Salt Corporation wants to acquire or merge with Pepper Corporation. The board and the
shareholders of Pepper are resisting. Salt should
a. file a plan of merger with the secretary of state.
b. file an article of merger with Pepper.
c. make a tender offer to the shareholders of Pepper.
d. make a tender offer to the shareholders of Salt.
Regal Recreation Sales, Inc., allows Sandy to take a Regal boat for a “test run.” Sandy
tries the boat for a few hours, returns, and buys it. This is
a. a bailment.
b. a consignment.
c. a sale on approval.
d. a sale or return.
Kennedy Capital Corporation provides other firms with funds to expand operations. If
Kenney strictly complies with existing laws, the firm will
a. fulfill all business ethics obligations.
b. fulfill no business ethics obligations.
c. fulfill some business ethics obligations.
d. not need to fulfill any business ethics obligations.
Eden, the chief executive officer of Flo-Thru Piping Corporation, wants to ensure that
Flo-Thru’s activities are legal and ethical. The best course for Eden and Flo-Thru is to
act in
a. good faith.
b. ignorance of the law.
c. regard for the firm’s shareholders only.
d. their own self interest.
Oscar is Precise Service Company’s chief executive officer. On Precise’s behalf, Oscar
solicits business, hires and fires workers, and handles the finances. Precise pays Oscar
varying amounts, depending on his “needs.” Oscar is most likely
a. a principal.
b. an employee.
c. an employer.
d. an independent contractor.
OK Dry-Cleaning advertises so effectively that the regular customers of its competitor
Purity Cleaners patronize OK instead of Purity. This is
a. appropriation.
b. conversion.
c. wrongful interference with a contractual relationship.
d. none of the choices.
Tasty Eatin” Corporation merges with Hasty Burgers, Inc. This merger between firms
that compete with each other in the same market is
a. a horizontal merger.
b. an interlocking directorate.
c. a tying arrangement.
d. a vertical merger.
Fact Pattern 15-4
Evelyn, who owns and operates Eve’s Farm & Garden Company, agrees to sell Hill &
Dale Produce, Inc., fifty bushels of apples.
Refer to Fact Pattern 15-4. A strike delays delivery of the apples by ten days. The
contract with Hill & Dale is
a. breached.
b. discharged.
c. not affected.
d. suspended.
Kay and Leo copy and exchange MP3 music files over the Internet without anyone’s
permission. With respect to songs owned by Natural Recording Company, this is
a. copyright infringement.
b. fair use.
c. licensing.
d. protected expression.
Hi-Five Aero Corporation is required to register its securities under Section 12 of the
Securities Exchange Act of 1934. Section 14(a) of the act regulates
a. the declaration of dividends by Hi-Five’s board of directors.
b. the later re-registration of Hi-Five’s securities.
c. the short-swing activities of Hi-Five’s insiders.
d. the solicitation of proxies from Hi-Five’s shareholders.
Medical Centre enters into a contract with Local Motion Fitness Club for discounted
memberships for the Centre’s employees. If the Club breaches the contract and the
Centre enters into a contract with KO Sports for the same service at a lower price, the
Centre might be awarded nominal damages to
a. establish, as a matter of principle, that the Club acted wrongfully.
b. provide the Centre with funds for a foreseeable loss beyond the contract.
c. provide the Centre with funds for its loss of the bargain.
d. punish the Club and set an example to deter others from similar acts.
Quito contracts with Rewind Graphix, Inc., to pay $5,000 for its work on the animated
film “Song.” After Rewind performs, they sign an accord, in which Quito promises to
pay $4,000 within ten days instead of $5,000 later. But Quito does not pay. Rewind can
sue Quito
a. under no circumstances.
b. on the accord only.
c. on the accord or the original obligation.
d. on the original obligation only.
Bob operated a pet grooming shop under a franchise agreement with Clean Pets Corp
(CPC). The agreement allowed CPC to terminate the franchise if Bob was fined for
cruelty to animals. After an investigation initiated by a customer complaint, Bob was
fined for cruelty. CPC terminated the franchise. Bob filed a suit against CPC for
wrongful termination. The court will most likely rule in favor of
a. Bob, because CPC had no good cause to terminate the franchise.
b. Bob, because the fine for cruelty was based on a customer complaint.
c. CPC, because a franchisor can terminate a franchise at any time.
d. CPC, because the franchise was terminated for good cause.
Swim & Trim Fitness Corporation wants to formulate a plan under which it pays a
portion of its debts and is discharged of the remainder while continuing in business. To
accomplish this goal, Swim & Trim should file a petition in bankruptcy for relief
through
a. a liquidation.
b. a reorganization.
c. a repayment plan.
d. a family-farmer bankruptcy plan.
Good Tire Company and Hiway Auto Service enter into a contract for a sale of tires.
Good Tire is a merchant who deals in goods of the kind sold. Under the UCC, an
implied warranty of merchantability arises
a. automatically in sales contracts.
b. only if the buyer asks for it.
c. only if the seller does not expressly disclaim it.
d. only in conjunction with lease contracts, not sales contracts.
Flem is an employee of Glo Goods, Inc. Flem reports to state officials that Glo is
illegally shipping unsafe goods to unsuspecting customers. When Glo learns of Flem’s
report, Glo fires him. He successfully sues Glo for wrongful discharge. With respect to
the employment-at-will doctrine, this is
a. an example of the doctrine.
b. an exception based on contract theory.
c. an exception based on public policy.
d. an exception based on tort theory.
The payment of Frida’s debt to Gianini is guaranteed by Frida’s personal property.
Gianini is
a. a debtor.
b. a secured party.
c. a secured transaction.
d. a security interest.
Resources Exploitation, Inc. (REI), files a petition in bankruptcy for relief through a
reorganization and assumes the role of a debtor in possession. In this role, REI is simi-
lar to
a. a creditor at a creditors’ meeting.
b. a farmer after a discharge through a family-farmer bankruptcy plan.
c. a secured creditor in possession of collateral.
d. a trustee in a liquidation.
Kim sends an offer to Leo to cut down and remove a tree for $200. Kim says, “If you
say nothing, I will consider you to have accepted my offer.” If Leo does not respond, he
will be deemed to
a. accept the offer.
b. make a counteroffer.
c. reject the offer.
d. none of the choices.
Travis sends Una a link to a purported e-birthday card that when clicked on downloads
software to her computer to record her keystrokes and send the data to Travis. He uses
the data to obtain her personal information and access her financial resources. This is
a. identity theft.
b. birthday bashing.
c. regifting.
d. Windows shopping.
In selling paving stones to Yard & Garden Supply, Trey tells Yard & Garden’s buying
representative that the stones are ‘soft as carpet.” This is
a. unconscionable.
b. fraud.
c. mistake.
d. puffery.
Guy and Hanna do business as G-H Associates. If G-H is a partnership, it is governed
by the Uniform Partnership Act
a. in the absence of an express agreement.
b. in the absence of an implied agreement.
c. only in the presence of an express agreement.
d. under all circumstances.
Desiree and Eduardo decide to wager, in violation of a state statute, on the outcome of a
soccer game. They each deposit money with Felipe, who agrees to pay the winner of the
bet. Before the game begins, Eduardo tells Felipe that he has changed his mind about
the bet. Eduardo can recover
a. the amount of his bet and the amount of Desiree’s bet.
b. the amount of his bet minus Felipe’s expenses.
c. the amount of his bet only.
d. nothing.
Fact Pattern 25-5
Mary’s home is in a state that has a $30,000 homestead exemption. Mary defaults on a
$60,000 debt that she owes to Nina. Mary’s home is sold at auction for $80,000.
Refer to Fact Pattern 25-5. Nina may recover
a. $0.
b. $30,000.
c. $50,000.
d. $60,000.
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.
Ramblin” Country Stables contracts to buy 1,000 horseshoes from Blacksmith, Inc., for
$1 per shoe. When the market price decreases to 50 cents per shoe, Ramblin” refuses to
go through with the deal. Blacksmith can recover
a. $1,500.
b. $1,000.
c. $500.
d. $0.
Chris, a minor, signs a contract to buy alcoholic beverages for Dine & Drink, his
parents’ restaurant. The contract is
a. valid but may be disaffirmed.
b. valid but may not be disaffirmed.
c. void as a matter of law.
d. void unless it is also signed by Edie, the manager of Dine & Drink.
Biff signs a note “payable to the order of County Credit Union.” Unless Biff has a valid
defense against payment, Biff’s liability on this note is
a. lateral.
b. primary.
c. secondary.
d. tertiary.
On the orders of their corporate employer, Della and Efron, employees of Fabulous
Fashionista, a clothing store, switch trademarks on clothing that comes into the store to
be sold to consumers. This is
a. forgery.
b. larceny.
c. obtaining goods by false pretenses.
d. no crime.
The brakes on a Coastal Railroad train malfunction and it rolls towards maintenance
workers on the tracks. Everyone gets out of the way except Dick, who wants to show
off. The train hits Dick, who sues Everest, Inc., the brakes’ manufacturer. Everest can
raise the defense of
a. a component-part manufacturer.
b. assumption of risk.
c. consumer participation.
d. product misuse.
A contractor who makes improvements to real property, but who is not paid for the
work, may place a mechanic’s lien on the property.
The death of a customer revokes a bank’s authority to pay an item.
Defamation is one person’s use of another’s name without permission.
The Uniform Partnership Act has done much to reduce controversies in the law relating
to partnerships.
No state has adopted the Uniform Commercial Code in its entirety.
An answer can admit to the allegations made in a complaint.
Tiny authorizes United Bank to make transfers from his account to make payments on
his debt to Vic’s Auto Dealership, which sold Tiny the car that serves as collateral for
the debt. After three payments, Vic’s repossesses the car and refuses to return it. Tiny
phones the bank to stop the payments and follows up with a confirming letter. The bank
fails to stop the next two payments, and Vic’s refuses to refund anything. Can Tiny get
his money from the bank? Explain.
Rulemakingthe formulation of new administrative regulationsis a major function of
Congress, not administrative agencies.
Once a dissenting shareholder elects appraisal rights, the shareholder loses his or her
shareholder status.
A federal law that conflicts with the U.S. Constitution will be deemed unconstitutional.
If an illegal contract is executory, either party can enforce it.
Complete performance occurs when conditions in a contract are fully satisfied.
Under the doctrine of comparative negligence, both the plaintiff’s and the defendant’s
negligence are taken into consideration.
The duty owed under the mitigation of damages doctrine depends on the situation.
Under the Americans with Disabilities Act of 1990, a person with a mental impairment
that ‘substantially limits” everyday activities is not disabled.
The Securities Exchange Act of 1934 provides for continuous, periodic disclosures by
publicly held corporations.
A board of directors can delegate some functions to corporate officers.