
What remedies might the court impose?
Ilise, an employee of Pyro Displays, Inc., pays Gavin, an employee of Pyros competitor
Fire Worx Company, for a secret Fire Worx pricing schedule. This may be
a. an effective marketing strategy.
b. commercial bribery.
c. creative legal bookkeeping.
d. money laundering.
Continents Two Corporation, a U.S. firm, establishes a wholly owned subsidiary firm in
Argentina. In this situation, Continents Two retains complete control and authority over
a. all of the operation.
b. only the part of the operation in the United States.
c. none of the operation.
d. about half of the operation.
Fact Pattern 29-2B
General Leasing Company (GLC) buys equipment for use as inventory, borrowing $1
million from Helpful Finance Corporation for a security interest in the equipment. The
next day, GLC borrows $500,000 from Interstate Bank, also for a security interest in the
equipment. GLC defaults on both loans.
Refer to Fact Pattern 29-2B. Suppose that Helpful perfects its security interest when
GLC takes possession of the equipment. In that circumstance, the party with priority to
the collateral on GLCs default would be
a. GLC.
b. Helpful and Interstate proportionately.
c. Helpful only.
d. Interstate only.
Basil and Rosemary enter into a contract for the sale of Basils condominium to
Rosemary. She transfers her right to be recorded as the owner of the property to her son
Sage. This transfer is
a. a delegation.
b. an assignment.
c. prohibited.
d. a negotiation.
Alpha Investments, Inc., offers to buy Beta Computer Corporation. On May 1, Beta
gives Alpha copies of Betas financial statements for the previous year. The statements
show an inventory of $1 million. On May 15, Beta discovers that the previous years
inventory is overstated by $500,000, but does not inform Alpha. On June 1, Alpha,
relying on the financial statements, buys Beta. On June 10, Alpha discovers the inven-
tory overstatement. Can Alpha succeed in a suit against Beta for fraud?
Dora receives a check from Eagle Corporation. Dora indorses the check to First
National Bank by writing “pay to First Natl Bank only and signing her name. This is
a. a blank indorsement.
b. a qualified indorsement.
c. a restrictive indorsement.
d. a special indorsement.
Thelma signs a check “pay to the order of Uri drawn on Thelmas account in Verity
Bank. Thelma has $400 in her account but the amount of the check is $500, which the
bank pays. This is
a. a dishonored check.
b. an overdraft.
c. a postdated check.
d. a stale check.
Rita believes that Shady Grove Apartments, Inc., her landlord, has violated the law in a
way that entitles her to withhold the rent. This remedy is generally associated with
a. breach of the covenant of quiet enjoyment.
b. breach of the implied warranty of habitability.
c. discrimination.
d. failure to provide security against crimes in common areas.
Brasilia, a real estate broker licensed only in Connecticut, concludes a land sale in
Delaware. She can
a. collect the commission if it has not been paid.
b. keep the commission if it has already been paid.
c. foreclose on the property to obtain any unpaid amount.
d. not collect the commission, keep it, or foreclose on the property.
Ralph contracts to sell his Double-R Ranch to Samantha on May On April 20, Ralph
tells Samantha that he will not go through with the deal. Samantha can recover
a. the cost of any property that Samantha would find suitable.
b. the cost of a similar, nearby ranch.
c. the Double-R Ranch.
d. nothing.
Arnie posts online a note that “I have good pix of child & me with a link to several
pictures of minors engaged in sex. Arnie is charged with violating a statute that makes it
a crime to distribute material intended to make others believe it is child pornography.
He argues that the statute is unconstitutional. The court is most likely to hold that the
statute is
a. unconstitutional because it criminalizes speech.
b. unconstitutional because it is overbroad.
c. unconstitutional because it is impermissibly vague.
d. valid because it does not prohibit a substantial amount of protected speech.
In making decisions for United Merchandising Company, Vance uses a cost-benefit
analysis. This is part of
a. duty-based ethics.
b. Kantian ethics.
c. the principle of rights.
d. utilitarianism.
Canada giving effect to the laws and court decisions of the United States is an
application of
a. the act of state doctrine.
b. the doctrine of sovereign immunity.
c. the principle of comity.
d. the World Trade Organization.
Quik Fix-It, Inc., offers Pam a job as a plumber. No time for acceptance is specified in
the offer. The offer will terminate
a. after a reasonable period of time.
b. after a typical work week (five business days).
c. after a usual month (thirty calendar days).
d. never.
Elmer can write checks on his account at Finance City Bank. Gina steals the checks,
forges Elmers signature, and cashes the checks at Finance City. The bank is excused
from any liability if, after receipt of the first forged check, Elmer fails to report the
forgeries within
a. five days.
b. fourteen days.
c. one year.
d. three years.
Elan Elite Service Companys offer of shares of stock in itself to anyone who is willing
to pay $600 per share is
a. a shareholder agreement.
b. key-person insurance.
c. a private offering.
d. a public offering.
Kansas enacts a law requiring all businesses in the state to donate 10 percent of their
profits to Protestant churches that provide certain services to persons whose income is
below the poverty level. Lo-Price Stores files a suit to block the laws enforcement. The
court would likely hold that this law violates
a. no clause in the U.S. Constitution.
b. the establishment clause.
c. the free exercise clause.
d. the supremacy clause.
Farm2Fork, LLC, is a limited liability company. Rather than distribute its profits to its
members, Energy wants to reinvest the profits in its business. For this reason, Energy
may prefer to be taxed as
a. a corporation.
b. a partnership.
c. a sole proprietorship.
d. a business trust.
Mike is arrested at a warehouse in North Industrial Park. A government prosecutor
issues a formal charge against Mike for receiving stolen property. This charge is
a. an arraignment.
b. an indictment.
c. an information.
d. an inquisition.
Tundi is a partner in YooHoo! Amusement, a new partnership. A YooHoo! debt comes
due. Tundi is
a. not liable for the debt.
b. only liable for the debt up to the amount of his capital contribution.
c. personally liable only to the extent the other partners do not pay.
d. personally liable to the full extent of the debt.
Cary is fifteen. In most states, Cary would be considered a minor because she is under
the age of
a. sixteen.
b. eighteen.
c. twenty.
d. twenty-one.
Felicity Cookware Company makes and sells kitchen products. To cover injuries to
consumers if the products prove defective, Felicity should obtain
a. group insurance.
b. health insurance.
c. liability insurance.
d. life insurance.
A lapsed legacy will occur if the testator predeceases the gift.
In a lawsuit between Digital Hardware Corporation and Software Engineering
Associates, Inc., the court applies the doctrine of stare decisis. What is this doctrine?
What does this doctrine have to do with the American legal system?
The checks and balances in the U.S. Constitution prevent any one branch of
government from exercising too much power.
To commit trespass to land, a person must harm the land.
A holding company is a company whose business activity consists of holding shares in
another company.
Under the theory of negligence, the duty of care requires a careless act.
A jurys good sense and careful consideration of consequences is known as
jurisprudence.
A person who commits larceny can be sued under tort law.
Ed, a businessperson, is a friend of Fran, the owner of a candy store. Every day, Ed
spends five minutes in Frans candy store, looking at the candy and usually buying one
or two candy bars. One afternoon, Ed goes into the store, looks at the candy, and picks
up a $1 candy bar. Ed waves the candy at Fran without saying a word and walks out. Is
there a contract? If so, how would it be classified in terms of formation, performance,
and enforceability?
Like statutory law, administrative law is created by legislatures.
If a discovery request involves confidential business information, the scope of the
request can be limited.
Ads cannot be unfair.
A certified checks is an instrument that has been accepted for payment by the bank on
which it is drawn.
Quality Computer Company agrees to sell one hundred hard drives to Retail
Electronics, Inc. The hard drives, which Retail Electronics expressly requires to have
certain amounts of memory, are to be shipped “F.O.B. Retail Electronics distribution
center in Memphis, TN. When the drives arrive, Retail Electronics rejects them and
informs Quality Computer, claiming that the drives do not conform to Retail Electronics
memory requirement. A few hours later, the drives are destroyed in a fire at Retail
Electronics distribution center. Will Quality Computer succeed in a suit against Retail
Electronics for the cost of the goods?
Ruby, an elderly woman, is diagnosed with lung cancer. She realizes her condition may
worsen, and that there is a chance that at some point she will become so weak the only
way she will be able to breathe is with the help of medical machinery. She does not
want to be kept alive in such a “vegetative state. What are Rubys options?
For criminal sanctions to be imposed under Section 10(b) of the Securities Exchange
Act of 1934 and SEC Rule 10b-5, scienter must not exist.
Any “person may be a debtor in a liquidation proceeding.