The Idaho Supreme Court rules against Jiffy Mart in a case against Kwik Stop Stores,
Inc. Jiffy Mart files an appeal with the United States Supreme Court. The Court does
not hear the case. This
a. is a decision on the merits with value as a precedent.
b. indicates agreement with the Idaho courts decision.
c. means nothing.
d. means that the Idaho courts decision is the law in Idaho.
A Minnesota state statute restricts certain kinds of advertising to protect consumers
from being misled. A court would likely hold this statute to be
a. an unconstitutional restriction of speech.
b. constitutional under the First Amendment.
c. justified by the need to protect individual rights.
d. necessary to protect national interests.
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. Kwiks refusal constitutes
a. a justified response based on Kwiks relation to the contract.
b. an assignment of Internets rights under the contract.
c. a reasonable suspension of performance under the contract.
d. a repudiation of the contract.
The idea for “On Your Mark, a computer game featuring racing cars, is protected by
a. copyright law.
b. patent law.
c. trademark law.
d. trade secrets law.
Made4U Goods, Inc., asks its employees, many of whom are members of the National
Machinists Union, to apply the utilitarian theory of ethics. This theory does not require
a. a choice among alternatives to produce the maximum societal utility.
b. a determination of whom an action will affect.
c. an assessment of the effects of alternatives on those affected.
d. the acquiring of the means of production by workers.
Eve is a director of Fab Stuff Corporation. Without informing Fab, Eve goes into
business with GR8 Things, Inc., in competition with Fab. Eve is liable for breach of
a. no duty or rule
b. the business judgment rule.
c. the duty of care.
d. the duty of loyalty.
Lia works for Media Marketing Company. Her job includes putting ‘spin on the firms
successes and failures. In this context, ethics consist of
a. “bad versus “good publicity.
b. questions of rightness and wrongness.
c. the firms quarterly revenue.
d. whatever is legal.
Vehicle Leasing Agency (VLA) and Wander Trucking Company enter into a contract
for a lease of eight cargo vans. VLA delivers eight vans, but they are not cargo-sized.
Wander
a. cannot reject the entire shipment.
b. can reject the entire shipment.
c. must accept the entire shipment.
d. must reject the entire shipment.
Bret buys a franchise from Comida Mexicano Ltd. If their agreement is like most
franchise agreements, it will specify that Comida can terminate the franchise
a. at will.
b. for any reason.
c. for cause only.
d. for no reason.
A specific grade of corn that fills BioFuel Cooperatives silo is fungible. This means that
the corn is
a. alike naturally or by agreement or trade usage.
b. fundamentally different.
c. fundamentally edible.
d. perishable.
Ralph offers to sell Sophie, who is seventeen years of age, a car about which Ralph
intentionally misrepresents several material facts. In reliance on the misrepresentations,
Sophie buys the car. To prove fraud in this transaction, Sophie would have to show that
a. Ralph intentionally deceived Sophie.
b. Ralph made statements that were obviously exaggerated.
c. Sophie does not know anything about cars.
d. Sophie is under eighteen years of age.
Oil Refining Companys plant emits hazardous air pollutants. Regarding these
pollutants, the plant must use
a. the all-pollution elimination technology.
b. the best possible available technology.
c. the maximum achievable control technology.
d. the practically affordable standard technology.
Luke is a director of Motor Parts Corporation. Luke makes decisions with respect to
Motor Parts in good faith, in what he believes is the firms best interest, and without
violating any duties owed to it. If, despite these circumstances, Luke exercises poor
business judgment, under the business judgment rule Luke is
a. immune from liability.
b. liable only to the extent that he gains as a result.
c. liable only to the extent that Motor Parts suffers as a result.
d. wholly liable.
With a bill of lading, Cartage Common Carrier Company acknowledges possession of
certain goods and contracts to deliver them. Cartage is
a. a bailee.
b. a buyer in the ordinary course of business.
c. a good faith purchaser for value.
d. an F.O.B.
Fabio, a user of GameCenter.coms Web site, can download gaming software for free if
he first clicks on “I accept after viewing certain terms. This is
a. a contract that does not include the terms.
b. a contract that includes the terms.
c. not a contract but the terms are enforceable.
d. unenforceable.
Dee, an accountant, does not work for Emergent Company, but wrongfully obtains
inside information concerning Emergent. Based on the information, Dee buys and sells
Emergent stock for personal gain. The Securities and Exchange Commission prosecutes
Dee, arguing that she is liable because she stole information rightfully belonging to
another. This argument is
a. the blue-sky theory.
b. the misappropriation theory.
c. the red-herring theory.
d. the tipper/tippee theory.
Flexo Trucking Company transports hazardous waste. Garn is a Flexo driver, whom the
company knows drives longer hours than federal regulations permit. One night, Garn
exceeds the limit and has an accident. Spilled chemicals contaminate Hill Citys water
source, forcing the residents to move away. Flexo acted unethically liable because
a. Flexo showed reckless disregard for Hill Citys residents and others.
b. Garn exceeded the federal time limit.
c. harm was caused by an unfortunate accident.
d. Hill City should have better protected its water source.
Fay is a member of Garden Groves LLC. Like other members of limited liability
companies, Fays liability for Garden Grovess obligations resembles the liability of
a. a member of a joint venture.
b. an owner of a sole proprietorship.
c. a partner of a partnership.
d. a shareholder of a corporation.
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, Geoff is most
likely
a. liable for insider trading.
b. not liable because Geoff did not prevent others from profiting.
c. not liable because Geoff did not solicit information from Dhani.
d. not liable because Geoff does not work for Eureka.
Silky Material Corporation in New Jersey sells fifty tons of fabric to Tattered Clothing,
Inc., in Ohio, “F.O.B. New Jersey. The cost of transporting the fabric to Ohio will be
paid by
a. Silky Material.
b. Tattered Clothing.
c. New Jersey.
d. Ohio.
On May 1, City Auto & Truck Sales agrees to sell a car to Dino. Five days later, Dino
refuses delivery and cancels the contract. City is entitled to
a. force Dino to accept the car.
b. recover any damages from Dino but not resell the car.
c. resell the car and recover any damages from Dino.
d. resell the car but not recover any damages from Dino.
Carol files a suit against Downwind Boat Corporation. Downwind responds that it
appears from the pleadings the parties do not dispute the facts and the only question is
how the law applies to those facts. Downwind supports this response with witnesses
sworn statements. This is
a. a counterclaim.
b. a motion for judgment on the pleadings.
c. a motion for summary judgment.
d. a motion to dismiss.
China and India form an agreement to govern their commercial exchanges with one
another. This is
a. a bilateral agreement.
b. a lateral agreement.
c. a multilateral agreement.
d. a unilateral agreement.
Jack owns land located outside Metro City. Jack sells the land to Quality Disposal, Inc.,
which establishes a hazardous waste disposal facility at the site. Quality Disposal
accepts only waste transported by Regional Trucking Company exclusively from
Consolidated Industries, Inc. Several years later, Quality Disposal closes its facility and
sells the land to Price Rite Corporation, which builds a Price Rite Discount Store on the
site. Meanwhile, some of Metros citizens complain to the Environmental Protection
Agency (EPA) that Metros municipal water supply is polluted. The EPA investigates
and discovers that the sources of the pollution are leaks of hazardous waste from what
is now the Price Rite property. The EPA cleans up the site. Who can be held liable for
the cost of cleaning up the site? What standards must Metro meet regarding the water?
Sharon, the human resources director for Tempo Corporation, attempts to comply with
the law in dealing with applicants and employees. One of the challenges Sharon faces is
that the legality of an action is
a. always clear.
b. never clear.
c. sometimes clear.
d. usually clear.
On Monday, Neil tells Outdoor Landscaping, Inc., that he will pay Outdoor $500 if a
variety of tasks are completed by Friday. On Wednesday, when Outdoor is more than
half done with the work, Neil says that he has changed his mind. These parties had
a. an expired contract when Neil said that he had changed his mind.
b. a quasi contract when Neil said that he would pay for certain work.
c. a unilateral contract as soon as Outdoor began to perform.
d. no contract.
Summit Supply Company contracts for a sale of medical equipment to Valley
Immediate Care Corporation. Summit can enforce its right to payment
a. only after Valley has actually inspected the goods.
b. only after Valley has had an opportunity to inspect the goods.
c. only before Valley has inspected the goods.
d. whether or not Valley has had the chance to inspect the goods.
Oakley posts a defamatory remark about Pierre in “Roominate, an online social network
maintained by SocNet, Inc., an Internet service provider. Most likely to be held liable
for the remark is
a. Oakley.
b. Pierre.
c. Roominate.
d. SocNet.
Kip, a representative for Lite-Weight Shipping Company, delivers a bill of lading to
Meg, the owner of Capacity Storage Warehouse. A bill of lading is
a. an invoice for payment for loading and carting.
b. an order to ship goods by carrier to a certain destination.
c. a receipt for goods signed by a carrier.
d. a receipt issued by a warehouser for goods in a warehouse.
Rikki signs a check “pay to the order of Scholar University drawn on Rikkis account in
State Bank to pay her tuition. Rikki is
a. the certifier.
b. the drawee.
c. the drawer.
d. the payee.
Jim agrees to act on Kits behalf, subject to Kits control, and Kit trusts Jim to so act.
This describes a relationship between
a. a business and its competitors.
b. a government and its governed.
c. a parent and a child.
d. a principal and an agent.
Bricks debt to Conry is past due. Conry brings a legal action against Brick to collect the
debt. To ensure that a judgment in Conrys favor will be collectible, Conry asks the court
to order the seizure of Bricks property. Exempt from such an order in most states is
a. all of Bricks personal property.
b. as much of Bricks personal property as Brick opts to exempt.
c. equipment that Brick uses in a business up to a specified amount.
d. none of Bricks personal property.
Elmo files a petition in bankruptcy. If the court concludes that there are grounds for a
finding of ‘substantial abuse, the court will most likely
a. dismiss Elmos petition.
b. discharge Elmos debts.
c. distribute Elmos property to Elmos creditors.
d. issue an automatic stay against any actions by Elmos creditors.
The government of the United States and the governments of other nations have the
power to enforce their respective national laws within their borders. The power to
enforce international law within the borders of all nations rests with
a. no court or international organization.
b. the European Union.
c. the International Court of Justice.
d. the United Nations General Assembly.
Generally, a cash deposit is not available for withdrawal until the next business day.
A forum-selection clause indicates the place for the resolution of a dispute arising under
a contract.
A debtors car may be exempt from satisfaction of a judgment debt.
If a voidable contract is avoided, the parties to it are released from it.
No employee has a reasonable expectation of privacy in the workplace.
An adult may avoid any contract with a minor.
Self-defense is a defense to negligence.
Minimum contacts with a jurisdiction are never enough to support jurisdiction over a
nonresident defendant.
Most securities can be resold without registration.
Counteradvertising is advertising that counters a competitors claims.
The beneficiaries of a business trust are personally liable for its obligations.
After two years of research and an investment of a substantial amount of money,
Coast-to-Coast Company (CC) develops a new product that it hopes will produce
substantial profits. CC learns that a competitor, National Sales, Inc., has made and
begun to sell a nearly identical product. CC learns from a reliable source that National
paid a CC employee to obtain the plans for CCs product when it was in development.
What legal recourse does CC have against National?
All rights can be assigned.
Mens rea refers to the mental state necessary for criminal liability.
An unconscionable contract is a contract so one-sided and unfair at the time it is made
that enforcing it would be unreasonable.
Under their police powers, states can regulate only public activities, such as political
demonstrations.
If no harm results from an allegedly negligent act, there is no liability.