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Gulf Air, Inc., is the major wholesale distributor of software in the state of Florida. Its
closest competitor is Fluid Systems Company, another Florida firm. The two firms
agree that Gulf Air will operate in south Florida and Fluid Systems will operate in north
Florida. This is
a. a group boycott.
b. a market division.
c. a joint venture.
d. an exclusive-dealing contract.
Dana defaults on a debt to Rachel. Rachel will NOT be able to recover the debt from
a. the sale of Dana's prize winning pet dog.
b. the sale of Dana's investments in stocks.
c. Dana's wages.
d. Dana's lottery winnings.
Elizabeth buys a car from Silas, who is sixteen years old. Elizabeth then wants to sell
the car to her neighbor, John. Elizabeth's title to the car is
a. valid.
b. voidable.
c. void.
d. good.
Sweet Selections is a general partnership that sells candy, cards and flowers. Sweet
Selections has ten partners. Jill and Amy each have a 25 percent interest in the
partnership. All the other members have a 10 percent interest. To pass a management
decision
a. a majority of the partners must agree to the decision.
b. both Jill and Amy must agree to the decision.
c. Jill or Amy must agree to the decision.
d. 30 percent of the partners must agree to the decision.
Handy Hardware Store agrees to hire Ilsa for one year at a salary of $500 per week.
When Handy cancels the contract, Ilsa spends $100 to obtain a similar job that pays
$450 per week for a year. Ilsa is entitled to recover
a. the amount of the wages that Handy promised only.
b. the difference between the wages at the two jobs only.
c. the difference between the wages at the two jobs plus $100.
d. $100 only.
Delite Candy Company hires Elton to sell Delite's 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 most
important factor in whether Elton is Delite's employee is
a. the amount of Elton's salary.
b. the control Delite has over the details of the work.
c. the length of the trial period.
d. the title that designates Elton's position.
Milo files a suit against Nick in an Ohio state court, noting that Nick operates a Web
site through which Ohio residents have done substantial business with him. The court is
most likely to have jurisdiction over Nick if Milo's claim arises from
a. anything an Ohio resident has done.
b. Nick's Web site activities.
c. nothing an Ohio resident has done.
d. something other than Nick's Web site.
Paltry Assembly Company makes espresso machines and sells one to Vim through a
misrepresentation on the label on which Vim relies and that results in an injury to Vim.
Paltry is most likely liable for
a. a commonly known danger.
b. fraud.
c. privity.
d. puffery.
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.
Even-Flo Hydraulics enters into a contract to repair valves and fittings in Fiesta
Company's plant. If Even-Flo breaches the contract, Fiesta can
a. do nothing but make a deal with .a different service provider.
b. do nothing but temporarily suspend operations and wait.
c. file a criminal complaint against Even-Flo.
d. sue Even-Flo for damages.
Brandy forges Caleb's signature on a check "payable to the order of Brandy" drawn on
Caleb's account in Downtown Bank. Caleb's forged signature is
a. effective if an innocent third party accepts the check.
b. effective to the degree that it matches Caleb's genuine signature.
c. effective to the extent that Downtown Bank debits Caleb's account.
d. not effective.
Tom and Bill are partners in Tough Trucks Towing. James is not a partner. In dealing
with Fred, James holds himself out to be a partner in Tough Trucks Towing and Fred
contracts to have Tough Trucks Towing tow some vehicles for him. If Tough Trucks
fails to tow the vehicles, a court may conclude that
a. a partnership by estoppel exists and James is liable to Fred.
b. no partnership exists and James is not liable to Fred.
c. a partnership by estoppel exists and Fred has all partnership rights.
d. no partnership exists, but Tom and Bill are liable to Fred.
Dan, a computer programmer, holds a garage sale to sell a lawnmower, some clothes,
some CDs and some old clothes. Will, a lawyer, sells Thelma his collection of seashells.
Philip, a CEO of a successful company, sells George his pet parakeet. Judy, an expert
horse trainer, sells Bob a horse. Which person would be considered a merchant under
the UCC?
a. Dan
b. Will
c. Judy
d. Philip
Maria signs an instrument payable to the order of National Loans, Inc., "on or before"
June 15. This instrument is
a. negotiable.
b. nonnegotiable, because the maker can move up the payment date.
c. nonnegotiable, because moving up the payment date is optional.
d. nonnegotiable, because the exact payment date cannot be determined from the face of
the instrument.
Mary is angry with Julia so she waits outside Julia's house and hits Julia with a baseball
bat as Julia leaves the house. When Julia sues Mary for battery, Mary will be considered
a
a. victim.
b. tortfeasor.
c. plaintiff.
d. unreasonable person.
Fact Pattern 31-3
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 31-3. Under the Securities Exchange Act of 1934, Hu is most
likely
a. liable for insider trading.
b. not liable because Hu is only a tippee, not a tipper.
c. not liable because Hu is too far down the chain of disclosure.
d. not liable because Hu traded on the basis of a true fact.
Corner Market sells groceries. Delite Food & Drug Store sells groceries and fills
prescriptions. The chief responsibility to prevent unsafe food and drugs from being sold
rests with
a. the Consumer Product Safety Commission.
b. no single federal agency.
c. the Federal Trade Commission.
d. the Food and Drug Administration.
Sunny Energy Company wants to genetically test its workers for potentially significant,
future health problems. Sunny may
a. discharge employees who test "positive."
b. discriminate against job applicants who test "positive."
c. deny group health insurance for its employees who test "positive."
d. not make employment decisions based on genetic testing.
The best definition of a remedy is
a. the relief given to an innocent party to enforce a right or to prevent or compensate for
the violation of a right.
b. medication paid for by the government.
c. a right guaranteed by the Bill of Rights.
d. a situation or state of facts that gives a person a right to initiate a judicial proceeding.
Bruno is a businessperson with investments in legal and illegal operations. Bruno may
be subject to penalties under RICO
a. for making an unprofitable, but legal, investment.
b. for the commission of any business fraud.
c. only in a case involving a "racket."
d. only in a case involving organized crime.
Sweetwater Café orders five gallons of transfat-free cooking oil from Restaurant
Supply, Inc. The seller mistakenly ships the wrong oil, which the buyer keeps, despite
the nonconformity. The oil is destroyed in a kitchen fire. The loss is suffered by
a. Sweetwater and Restaurant Supply, but not Sweetwater customers.
b. Sweetwater, Restaurant Supply, and Sweetwater customers.
c. Sweetwater only.
d. Restaurant Supply only.
Frothy Beverage Corporation is a public company whose shares are traded in the public
securities markets. Under the Securities Act of 1933, Frothy is required to
a. contribute to the operations of national stock exchanges.
b. disclose financial and other information about its securities.
c. engage in market surveillance to deter undesirable practices.
d. solicit proxies for voting.
Location! Realty LLC is a limited liability company. Like other LLCs, for federal
jurisdictional purposes, Location! Realty is most likely a citizen of
a. all states.
b. every state in which its members are citizens.
c. no state.
d. only the state in which it was formed.
Travis sends Suri what purports to be a link to an e-birthday card, butwhen she clicks
on the link, software is downloaded to her computer torecord her keystrokes and send
the data to Travis. He uses the data toobtain her personal information and access her
financial resources. This is
a. identity theft.
b. cyberterrorism.
c. entrapment.
d. no crime.
New Town Construction, Inc., wants to build a parking ramp to connect to its New
Town Mall, both of which are on private land. For this action, an environmental impact
statement is
a. prohibited.
b. required.
c. unnecessary.
d. voluntary.
Ruby Red Corporation is incorporated in South Carolina. In that state, Ruby Red is
a. a domestic corporation.
b. a foreign corporation.
c. an alien corporation.
d. a non-entity.
Hu, Ivan, and Juana apply to work for King Meatpacking Company. These individual'
identities and eligibility to work must be verified by
a. the employer.
b. the individuals.
c. the individual' countries of origin.
d. the U.S. Citizenship and Immigration Services.
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.
Peak & Vale Accountants provides other firms with accounting services. Questions of
what is ethical involve the extent to which Peak & Vale has
a. a legal duty beyond those duties mandated by ethics.
b. an ethical duty beyond those duties mandated by law.
c. any duty beyond those mandated by both ethics and the law.
d. any duty when it is uncertain whether a legal duty exists.
Scott, a State Bank employee, deposits into his account checks that are given to him by
bank customers to deposit into their accounts. This is
a. embezzlement.
b. larceny.
c. money laundering.
d. no crime.
Beth, an accountant for Credits & Debits, acquires a negotiable instrument from Ellen
by promising to pay its face value in thirty days. Beth acquires the status of an HDC
when she
a. acquires possession of the negotiable instrument.
b. agrees with Ellen to buy the negotiable instrument.
c. pays the face value due on the instrument.
d. transfers the instrument to another party.
Quinn enters into a series of agreements with Reba involving a sale of a Suite Dreams
Motel, including the land, building, furnishings, shares of stock in Suite Dreams
Company, and a contract with Trudy to create an ad campaign. Reba suspects that
Quinn may be misrepresenting the facts. The UCC Statute of Frauds governs
a. the sale of any of the property evidenced by a writing.
b. the entire deal, including the marketer's services.
c. the sale of the furnishings priced at $500 or more.
d. the sale of the land and the building.
Odina signs a covenant not to compete with her employer, Penultimate Sales
Corporation. A court decides that the covenant is overly restrictive. The court will likely
a. enforce it as written so as not to undercut the freedom of contract.
b. enforce it but evaluate its effects over time.
c. reform its terms to prevent any undue burden.
d. refuse to enforce it unless Penultimate pays additional consideration.
Mary admires Julia's collection of scarves. Julia says "I might sell you a few someday,
if I get tired of them." Julia's statement is
a. an effective offer.
b. not an effective offer because it has not been communicated to Mary.
c. not an effective offer because the Julia does not show a serious intent to be bound.
d. an acceptance.
As the trustee of a business trust, Dwight is required to
a. manage the trust and distribute its profits.
b. assume liability for the trust's debts.
c. draft a written trust agreement.
d. none of the choices.
Laws governing franchising are designed in part to prevent franchisors from
terminating franchises without good cause.
Most courts apply the same principles to joint ventures as they apply to corporations.
Trade names have the same legal protection as trademarks.
Bowie, a certified public accountant, prepares and certifies Candy Products
Corporation's financial statements. These statements are included in Candy's
registration statement filed with the Securities and Exchange Commission before
Candy's offering of securities. Dona buys a security covered by the registration
statement. Based on this transaction, Dona files a suit against Bowie under Section 11
of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934.
To succeed in the suit, what must Dona prove? Bowie responds that Dona was not in
privity with him and that even if she had been in privity, she cannot prove his lack of
due diligence. Can Bowie prevail on these grounds? Why or why not?
A false statement by an expert to a naive buyer usually will entitle the buyer to rescind
or reform a contract.
An insurer has a duty to avoid the payment of claims.
In raising capital, a sole proprietor is limited to his or her personal funds'a loan is not
possible.
Under the employment-at-will doctrine, an employer can end an employment
relationship at any time.
Consequential damages are awarded to cover all of the remote consequences of
whatever injury a nonbreaching party suffers.
A corporation is an artificial being.
Commercial banking practices consider a check that has been outstanding for three
months to be a stale check.
Public water system operators must meet the Environmental Protection Agency's
standards regardless of the economic and technological feasibility.
Managers should apply the same ethical standards to themselves and to their
employees.
An ordinary holder can recover nothing on an instrument that has been materially
altered.
In a contract for a sale of goods, the usual measure of compensatory damages is the
difference between the contract price and the market price.
In most states, revocation becomes effective on receipt.
State courts cannot have exclusive jurisdiction.
Unfair labor practices are defined by the Norris-LaGuardia Act.
The annual percentage rate is the actual cost of a loan on a yearly basis.
