Requirements that must be met under the loan agreement before the lender’s obligations
arise are known as:
a. conditions precedent.
b. conditions concurrent.
c. conditions subsequent.
d. loan qualifiers.
Answer:
CASE 1, Wal-Mart Stores, Inc. v. Dukes (2011), involved a question of whether:
a. Wal-Mart should be properly sued in federal vs. state court.
b. there was sufficient commonality among Wal-Mart employees to certify the group as
a class.
c. one Wal-Mart employee could represent over one million other employees.
d. the employees had waived their rights to arbitration under the Federal Arbitration
Act.
Answer:
Bobby develops a way to clone catfish. He finds that this is a very economical way to
run his fish business. He begins selling the catfish to grocers in the area. Other fish
producers, who do not know how to clone the fish, are very annoyed with Bobby and
start to complain. They tell Bobby that he is violating federal law by not placing a label
on his fish notifying consumes that the fish are cloned. Is Bobby in violation of the law?
a. Bobby is not in violation of federal law, but he should check to see if his state has
such a requirement because labeling legislation has been introduce in some states.
b. Bobby is not in violation of federal law nor have any states made any effort to require
notification of cloned products.
c. Bobby is in violation of federal law by not notifying consumers through labeling of
the cloning.
d. Bobby is in violation of federal law by not notifying consumers through labeling of
the cloning only if there is evidence that the nutritional value of the fish is less than that
of noncloned fish.
Answer:
Which of the following is a type of conditional promise?
a. Condition concurrent
b. Condition subsequent
c. Condition illusory
d. Both a condition concurrent and a condition subsequent
Answer:
Which of the following is the essential consideration under the UETA for determining
the validity of an electronic signature?
a. Whether the person intended the process or mark provided to act as a signature and
whether it can be attributed to that person.
b. Whether an actual signature, as opposed to some sort of unacceptable click-type
agreement is involved.
c. Whether an actual written type signature appears as opposed to an unacceptable typed
name.
d. Whether an actual written or typed signature appears as opposed to some sort of
facsimile.
Answer:
In the Chevron USA, Inc. v. Echazabal case discussed in the text, the plaintiff claimed
Chevron violated his rights under the ADA when it refused to allow him to work in its
refinery because of plaintiff’s liver disease and concerns regarding his health. How did
the U.S. Supreme Court rule?
a. The Court ruled that under the ADA an employer is authorized to refuse to hire an
individual if the individual’s performance on the job would endanger his or her own
health owing to a disability.
b. The Court ruled that under the ADA an employer is only authorized to refuse to hire
an individual if the individual’s performance on the job would in any manner endanger
another employee’s health.
c. The Court ruled that under the ADA an employer is only authorized to refuse to hire
an individual if he or she has a communicable disease.
d. The Court ruled that under the ADA an employer may not take into consideration a
health condition that would present a problem to the applicant or others. The employer
may only consider whether the applicant has the skills to do the job.
Answer:
The Stop Trading on Congressional Knowledge Act of 2012 (STOCK Act) provides that
“political intelligence” firms, but not Congressional staff, can be liable for trading based
on material nonpublic information derived from the officials’ positions.
a. True
b. False
Answer:
In CASE 7.1 SIGA Technologies, Inc. v. PharmAthen, Inc.(2013) the main issue before
the Supreme Court of Delaware was whether:
a. the pre-contractual letter of intent was enforceable.
b. Pharmathene had breached its obligation to negotiate the licensing agreement in good
faith.
c. SIGA had breached its obligation to negotiate the licensing agreement in good faith.
d. the Delaware court had properly applied New York law in the case.
Answer:
Under the Sarbanes-Oxley Act, discriminating against or discharging an informant is:
a. punishable by a fine only.
b. punishable by a substantial fine or imprisonment for as long as ten years, but not
both.
c. punishable by a substantial fine or imprisonment for as long as ten years, or both.
d. not addressed.
Answer:
Codification is a process by which existing common law positions are restated and laid
down in a statute.
a. True
b. False
Answer:
A product that was sold without a component part properly fastened to the product is an
example of a __________ defect.
a. design
b. manufacturing
c. non-liability forming
d. design and manufacturing
Answer:
Fact Pattern 20-1
Tonya is the president of Big Corporation. Big Corporation is looking for land on which
to build a new facility. Tonya locates suitable land, but purchases it for herself with
plans to sell it at a profit at a later date. Rick, the majority shareholder of Big
Corporation hears about Tonya’s purchase and complains to her about it. She tells Rick
that she viewed and purchased the land on her own time and that she did not breach any
duties owed to the corporation. Rick tells her that she should reconsider and that he
plans to discuss the matter with the rest of the board.
Refer to Fact Pattern 20-1. Which of the following is a right of the corporation if it is
determined that an officer wrongfully takes an opportunity belonging to the
corporation?
a. An absolute trust
b. A constructive trust
c. A 10% penalty based upon the value of the lost opportunity which is imposed by
federal law
d. As imposed by most states, a 10% penalty based upon the value of the lost
opportunity
Answer:
Trudy, a female manager at ABC Company, was surprised to learn that one of her male
employees had accused her of sexual harassment. Trudy denied all charges. After a long
and expensive battle in court, the jury ruled in favor of ABC Company on all charges. A
few days after the trial, Trudy’s supervisor fired her for no apparent reason. Trudy
obtained evidence in the form of interoffice memos that she was fired because of the
charges brought against her. Trudy thought that was unfair because she was completely
vindicated by the jury. Are any remedies available to her under Title VII?
a. No remedies are available to her under Title VII because it only protects victims of
discrimination and harassment along with witnesses testifying in support.
b. Trudy can sue under Title VII only if she can establish that men had been treated
differently when accused of harassment.
c. Trudy can sue under Title VII only if she can establish the existence of an
employment contract whereby she can only be discharged for just cause.
d. At least one court has ruled that Trudy has a cause of action under Title VII based
upon retaliation.
Answer:
“Crowdfunding” is an internet-based, fund-raising method certain startups and other
small businesses can use to raise relatively small amounts of money from a large
number of individuals.
a. True
b. False
Answer:
Under which of the following situations will courts usually find pricing legal?
a. When the prices are above average variable cost but below average total cost and the
company has excess capacity.
b. When the prices are above average variable cost but below average total cost and the
company does not have excess capacity.
c. When the prices are below average variable cost and below average total cost and the
company does not have excess capacity.
d. Only when prices are above both average variable cost and average total cost.
Answer:
A sublease is legally the same thing as an assignment of a lease.
a. True
b. False
Answer:
A __________ permit allows uses that are not permitted as a matter of right under a
zoning ordinance and imposes conditions to ensure that the use will be appropriate for
the particular situation.
a. conditional-use
b. limited-access
c. nonconforming
d. division
Answer:
Bank president Spencer had approved significant loan amounts to Bob for the purpose
of developing a shopping center. Spencer was satisfied that the land collateralizing the
shopping center loan was sufficient, and Spencer was not particularly concerned about
that loan. Bob, however, requested an additional loan for the purpose of starting a
temporary employee agency. Bob offered to collateralize that loan with his office
equipment, but Spencer was uneasy that such collateral was insufficient. If Spencer
decides to go forward with the loan involving the temporary employee agency, which of
the following is true regarding his options?
a. Spencer should request a cross-default provision and also a cross-collateralization
provision.
b. Spencer should only request a cross-default provision because Article 9 makes
cross-collateralization provisions unenforceable.
c. Spencer should only request a cross-collateralization provision because Article 9
makes cross-default provisions unenforceable.
d. Spencer should request a guarantee from a solvent person or entity because Article 9
makes both cross-default and cross-collateralization provisions illegal.
Answer:
The silicone breast implant case against Dow Corning, as well as the cases involving
smoking and securities fraud, are examples of class action lawsuits.
a. True
b. False
Answer:
Seasoned issuers may make automatic shelf registration offerings which are effective
immediately on filing a registration statement with the SEC.
a. True
b. False
Answer:
Assuming a jurisdiction permits noncompete agreements, which of the following is
considered in determining whether restrictions are reasonable?
a. The duration of limitations
b. Geographic limitations
c. The scope of the activities prohibited and the duration of any limitations
d. The duration of limitations, geographic limitations, and the scope of the activities
prohibited
Answer:
A violation of Rule 10b-5 does not give investors a private right of action.
a. True
b. False
Answer:
Fact Pattern 19-2
Maxine and Vince verbally agree to form a dog grooming partnership called “XYZ
Grooming.” They file nothing with the state. Maxine puts up 80% of the capital needed
for the partnership, and Vince supplies 20%. Maxine assumed that Vince would do extra
work to account for the small amount of capital contributed by him, but that did not
occur. Maxine found herself grooming more than 90% of the animals on her own.
Maxine told Vince that he was only entitled to 10% of the profits because he was only
doing 10% of the work. Vince disagreed, and a heated argument occurred. Not
surprisingly, Maxine and Vince decided to end the partnership. While winding up
affairs, Maxine discovered that Vince paid an excessive amount for some dog shampoo.
She thought he bought it from a certain supplier just so he could flirt with the
receptionist there. She told him that paying for the shampoo was entirely his
responsibility because she had not agreed to the purchase. Maxine and Vince also
became aware of a lawsuit filed by the owner of a Welsh Pembroke Corgi complaining
that the dog developed a skin rash following bathing by Vince in the expensive
shampoo he had purchased, and that the owner lost money because the dog could not be
entered into shows. Maxine told Vince that the litigation was entirely his responsibility
and that she disavowed any liability to the plaintiff.
Refer to Fact Pattern 19-2. Is Maxine, XYZ Grooming, or Vince responsible for
payment of the shampoo purchased by Vince?
a. The partnership is liable and Vince is liable in the event there are insufficient
partnership assets, but Maxine is not liable on the debt.
b. The partnership is liable, and so are both Vince and Maxine if insufficient partnership
funds exist to pay the debt.
c. Vince is liable on the debt, but neither Maxine nor XYZ Grooming is liable.
d. Since the winding-up process has begun, neither Maxine, Vince, nor XYZ Grooming
is liable.
Answer:
In a __________ merger, the shares in the disappearing corporation are automatically
converted into shares in the surviving corporation.
a. cash out
b. noncash
c. freeze out
d. liquidation
Answer:
Fact Pattern 9-2
Blake lives in a jurisdiction that applies joint and several liability along with the
doctrine of contribution. He was involved in a very unfortunate motor vehicle accident.
Tony hit Blake’s new Mercedes in the rear just as Cathy crossed the center line and
sideswiped him. Blake’s car was severely damaged, and Blake suffered from whiplash
for a few weeks. Blake sued both Tony and Cathy. It was determined at trial that both
Tony and Cathy were negligent, that Blake was not negligent, that Tony was 60%
responsible for Blake’s injuries, that Cathy was 40% responsible for Blake’s injuries,
and that Blake’s total damages were $100,000.
Refer to Fact Pattern 9-2. Assume Tony or his insurer pays the entire amount and then
attempts to recoup amounts from Cathy. Could Cathy be held liable for any amounts?
a. Yes, she could be required to pay her proportional share under a contribution theory.
b. Yes, she could be required to pay her proportional share under an indemnification
theory.
c. No, she could not be required to pay under either a contribution or an indemnity
theory.
d. No, she could not be required to pay but only because she was less at fault.
Answer:
When analyzing insider trading, the person giving the tip is the __________, the person
receiving the tip is the __________, officers and directors are __________, and persons
working with the issuer are __________.
a. tipper, remote tippee, temporary insider, permanent insider.
b. tipper, remote tippee, traditional insider, temporary insider.
c. tippee, tipper, temporary insider, traditional insider.
d. tipper, tippee, traditional insider, temporary insider.
Answer:
A manager should review the scope of authority granted to the company’s workers and
consider the company’s potential liability for the actions of those workers.
a. True
b. False
Answer:
The term “usual authority” refers to the authority that an agent has been allowed to
exercise in the past.
a. True
b. False
Answer:
Which of the following refers to the principle that unless barriers to entry or other
factors make a market structurally conducive to monopolization, pricing below cost is
not a Sherman Act violation, regardless of whether the defendant had monopolistic
intent?
a. The principle of certainty
b. The principle of uncertainty
c. The rule of improbability
d. The rule of impossibility
Answer:
__________ focuses on how the burden and benefits of a particular system are
distributed.
a. Compensatory Justice
b. Retributive Justice
c. Distributive Justice
d. Rawlsian Justice
Answer:
Which of the following is an approach to analyzing the reasonableness of a restraint of
trade?
a. Totality rule
b. Per se rule
c. Rule of reason
d. Both the per se rule and the rule of reason
Answer:
The two main schools of ethical thought are teleological and deontological.
a. True
b. False
Answer:
The Consumer Credit Protection Act limits the garnishment of wages to the lesser of
_____ of the debtor’s disposable earnings for the week or the amount by which
disposable earnings for the week exceed _____ times the current federal minimum
hourly wage.
a. 10%; 30
b. 25%; 30
c. 30%; 25
d. 35%; 40
Answer:
Prior to filing a lawsuit the plaintiff must have standing to sue, which means all of the
following, EXCEPT:
a. Plaintiff has the resources to pay his legal and court costs.
b. Plaintiff is the proper party to file the suit
c. Plaintiff has a personal interest in the outcome of the suit.
d. Plaintiff will benefit from a favorable ruling.
Answer:
In certain cases a court may order specific performance rather than monetary damages.
a. True
b. False
Answer: