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Which of the following persons is NOT an agent?
a. Diane, a shoe salesperson for a retail store.
b. Tim, a real estate broker for a large real estate company.
c. Craig, a telephone marketing employee.
d. Harold, a trustee to the beneficiaries of an estate.
A finding by a court that a managers decision had a rational business purpose does not
necessarily protect the manager from a finding that he breached a duty of care.
a. True
b. False
Larry decided to relocate to Germany. Larry hired Happy Homes, Inc. to find a buyer
and contract for the sale of his house in the U.S. The agency relationship between Larry
and Happy Homes must be evidenced with a written agreement.
a. True
b. False
TriColor purchased an industrial stamping machine from Vicy, Inc. TriColor paid for
the machine with a negotiable note. The note was payable to the order of Vicy, Inc.
Vicy, Inc. indorsed the note and gave it to CCLoans to satisfy a debt. CCLoans knew
nothing about the contract between TriColor and Vicy, Inc. CCLoans indorsed the note
and gave it to Great River Youth Club as a charitable donation. When Great River Youth
Club presented the note for payment on its due date, TriColor refused to pay, claiming
that the stamping machine was defective.
(A) Is Great River Youth Club a holder in due course?
(B) Will TriColor be able to avoid liability to Great River Youth Club on the basis that
the machine was defective?
In reality, the officers of the large corporations have a great deal of influence on who
will be nominated and elected as directors.
a. True
b. False
The status of a third party is determined by
a. the type of contract.
b. whether the third party gave consideration.
c. the reasonable expectations of the third party.
d. the intent of the contracting parties.
The initial term for which a financing statement will be effective is
a. one year.
b. five years.
c. ten years.
d. two years.
If apparent authority is present, the principal is liable for even the unauthorized acts of
the agent.
a. True
b. False
When a stock underwriter acts as the company's agent in selling stock, it is called a
a. company underwriting.
b. express underwriting.
c. firm commitment underwriting.
d. best efforts underwriting.
Under the ADEA, an employer can win a disparate impact case if it can show that the
discriminatory decision was based on a reasonable factor other than
a. age.
b. sex.
c. race.
d. national origin.
At its inception, the Communications Decency Act of 1996, created broad immunity for
Internet service providers (ISPs) and websites.
a. True
b. False
In good faith, Clinton gave Jane $500 for a negotiable promissory note made out to
Jane for $550. She needed some money before the due date on the note, and Clinton
had no notice of outstanding claims or other defects of the note. Clinton
a. has more rights than Jane.
b. has the same rights as Jane.
c. has only conditional rights because they depend on Janes rights.
d. cannot transfer the note to anyone else.
The buyer of a product is located in Des Moines, Iowa and the seller is located in
Sacramento, California. The contract specifies F.O.B. Des Moines. What type of
contract is this?
a. A destination contract
b. A mixed contract
c. A shipment contract
d. A carrier contract
Mega Corporation, the bailor, negotiates a bailment agreement with Huge Corporation,
the bailee. Huge Corporation insists that an exculpatory clause be included in the terms
and conditions of the bailment agreement. Later, Huge Corporation negligently
(ordinary negligence, not gross negligence) damages the property which is the subject
of the bailment. Most courts will allow Huge Corp. to stand behind its exculpatory
clause and deny liability.
a. True
b. False
Which of the following statements is correct?
a. Investors generally receive a copy of the registration statement.
b. Investors generally do not receive the company's prospectus.
c. A registration statement and a prospectus are essentially the same thing.
d. All investors must receive a copy of the prospectus before purchasing the stock.
What isspam?
a. a form of tracking software
b. unsolicited commercial email
c. a federal statue regarding privacy
d. behavioral marketing regulations
Someone who is not paid for performing duties is a(n)
a. fiduciary agent.
b. charitable agent.
c. implied agent.
d. gratuitous agent.
Which of the following states that a corporation cannot undertake any transaction
unless its charter permits it?
a. The ultra vires doctrine
b. The estoppel doctrine
c. The exculpatory clause
d. The indemnification clause
Stuart is vying for a promotion, but faces competition from a co-worker, Brenda.
Without authorization, Stuart accesses stored company records and discovers an
unfavorable e-mail message Brenda had written about the company. Stuart sends the
message to his supervisor in hopes of keeping Brenda from getting the promotion.
Discuss whether Stuart has violated any statute and, if so, what sanctions he may face.
The FTC may consider an act unfair if it simply violates public policy.
a. True
b. False
Roger parked his car at a garage that has a large sign at the entrance saying, "This
garage is not liable for items stolen from a car." This type of notice is referred to as an
exculpatory clause.
a. True
b. False
When a provision in a contract is unclear by accident, it is a case of
a. vagueness.
b. mistake.
c. ambiguity.
d. condition.
An agent is always liable for his or her own torts committed within the scope of the
agency relationship.
a. True
b. False
In general, police do not need a warrant to find out what websites you have visited.
a. True
b. False
Which of the following terms designates the legal ability of a party to enter into a
contract?
a. Consent
b. Affirmation
c. Materiality
d. Capacity
If a seller cures within a reasonable amount of time, the contract
a. has been performed.
b. is breached.
c. is void.
d. is voidable.
Amanda, a recent university graduate, needed a car to get to her new job. To help
Amanda secure a loan for the car, Ted, a friend, agreed to pay the loan should Amanda
default. Ted's promise to pay the loan is a collateral promise. His promise must be in
writing to be enforceable.
a. True
b. False
HBR Accounting hired Denise, a CPA, to prepare tax returns. Which statement is
correct?
a. Denise is a gratuitous agent and has a duty not to commit gross negligence.
b. Denise is a gratuitous agent and has a duty not to commit ordinary negligence.
c. Denise, as a CPA, is an agent with special skills. She is held to a higher standard than
ordinary negligence.
d. Denise, as a CPA, is an agent with special skills. She is held to a lower standard than
ordinary negligence.
Susan took out a life insurance policy on herself, paying all of the premium payments.
She named her daughter, Jessica, as the beneficiary under the policy. Jessica has not
given anything in consideration for the policy. Jessica is
a. a donee beneficiary who has rights to enforce the policy once Susan dies.
b. a creditor beneficiary who has rights to enforce the policy once Susan dies.
c. an incidental beneficiary because Jessica did not give any consideration for the policy
and therefore cannot enforce the policy even when Susan dies.
d. a promisor in the contract with no enforcement rights.
An insurance policy must meet which of the following?
a. state statutory requirements for tort law
b. federal statutory requirements for tort law
c. common law requirements for contracts
d. common law requirements for tort law
Sullivan Consumer Products Co. asks its employees to apply four tests in determining
whether their behavior violates Title VII with respect to sexual harassment. Which of
the following is one of the four tests?
a. Would your friends be impressed with your behavior?
b. Do you think your behavior is humorous?
c. Would your behavior help you to get a promotion?
d. Would you like your behavior reported in your local newspaper?
A court may pierce an LLC's veil if
a. members fail to provide adequate capital.
b. members treat the LLC like a separate organization.
c. members keep their assests and the assets of the LLC separate.
d. the LLC has too many members.
The Tavern's secret recipe for its pizza sauce would be considered
a. a trade secret, and an employment noncompete clause would be enforceable to
protect it.
b. a trade secret, and an employment noncompete clause would NOT be enforceable to
protect it.
c. just a secret recipe and not something the Tavern could protect in a noncompete
clause.
d. an exculpatory clause and not enforceable.
Compare and contrast the perspectives of a lawyer and a business client when
approaching the negotiation of a contract.
Grant is a delivery person for Watkins Furniture. One day, after delivering a chair to
Nadines house, he stopped at a fast food restaurant to get a sandwich at the
drive-through window. As he was leaving the parking lot, he accidentally hit the rear of
Blanches car. Discuss the possible liability of Watkins for Grants accident. Would there
be any difference in the potential liability of Watkins if Grant had the accident after
driving 30 miles away to visit a friend?
List the warranties a transferor of a negotiable instrument makes.
What elements are necessary for an offer to be valid? Give two examples of nonoffers.
Denise is a promoter for a proposed corporation, EVR-Young Corp. As promoter, she
signed a three-year lease to rent office space in an office park. She signed her name and
indicated below her signature she is signing as "promoter for EVR-Young Corp., a
company yet to be incorporated."
EVR-Young is never incorporated. The lessor believes that Denise is personally liable
for any damages it will sustain as a result of the three-year lease having to be breached.
Is Denise personally liable? Explain.
Outline the beliefs of the various theories of ethics.
What are the purposes of a registration statement and what information must it contain?
Foiler Manufacturing, a new corporation, estimates it may generate approximately 200
kilograms of hazardous waste each month. Discuss the EPA requirements it faces in
relation to this waste.
Bill was shopping at the mall. As he was walking to Tonne's Department Store, his
wallet fell out of his pants. While trying on a new suit, Bill left his leather jacket in the
change room. Sue found Bill's wallet. Arnie, a sales associate, found his coat. What
kind of found property is Bill's wallet? What kind of property is his jacket? What rights
do Sue and Arnie have in the found property?
Andrew Durham was injured in a job-related accident that resulted in a workers'
compensation settlement agreement with the employer's insurance carrier, Travelers
Indemnity Company. The settlement agreement required Traveler's to pay Durham
$2500 per month for the rest of his life. To finance its obligation, Traveler's purchased
an annuity in its name. The settlement agreement required Traveler's approval or written
consent prior to an assignment of the annuity payments. Durham later decided to open a
business and went to a credit union for a $214,000 loan. The credit union loaned the
money, taking a security interest in Durham's monthly annuity payments. Traveler's
consent was never secured. Discuss the conditions in which a right may not be assigned
and assess if this was this a valid assignment.
Ken decided to open a retail boat dealership. He expects that many of his sales will be
credit sales. What should Ken do to protect his interests in the collateral in the credit
sales that he makes?
Karen has filed for bankruptcy. Who has the authority to confirm or reject a plan of
payment, and what factors will be considered when deciding whether to approve a
repayment plan under Chapter 13?
Connie and her fellow union employees went out on strike when the company refused
to meet the union's demands for higher wages and better benefits. Shortly thereafter, the
company began hiring permanent replacement workers. After a hard eight-month strike,
the union and the company reached an agreement. When the strike was over, Connie
was upset that she was not given her job back. The replacement worker that took over
her job was retained. She believes she has a legal right to her job, especially since she
was a faithful employee for over 20 years. Is Connie right? Explain.
Rick wrote a song entitled "Wonderful." At the bottom of the first page of music he
wrote "© 1990 by Rick Reed." Four months later a local band was playing his song at a
bar. Rick felt that the bar was an inappropriate setting for his music. What is his
remedy?
Matt wrote a $500 check to Alistar for some yard work that Alistar had done. What will
Alistar have to do negotiate this instrument to Totally Tough, Inc. in payment for some
yard equipment Alistar had bought?
ATC, Inc. offered health insurance benefits to unmarried same-sex domestic partners
but not to unmarried, cohabiting heterosexual couples. Ray, an employee of ATC, Inc.,
challenged the benefit plan, claiming that it was in violation of Title VII of the Civil
Rights Act. Under the Civil Rights Act, an employer may not discriminate against any
individual on the basis of sex. Discuss the tools that a court may use in interpreting the
Civil Rights Act.
Discuss the effect of the Uniform Commercial Code on the law of sales contracts in the
area of open terms.
Artistic Framing, a business with $120,000 of unsecured debt, needs to file for
bankruptcy, but wants to continue in business. Discuss what chapter of the Bankruptcy
Code should be used, and discuss the effect of the 2005 amendment to the Code on the
proceedings.
ACME, Inc. is a software producer that entered into a verbal agreement with XYZ
Corporation wherein XYZ agreed to buy ACME's newly developed software. The
agreement also provided that ACME would supply training personnel, as well as
technical personnel, to work with XYZ employees in installing and learning the
software. What law governs this agreement?
