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.
Lew angrily accuses Mandy, a broker with New Financial Services, of fraudulently
inducing him to invest in Open Pit Oil Company, whose wells are dry. The reliance that
gives rise to liability for fraud is normally based on a statement of
a. emotion.
b. fact.
c. opinion.
d. puffery.
Todd indorses a check, “Pay to Interstate Trucking if they deliver the lumber by May 1,
2010. This is
a. a blank indorsement.
b. a qualified indorsement.
c. a restrictive indorsement.
d. a special indorsement.
Southwestern Foods Corporation operates a packaging plant near the border between
the United States and Mexico. Due to the location, it would be easier for Southwestern
to employ noncitizens. It is legal for a U.S. employer to
a. hire persons not authorized to work in the United States.
b. recruit persons not authorized to work in the United States.
c. refer for a fee persons not authorized to work in the United States.
d. none of the choices.
Begin Anew Enterprise, Inc., completes its registration process and issues a free-writing
prospectus. This tells prospective investors
a. about investing freely.
b. how to write their own prospectus.
c. that they can “freely write their own ticket to buy Begins securities.
d. that they may obtain the prospectus at the SECs Web site.
Jim is an appliance salesperson. To make a sale, he asserts that a certain model of a
Kitchen Helper refrigerator is the “best one ever made. This is
a. fraud if the statement is the truth.
b. fraud if Jim believes that this statement is not true.
c. fraud if Jim is stating his opinion, not the facts.
d. not fraud.
Reaching for a bottle of soda from a display in a Bargain Mart store, Cody slips in a
puddle of spilled soda and falls, suffering an injury. Bargain Marts employees are not
aware of the spilled soda until Cody falls. In a suit against Bargain Mart, Cody will
most likely
a. lose, because Bargain Marts employees were not aware of the spill.
b. lose, because Cody should have exercised more care.
c. win, because Bargain Mart can recover from the soda bottler.
d. win, because the spilled soda was foreseeable.
Delite Candy Company hires Elton to sell Delites products in a certain area. Delite
agrees to pay Elton a salary, plus commission, for a trial period. They also agree that
Elton can sell using any methods and during any hours that seem appropriate. The key
factor in whether Elton is Delites employee is
a. the amount of Eltons salary.
b. the control Delite has over the details of the work.
c. the length of the trial period.
d. the title that designates Eltons position.
Bob is arrested at his home, after the police search it and seize certain property to be
used as evidence. A judge sets Bobs bail, as required by a state statute, and Bob is put
on trial. The U.S. Constitution provides safeguards against all of the following except
a. arrests without probable cause.
b. excessive bail.
c. trying someone for a criminal offense.
d. unreasonable searches and seizures.
Leweys Bicycle Store contracts to buy fifty bicycles from Mountain Bikes, Inc. Unless
the contract states otherwise, this is
a. a bill of lading.
b. a destination contract.
c. a shipment contract.
d. a warehouse receipt.
Lil Canine Company (LCC) uses a trademark that neither LCC nor anyone else has
registered with the government. Under federal trademark law, LCC
a. can register the mark for protection.
b. cannot register a mark that has been used in commerce.
c. has committed trademark infringement.
d. must put off registration until the mark is out of use for six months.
Through a series of e-mail messages, Hudson convinces Gwen to transfer funds to
Hudson to invest in Fried Critter Company stock on Gwens behalf. Fired Critter stock
does not exist. This is computer crime in which the computer is
a. the object of the crime.
b. the subject of the crime.
c. the instrument of the crime.
d. irrelevant to the crime.
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.
John writes a check to Kay as payment for a DVD player but soon discovers the player
is broken. He goes to the drawee bank and orally authorizes Larry, a bank officer, to
stop payment on the check. This order is valid for
a. fourteen days.
b. fourteen months.
c. thirty days.
d. six months.
Mae is granted immunity after she agrees to testify about a crime. Mae has an absolute
privilege against self-incrimination and
a. can be prosecuted only for a crime about which she agreed to testify.
b. cannot be prosecuted for any crime.
c. cannot refuse to testify on Fifth Amendment grounds.
d. can refuse to testify on Fifth Amendment grounds.
Natalie is a shareholder of Off-Road Vehicle Company. As a shareholder, Natalie does
not have
a. a right to compensation.
b. dividend rights.
c. inspection rights.
d. preemptive rights.
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.
Bess runs Creditors Asset Recovery. She recruits clients by misrepresenting the facts
and pretending to be licensed in various occupations in Michigan. Besss conduct most
likely warrants
a. an ethical admonishment but no other sanctions.
b. an injunction plus other sanctions.
c. no sanctions but no praise.
d. praise for her aggression in recovering the assets of “deadbeat debtors.
Fact Pattern 21-3
Dhani, an accountant for Eureka, Inc., learns of undisclosed company plans to market a
new laptop. Dhani buys 1,000 shares of Eureka stock. He reveals the company plans to
Fay, who buys 500 shares. Fay tells Geoff, who tells Hu. Both Geoff and Hu buy 100
shares. They know that Fay got her information from Dhani. When Eureka publicly an-
nounces its new laptop, Dhani, Fay, Geoff, and Hu sell their stock for a profit.
Refer to Fact Pattern 21-3. Under the Securities Exchange Act of 1934, Fay is most
likely
a. liable for insider trading.
b. not liable because Fay did not prevent others from profiting.
c. not liable because Fay did not solicit information from Dhani.
d. not liable because Fay does not work for Eureka.
Chocolate Chip Cookie Corporation (4C) obtains, and gives its employees, a list of the
customers of Sugar & Spice Sales, Inc. (3S). Under the law that applies to trade secrets,
4Cs conduct is actionable provided
a. consumers are confused.
b. 4Cs conduct is intentional.
c. 4Cs uses the list.
d. 4C does not have 3Ss permission to use the list.
Lively Toys Store and Movin Products Company (MPC) enter into an e-contract under
which MPC agrees to ship a case of electronic, remote-controlled bugs to Lively Toys,
which agrees to pay on delivery. The Uniform Electronics Transactions Act (UETA)
a. denies the enforcement of such contracts.
b. does not apply to such contracts.
c. preempts all other laws with respect to such contracts.
d. supports the enforcement of such contracts.
Via e-mail, Vern makes repeated credible threats to Ursula that put her in reasonable
fear for her safety. This is
a. cyber stalking.
b. employment fraud.
c. phishing.
d. vishing.
The payment of Yvess debt to Zach is guaranteed by Yvess personal property. Their
agreement describes Yvess subject property by serial number. To establish Zachs
interest, this is
a. irrelevant.
b. not sufficient.
c. sufficient if it accurately describes the parties agreement.
d. sufficient unless it is too tedious to review.
Smitty, driving while intoxicated, causes a car accident that results in the death of
Tiffany. Smitty is arrested and charged with a felony. A felony is a crime punishable by
death or imprisonment for
a. any period of time.
b. more than one year.
c. more than six months.
d. more than ten days.
Enterprising Business Corporation may be engaging in conduct that violates the
Sherman Act. To bring an action against the firm under this statute requires that its
conduct have a significant impact on
a. international commerce.
b. Internet commerce.
c. interstate commerce.
d. intrastate commerce.
Metro Daily and New City Newsstand enter into a contract under which Metro agrees
to deliver a certain quantity of newspapers to New City each day. The contract does not
include a price term. In a suit between the parties over the price, a court will
a. determine a reasonable price.
b. impose the lowest market price.
c. refuse to enforce the agreement.
d. return the parties to the positions they held before the contract.
Fact Pattern 12-1
Internet Cafes, Inc., contracts to buy all of its requirements for coffee, at a minimum of
1 million pounds per year, from Java Corporation for six years. After three years,
Internet tells Java that it plans to sell its company to Kwik Eateries, Inc. Kwik refuses
to assure Java that it will continue Internets contract.
Refer to Fact Pattern 12-1. Java can
a. assign its rights under the contract but cannot terminate it.
b. do nothing.
c. suspend performance under the contract until Java is fully paid.
d. terminate the contract and seek damages.
In 2010, Online Marketing Corporation registers its trademark as provided by federal
law. After the first renewal, this registration
a. is renewable every ten years.
b. is renewable every twenty years.
c. runs for the life of the corporation plus seventy years.
d. runs forever.
To raise $12 million to expand operations, Star Corporation makes a stock offering
directly to sixty accredited investors and twenty sophisticated, but unaccredited
investors. Star plans to notify the SEC of sales. Under the Securities Act of 1933, this
issue may qualify as an “exempt transaction
a. as is.
b. if all of the investors are also given certain material information.
c. if the offering is also made available to the general public.
d. under no circumstances.
Orange Company makes computers. The companys ad states that “if you arent eatin an
Orange, you arent gettin any C. The Federal Trade Commission would consider this ad
a. false and misleading.
b. false only.
c. misleading only.
d. neither false nor misleading.
Through a certain transaction, Corporate Properties, Inc., acquires all of the shares of
Downtown Realty Corporation for some of Corporates shares. Both Corporate and
Downtown continue to exist. This is
a. a consolidation.
b. a share exchange.
c. a short-form merger.
d. a termination.
Like the bylaws of other corporations, the bylaws of Retail Sales, Inc.,
a. establish the operating name of the corporation.
b. establish the value and classes of corporate stock.
c. were adopted at its first organizational meeting.
d. were submitted for approval to the public official in charge.
Dependable Appliances, Inc., and Elain enter into a contract for a sale of kitchen
appliances. Dependable, a merchant who deals in goods of the kind sold, notes that its
goods come with an implied warranty of merchantability. Under the UCC, this means
that the goods are reasonably
a. fit for the buyers particular purpose.
b. fit for the ordinary purpose for which such goods are used.
c. suitable for resale at an acceptable price.
d. the best quality that money can buy.
Timber Products, Inc., and Walt, a consumer, enter into a contract for a sale of plywood.
If the contract includes a clause that is perceived as grossly unfair to Walt, its
enforcement may be challenged under the doctrine of
a. good faith.
b. square dealing.
c. the mere image rule.
d. unconscionability.
Owen takes a Paisley-made pinball machine to Quality Games, Inc., for repair. Lacking
certain parts, Quality ships the game to Regal Repair Company. While in Regals
possession, the game is damaged. Quality can recover for the damage from
a. no one.
b. Owen.
c. Paisley.
d. Regal.
Hawk Corporation begins making and selling motorcycles in 2000 under the mark
“Hawk. Ten years later, Hawk.com, Inc., a different company selling medical
equipment and supplies, begins to use “hawk as part of its URL and registers it as a
domain name. Can Hawk Corporation stop Hawk.coms use of “hawk? If so, what must
the motorcycle-maker show?
A stale check is one that has been outstanding for longer than one month.
“Unless otherwise explicitly agreed, title passes to the buyer at the time and place at
which the seller physically delivers the goods.
A registration statement must state how a corporation plans to use the proceeds from the
sale of the securities.
The doctrine of negligence per se applies if an event causing harm does not normally
occur in the absence of negligence.
Only blue-collar crimes are prosecuted under RICO.
A courts review of an arbitrators award may be restricted.
Larceny relies on stealth while robbery relies on fear and force.
College Copy Shop (CCS) compiles, copies, and sells reading materials to students on
the instructions of their professors, who indicate which parts of which publications
should be included. These include texts published by Deep Topics, Inc. CCS does not
obtain the permission of Deep Topics, or any of the other original publishers of the
copied materials, and does not pay royalties on the sales of the compilations. Deep
Topics and others file a suit against CCS, alleging infringement of the plaintiffs
intellectual property rights. Which type of intellectual property is involved in this
situation? What is CCSs likely defense? How is a court most likely to rule? Explain.
Violations of the Securities Exchange Act of 1934 may be subject to criminal
prosecution.
An association cannot be a partnership without an express agreement.
Cutter Company makes and sells table saws, which are designed to be safe if used
properly. Erin buys a Cutter saw and lends it to her neighbor Frank. To reach a toolbox
on a high shelf in his garage, Frank props the saw at an angle against a cabinet and
climbs onto the saw. Frank loses his footing, slips off the saw, falls on the blade, and is
injured. He files a product liability suit against Cutter, on the ground of negligence. On
what basis could the maker prevail?
The state office in which a financing statement should be filed depends on the creditors
location.
A mistake of fact can be a defense to criminal liability.
A minor may disaffirm a contract only if the subject matter is illegal.
Unsecured parties have priority over secured parties to the proceeds from the
disposition of collateral on the distribution of a debtors estate.