StartUp Investors, LLC, is a limited liability company without a written operating
agreement. Among the members, a dispute arises concerning the division of profits.
Under most LLC statutes, the profits will be
a. distributed according to the members’ proportionate shares of ownership in the firm.
b. divided equally among the members.
c. forfeited to the state.
d. reinvested in the business until the dispute is resolved.
CrossCountry Trucking & Transport enters into a contract with Discount Outlet Stores
to load, transport, deliver, and unload the cargo that Discount designates.
CrossCountry’s offer to perform, when the company is ready, willing, and able to do so,
is
a. complete.
b. substantial.
c. tender.
d. absolute.
The standard for determining whether constructive discharge has occurred is whether or
not
a. a reasonable person in the employee’s position would feel compelled to quit.
b. the employee’s annual wage rate is fair.
c. a person of another race in the employee’s position would feel compelled to quit.
d. a person of the opposite gender in the employee’s position would feel compelled to
quit.
Valley Paragliders Association files a suit against Wing Designers, Inc., claiming that
the consideration for their contract is inadequate. The court will most likely not
examine the adequacy of the consideration if
a. there is a large disparity in the amount of consideration exchanged.
b. the consideration involves the performance of services.
c. something of value passed between the parties.
d. the consideration is worth less than $100.
Liz offers to sell Jock her iPad for $500 without any accessories. Under the mirror
image rule, Jock’s response will be considered an acceptance if the terms of the
acceptance
a. exactly mirror those of the offer.
b. change the items offered, but do not change the price.
c. change the price, but do not change the items offered.
d. change both the price and the items offered.
BBQ, Inc., makes and sells grills to Grill Mart, a retailer, which sells one of the grills to
Hope, a consumer. BBQ and Grill Mart include in their contracts a limitation on
consequential damages for personal injuries arising from a breach of warranty. This is
prima facie unconscionable with respect to
a. all of these parties.
b. BBQ and Grill Mart, but not Hope.
c. Hope only.
d. none of these parties.
Lewis, an employee of Silos, Inc., makes a substantial mathematical error in totaling the
estimated costs for a project for which AgriCo-op is seeking bids. Consequently, Silos’s
bid is significantly low. Any contract with AgriCo-op that includes the mistake may be
rescinded
a. if the error was made inadvertently and without gross negligence.
b. if the error was made intentionally or negligently.
c. if the error was made intelligently but distractedly.
d. under no circumstances.
Qang and other foreign citizens allege human rights violations committed overseas by
the government of Burma on behalf of Railway Construction Company, a U.S. firm. To
seek redress for their injuries in a U.S. court, these citizens can
a. allege antitrust injuries under the Sherman Act.
b. bring civil suits under the Alien Tort Claims Act.
c. file criminal complaints under Title VII of the Civil Rights Act.
d. do nothing.
Rikki signs a check “pay to the order of Scholar University” drawn on Rikki’s account
in Town Bank to pay her tuition. Rikki is
a. the certifier.
b. the drawee.
c. the drawer.
d. the payee.
Because stock is intangible personal property, a stockholder’s ownership of the stock
a. exists independently of the stock certificate itself.
b. cannot exist without a tangible stock certificate.
c. cannot exist without the original stock certificate.
d. cannot be transferred to another person.
Leatherbound Stores, Inc., rejects a shipment of goods that does not conform to its
contract with Cowhide Corporation, but is unable to obtain instructions from the seller.
Leatherbound may
a. resell or return the goods only.
b. resell or store the goods only.
c. return or store the goods only.
d. resell, return, or store the goods.
E-Shopping Corporation inserts Fiesta Mall, Inc.’s trademark as a meta tag in
E-Shopping’s Web site’s key-words field without Fiesta’s permission in a manner that
suggests Fiesta authorized the use. This is
a. copyright infringement.
b. patent infringement.
c. trademark infringement.
d. no infringement.
Leigh wants to go into the business of construction contracting. Among the reasons that
would probably convince Leigh to set up his business as a sole proprietorship would be
a. its greater organizational flexibility.
b. its limited liability.
c. its perpetual existence.
d. the ease of transferring the business to other family members.
Metro City operates its own municipal public drinking water system for which the
Environmental Protection Agency has set maximum levels of pollutants. Metro does not
use any equipment to meet these standards. With regard to any contamination of the
water, under the Safe Drinking Water Act, this is most likely
a. a violation.
b. not a violation because Metro does not set the standards.
c. not a violation because water is not a stationary source.
d. not a violation because Metro does not use any equipment.
Liberty Bank provides Michelle with a standard mortgage with an unchanging rate of
interest to buy a home. Payments on the loan remain the same for the duration of the
mortgage. This is
a. a fixed-rate mortgage.
b. an adjustable-rate mortgage.
c. an interest-only mortgage.
d. a violation of the law.
ValuRich Tools, Inc., sells tools, tool parts, and related supplies under “full” warranties.
Under the Magnuson-Moss Warranty Act, this means that ValuRich must provide
a. a choice between a refund or replacement if a product cannot be fixed and repair or
replacement of defective parts.
b. neither a choice of a refund or replacement, or repair of defective parts.
c. only a choice of a refund or replacement if a product cannot be fixed.
d. only repair or replacement of defective parts.
InTown Delivery Service promises to deliver a certain couch to Kurt, who promises to
pay for the service. If InTown does not perform, it may be required to
a. do nothing.
b. make another promise.
c. pay monetary damages.
d. perform a different service.
Fiona and Dora enter into an oral contract under which Fiona agrees to work on Dora’s
farm for not less than one week. This contract is enforceable by
a. Fiona only.
b. Dora only.
c. either party.
d. neither party.
Sara has a flat-screen TV, a Blu-ray disc player, set of computer games and an
investment portfolio that includes stock in the Internet game company Zynga. Sara’s
intangible property includes
a. the TV and Blu-ray player.
b. the computer games.
c. the Zynga stock.
d. the TV only.
Mike is arrested at a warehouse in North Industrial Park and is charged with the crime
of theft. Mike will be prosecuted by
a. the owner of the warehouse.
b. the owner of the property that Mike is charged with stealing.
c. a public official.
d. any third party unrelated to Mike, the property, or the crime.
Even-Bilt Construction contracts to build a warehouse for Discount E-Sales Company.
Even-Bilt completely performs. Discount E-Sales is entitled to
a. an accord.
b. rescission.
c. novation.
d. nothing more.
Doral, Esteban, and Fiona are general partners in Centreville Dentistry, a dental clinic.
Their agreement states it is a breach of the agreement for any partner to assign his or
her interest to a creditor without the consent of the other partners. Doral’s assignment of
his interest in the clinic to Hometown Lenders results in
a. nothing with respect to Doral or the clinic.
b. the automatic termination of the clinic’s legal existence.
c. Doral’s liability for all of the clinic’s debts.
d. Doral’s wrongful dissociation and liability for any damages.
Valley View Farms enters into a contract to sell Sarah’s Corner Shop a truckload of eggs
from free range chickens. Valley View then fails to deliver the eggs to Sarah’s Corner
Shop. Sarah
a. must still pay for the eggs or she will be in breach of contract.
b. does not have to pay for the eggs because Valley View failed to perform.
c. must still pay for the eggs, but can file suit against Valley View for breach of
contract.
d. does not have to pay for the eggs, but cannot file suit against Valley View for breach
of contract.
A common ethical dilemma faced by the management of Spencer Hydraulics
Corporation involves the effect that its decision will have on
a. one group as opposed to another.
b. the firm’s competitors.
c. the government.
d. the U.S. Chamber of Commerce.
Rural Electric Company submits a bid to build a dam on federal land as part of a federal
project. For this action, an environmental impact statement is most likely
a. prohibited.
b. required.
c. unnecessary.
d. voluntary.
Gas Up, Inc., designs, makes, and sells a fuel injection system that copies Hybrid
Corporation’s design without Hybrid’s permission. This is most likely
a. copyright infringement.
b. patent infringement.
c. trademark infringement.
d. a theft of trade secrets.
Tiny is an accountant. Tiny’s violation of generally accepted accounting principles and
generally accepted auditing standards
a. does not indicate that Tiny was negligent.
b. is prima facie evidence that Tiny was negligent.
c. precludes Tiny from raising any defense against a negligence claim.
d. will never subject Tiny to liability.
Kelly transfers shares of stock that she owns in Lone Starz Company to Max. A
shareholders’ meeting takes place before Max’s ownership is entered in Lone Starz’s
stock book. A vote at the meeting can be cast by
a. Kelly and Max.
b. Kelly only.
c. Max only.
d. neither Kelly nor Max.
Evan is charged with a crime. Almost all federal courts and some state courts would not
hold Evan liable if, at the time of the offense, as a result of a mental disease or defect,
Evan lacked substantial capacity to
a. appreciate the wrongfulness of his conduct only.
b. appreciate the wrongfulness of his conduct and obey the law.
c. appreciate the wrongfulness of his conduct or obey the law.
d. obey the law only.
The payment of Brian’s debt to Chuck is guaranteed by Brian’s personal property. This
is
a. an attachment.
b. a secured transaction.
c. perfection.
d. a violation of most state laws.
John obtains a loan from Liberty Credit Bank at an interest rate that exceeds the state’s
maximum. Liberty has
a. created a risk for the purpose of assuming it.
b engaged in a restraint of trade.
c. violated a licensing statute.
d. committed usury.
Oak Grove Residences, Inc., owns apartment buildings. Pedro leases one of Oak
Grove’s apartments. Pedro’s transfer of his interest in the lease to Quito for a period
shorter than the lease term is
a. an assignment.
b. an eviction.
c. a right of entry.
d. a sublease.
Pure Water Company is subject to a decision by the Environmental Protection Agency.
Pure Water appeals the decision, arguing that it is arbitrary and capricious. This could
mean that the decision
a. changed the agency’s prior policy without justification.
b. followed a consideration of all relevant factors.
c. was accompanied by a rational explanation.
d. was plainly warranted by the evidence.
GR8 Vision, Inc., hires Haul-Way Company to transport fifty large-screen HDTVs from
GR8’s warehouse in San Diego to an Ideal Electronics retail store in Phoenix. The
bailee is
a. GR8 Vision.
b. Haul-Way.
c. Ideal Electronics.
d. no one.
If a lessor is a merchant, the risk of loss passes to a lessee on the lessee’s receipt of the
goods.
In a limited partnership, a general partner has full responsibility for the partnership and
for all its debts.
The Foreign Sovereign Immunities Act spells out what a “foreign state” includes.
Specific performance is an equitable remedy requiring exactly the performance that was
specified in a contract.
A partner may dissociate from a partnership by declaring bankruptcy.
Downloading software or music into a computer’s random access memory without
authorization is copyright infringement.
Focusing on a firm’s short-term profits without considering the company’s long-term
needs may be acting unethically.
Generally, an employer’s monitoring of electronic communications in the workplace
does not violate employees’ privacy rights.
Securities that are exempt from the registration requirement can generally be sold and
resold without being registered.
Risks ordinarily assumed in business constitute consideration for the modification of a
contract.
If a principal ratifies a contract without knowing all of the facts, the principal can
rescind the contract.
All oral contracts are enforceable under the UCC.
The initial board of directors of a corporation is normally elected at the first annual
shareholders’ meeting by a majority vote of the shareholders.
Real estate brokers are independent contractors.
Some states provide that in the absence of an agreement to the contrary each member of
a limited liability company has one vote.
A material fact is a fact that a reasonable person would consider important when
determining his or her course of action.
The President determines the jurisdiction of the federal courts.