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.
Swinborn sells “Tyger steroids over the Internet. He is arrested and charged with the
sale of a controlled substance. This is cyber crime, which is
a. a crime in which the letter “y is used in the misspelling of a word.
b. a crime .that occurs in the virtual community of the Internet.
c. a crime that is less real than the same crime in the physical world.
d. no crime.
Sights Unseen, Inc., (SUI) sells scopes with distinctively designed and made lenses and
mirrors to scientists. Telescopes, Etc. Corporation later begins to sell scopes with
identical set-ups of lenses and mirrors, without SUIs permission, to consumers. This is
most likely
a. copyright infringement.
b. patent infringement.
c. trademark infringement.
d. not infringement.
Beans Coffee & Cocoa Company makes and sells a chocolate-flavored coffee drink
under the name “CoCoCafe. Darkroast Java, Inc., later markets a similar tasting drink
under the name “KoKoKafe. This is most likely
a. copyright infringement.
b. patent infringement.
c. trademark infringement.
d. a theft of trade secrets.
Mineral Resource Company contracts to provide several manufacturers with tin. When
a cartel of tin-producing countries suddenly embargoes future shipments of tin to
Mineral Resource so that it cannot fulfill its contracts, the distributor
a. can substitute some other material for the tin.
b. is excused from the performance of its contracts.
c. is liable for breach of contract.
d. must still supply the tin needs of its customers.
Jen signs a check “pay to the order of Key drawn on Jens account in Little Bank to buy
Keys car. Jen asks Little Bank to indicate on the face of the check that it will accept it
when Key presents it for payment. If the bank agrees, this will be
a. a cashiers check.
b. a certified check.
c. a trade acceptance.
d. a travelers check.
Lexy, a salesperson for My-T-Fine Corporation, learns that My-T-Fine will increase the
dividend it pays to shareholders. Lexy buys 10,000 shares of My-T-Fine stock. When
the price increases, Lexy sells the shares for a profit. Lexy would not be liable for
insider trading if the information about the dividend was
a. material when she sold the stock.
b. public after she bought the stock.
c. public before she bought the stock.
d. speculative when she bought the stock.
Mace copies Nicks book, Off the Beaten Path, in its entirety and sells it to Parkland
Books, Inc., without Nicks permission. Parkland publishes it under Maces name. This is
a. copyright infringement.
b. fair use.
c. licensing.
d. protected expression.
Mikayla enters into a contract with Logan to provide surface material for Mikaylas
tennis courts by April 1 for a tournament to begin May 1. The contract specifies an
amount to be paid if the contract is breached. This is a liquidated damages clause if the
amount is
a. an excessive estimate of the loss on a breach.
b. a reasonable estimate of the loss on a breach.
c. designed to penalize the breaching party.
d. intended to quickly provide cash to the nonbreaching party.
Orin enters into a contract with Natalie. Later, Orin is adjudged mentally incompetent
and Moseby is appointed Orins guardian. Lila, Orins daughter, attempts to void Orins
contract with Natalie on the ground of Orins incompetency. The contract is
a. enforceable if Orin does not attempt to disaffirm it.
b. enforceable if Natalie is also incompetent.
c. enforceable if Moseby knew of the contract when he was appointed.
d. void.
Fact Pattern 10-2
Haruko, who owns and operates Garden Orchard, agrees to sell Fresh Produce
Cooperative ten bushels of apples. Refer to Fact Pattern 10-2. When bad weather
destroys Garden Orchards apple crop, Harukos obligation to deliver apples to Fresh
Produce is
a. breached.
b. discharged.
c. not affected.
d. suspended.
Clyde issues a check payable to Discount Mart. Elle, Discounts cashier, forges the
stores indorsement and deposits the check in her bank account. Clydes bank, First State
Bank, pays the check. Clyde can recover from
a. Elle, but not First State Bank.
b. First State Bank, which cannot recover from Elle.
c. First State Bank, which can recover from Elle.
d. no one.
Penny Stock Company faxes ads to Quality Personnel Corporation and other businesses
without the recipients permission. This is
a. illegal.
b. legal and smart because such ads are generally cheap.
c. legal but not smart because such ads are generally ineffective.
d. legal but only potentially smart, depending on the response rate.
Genetic Seed Company hires Howie to work on Genetics shipping dock, accepting
deliveries and dealing with other companies drivers. With respect to Genetic, Howie is
most likely
a. an agent.
b. an independent contractor.
c. a principal.
d. a work for hire.
Jock hires Kym to act as his agent to purchase Lifetime Gym & Fitness, Inc. Jock tells
Kym to reveal that she is buying the firm on behalf of a third party and to tell Lifetimes
seller who that third party is. Jock is
a. a disclosed principal.
b. an apparent principal.
c. an undisclosed principal.
d. a partially disclosed principal.
U-Can-Own-It Corporation sells appliances to less educated consumers, including Vi,
on installment plans. U-Can-Own-It files a suit against Vi when she stops making
payments. Vi claims that the deal is unconscionable. The court will most likely consider
a. the geographic area of the relevant market.
b. the parties relative bargaining power.
c. the quality of related products in the general market.
d. the relation of this deal to those of other customers.
The payment of Hus debt to Ian is guaranteed by Hus personal property. To give public
notice of his interest in Hus property, Ian is most likely to
a. attach a bright label to Hus property.
b. e-mail other potential creditors.
c. file a financing statement with the appropriate authority.
d. publish a collection notice in local newspapers.
Melanie engages in speech that harms others good reputations on her blog at
no.lie.com. The First Amendment gives such speech
a. less protection than obscene speech.
b. more protection than symbolic speech.
c. no protection.
d. the same protection as any noncommercial speech.
During the trial phase of Fuel Corporations suit against Gas Stations, Inc., their
attorneys engage in voir dire. This is
a. the assessment of the arguments on the issues.
b. the determination of the issues to be argued.
c. the litigation of the issues and arguments.
d. the selection of jurors.
Quality Products, Inc., files a suit against Retail Sales Corporation. Sid is a witness for
Quality. Tod is a witness for Retail. Quality may direct interrogatories to
a. Retail only.
b. Retail, Sid, or Tod.
c. Sid only.
d. Sid or Tod only.
Serene City enacts an ordinance that bans the use of ‘sound amplifying systems on
public streets. Tyler wants to campaign for a seat on the city council by broadcasting his
message through speakers mounted on a truck. In Tylers suit against the city, a court
would likely hold the ordinance 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.
Nero signs a check “pay to the order of Olive drawn on Neros account in Plum Bank.
Olive signs the back of the check. Secondary liability on this check extends to
a. Nero and Olive only.
b. Nero and Plum Bank only.
c. Nero only.
d. Plum Bank only.
Trek Transport Company uses a mark associated with its name to distinguish its
services from those of other trucking firms. This mark is
a. a certification mark.
b. a collective mark.
c. a service mark.
d. trade dress.
Region Bank wants to perfect its security interest in timber owned by Superior Lumber,
Inc. Most likely, a financing statement should be filed with
a. the local chamber of commerce.
b. the county clerk.
c. the federal loan officer.
d. the secretary of states office.
Lovey is a shareholder of Matchless Corporation with preemptive rights. With these
rights, Lovey can
a. buy a prorated share of a new issue of stock before other buyers.
b. choose to have Matchless act exclusively in a certain area.
c. “preempt managerial decisions that affect shareholders.
d. sell a prorated share of a new issue of stock before other sellers.
Mit-E Clean Corporation wants to make an offering of securities to the public. This
offering is not exempt from registration under the Securities Act of 1933. Before the
firm sells its securities, it must provide investors with
a. a forward-looking financial forecast.
b. an investment contract.
c. a prospectus.
d. a road show.
Fealty Credit Corporation asks its employees to evaluate their actions and get on the
ethical business decision-making “bandwagon. Guidelines for judging individual
actions include all of the following except
a. an individuals conscience.
b. business rules and procedures.
c. loopholes in the law or company policies.
d. promises to others.
Superior Energy Corporation engages in ethical behavior solely for the purpose of get-
ting good publicity and thereby increasing profits. Superior is
a. acting unethically in its pursuit of publicity.
b. acting unethically in its pursuit of profits.
c. acting unethically in its setting of priorities.
d. not acting unethically.
To drive its competitors out of a certain geographic segment of its market, Fryin
Potatoes, Inc., sets the prices of its products below cost for the buyers in that area. This
is
a. a refusal to deal.
b. business acumen.
c. predatory bidding.
d. price discrimination.
Clifton is a director of Dri-Cleaning Corporation. In this capacity, Clifton has a right of
a. accounting.
b. loyalty.
c. participation.
d. service.
SEC Rule 10b-5 prohibits the commission of fraud in connection with the purchase or
sale of any security
A buyer has an insurable interest in identified goods.
A bank cannot recover from a holder who cashes a check bearing a forged indorsement
once the bank has accepted and paid the item.
When a check “bounces, its holder can resubmit the check later, hoping that sufficient
funds will be available.
An effective offer requires a reasonable price related to market value.
Only state law governs drug tests of private-sector employees.
The public disclosure of private facts about a person is not an invasion of privacy if it is
done without the persons knowledge or consent.
If a contract specifies a certain carrier, a substitution of a different carrier for any reason
breaches the contract.
Voir dire is a process for presenting evidence in a case.
In early neutral case evaluation, a third partys evaluation of each partys strengths and
weaknesses forms the basis for negotiating a settlement.
In most states, state law determines the amount of a debtors property that is exempt
from distribution on bankruptcy.
In mediation, the mediator proposes a solution that includes what compromises are
necessary to reach an agreement.
A manufacturers duty of care does not extend to the inspection and testing of products
bought to incorporate in the final product.
When two conflicting security interests are unperfected, the first to attach has priority.
Unlike stalking in the “real world, cyberstalking requires an “incredible threat.