Through a certain transaction, Corporate Properties, Inc., acquires all of the shares of
Downtown Realty Corporation for some of Corporate Propertiess shares. Both
Corporate Properties and Downtown Realty continue to exist. This is
a. a consolidation.
b. a share exchange.
c. a short-form merger.
d. a hold-up.
Posing as Platinum Bank, Oswald e-mails Nadia, asking her to update her personal
banking information through a link in the e-mail. She clicks on the link and types in the
data, which Oswald promptly sells to Moe. This is
a. no crime.
b. employment fraud.
c. phishing.
d. vishing.
Catchy Gadgets Corporation and Discount Outlets, Inc., enter into a contract for a sale
of kitchenware. The contract requires Catchy to deliver the goods to Rapido Carrier
Company for transport to Discounts warehouse. Risk of loss passes to Discount when
a. Catchy delivers the goods to Rapido.
b. Catchy and Discount enter into their contract.
c. Rapido transports the goods to Discounts warehouse.
d. Discount sells the goods to its customers.
Commercial Development Corporation (CDC) hires Delta Construction Company to
work at a site as an independent contractor. Whether CDC will be liable for torts
committed at the site by Delta depends on
a. what Delta bid for the job.
b. whether unusually hazardous activities are involved.
c. which party obtained insurance to cover tort liability.
d. who is paying Delta.
Phil enters into a contract with Quality Resorts, Inc., to work as a chef. Under the plain
meaning rule, the meaning of this contract must be determined by reference to
a. any available evidence.
b. any relevant extrinsic evidence.
c. the face of the instrument.
d. the later testimony of the parties.
Howie enters into a contract with Ida over the Internet to buy soybeans as a hedge
against falling prices in corn. Neither party prints out a hard copy. Under the Electronic
Signatures in Global and National Commerce Act (E-SIGN Act), this contract can
a. be “denied legal effect if it falls under the UCCs Statute of Frauds.
b. be “denied legal effect unless a hard copy is printed.
c. be “denied legal effect until it is executed.
d. not be “denied legal effect because it is only in electronic form.
Karen writes on a piece of paper, “I owe you $600, signs it, and gives it to Lou. This
instrument is
a. negotiable.
b. nonnegotiable, because it does not include an express promise to pay.
c. nonnegotiable, because it does not recite any consideration.
d. nonnegotiable, because it does not state any conditions to payment.
Emery is an agent for Downtown Market Corporation. Emery makes an innocent mis-
representation when entering into a contract on behalf of Downtown Market with Cool
Fruits, Inc. Cool Fruits
a. is directly responsible for performing the contract.
b. is estopped from performing the contract.
c. may rescind the contract.
d. must ratify the contract.
Property Management Corporation (PMC) owns several apartment buildings in two
states. Regarding standards for maintenance of the buildings, PMC should consult
a. the applicable city ordinances and state statutes.
b. the previous owners.
c. the long-term tenants.
d. the Uniform Landlords Maintenance Manual.
As part of a stock offering for Equine Corporation, Flem, Equines accountant,
intentionally misrepresents material facts in the prospectus. Gigi buys the stock
unaware of the misrepresentation and suffers a loss. Flem may be subject to
a. a fine and damages only.
b. a fine and imprisonment only.
c. a fine, imprisonment, and damages.
d. damages only.
Fact Pattern 32-1B
Liz and Molly work as clerks in Nias Dress Shop. Nia withholds federal taxes from
their pay, and controls the methods and details of the performance of their work. Liz
and Molly are not authorized to modify the prices or other terms of a sale at the shop.
Refer to Fact Pattern 32-1B. Nia authorizes Liz to sell clothes at remote locations at
prices that Liz negotiates in those locations. With respect to sales at those locations, Liz
is
a. an independent contractor.
b. Nias employee only.
c. Nias employee and agent.
d. Nias principal.
Wang Ltd., a Chinese firm, imports its goods into the United States and offers those
goods for sale at “less than fair value. This is
a. confiscation.
b. defalcation.
c. dumping.
d. expropriation.
Phil agrees to work for Vacation Resorts, Inc., as a chef. In determining whether a
contract has been formed, an element of prime importance is
a. the parties intent.
b. Phils rate of pay.
c. the duration of the work.
d. Vacation Resortss facilities.
Consolidated Trucking Company transports radioactive materials. Darla suffers from
cancer. To succeed in a suit against Consolidated on the ground of strict liability, Darla
must show that her injury was caused by
a. Consolidateds failure to use reasonable care to avert herm to Darla.
b. Consolidateds intentional lack of regard for the general public.
c. Consolidateds operation.
d. radiation from any source.
Greta is a member of Hovercraft LLC. As a member, Greta is
a. a manager or officer, but not an owner.
b. an investor, but not a manager, officer, or owner.
c. an owner.
d. a participant, but not an investor, manager, officer, or owner.
Sudan seizes the assets of Triage Medico, Inc., a U.S. firm. Triages recovery from
Sudan in a U.S. court may be prevented by
a. the act of state doctrine.
b. the doctrine of sovereign immunity.
c. the Foreign Corrupt Practices Act.
d. the principle of comity.
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.
Obie accuses Portia, a broker with QT Financial Services, of fraudulently inducing him
to invest in Riske Development Company, whose stock price declines in value. The
reliance that gives rise to liability for fraud requires
a. a subjective, not an objective, statement.
b. misrepresentation of a fact knowing that it is false.
c. puffery.
d. sellers talk.
Ratzo is asked to be a witness to Sades will. Before attesting to the will,
a. Ratzo does not have to read the will or be informed of its contents.
b. Ratzo must read the will and recite its contents.
c. Sade must orally tell Ratzo of the wills contents.
d. Sades attorney must read the will aloud to Ratzo.
Huey signs a promissory note in reliance on Ians assurance that it is not a note. Ian
negotiates the note to Jinx Collection Agency, which is a holder in due course (HDC) of
the note. When Jinx tries to collect, Huey refuses to pay. Under the HDC doctrine, the
loss falls on
a. Huey only.
b. Huey and Jinx equally.
c. Huey or Jinx, depending on which party can afford the loss.
d. Jinx only.
To qualify as a professional corporation, Medical Clinic, P.C.,
a. must be a corporation formed by professionals.
b. must grant all shareholders voting rights.
c. must have at least thirty-five shareholders.
d. all of the choices.
Fact Pattern 42-2A
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, each of whom buy 100 shares.
They knows that Fay got her information from Dhani. When Eureka publicly announces
its new laptop, Dhani, Fay, Geoff, and Hu sell their stock for a profit.
Refer to Fact Pattern 42-2A. Under the Securities Exchange Act of 1934, Fay is most
likely
a. liable for insider trading.
b. not liable because Fay did not prevent others from profiting.
c. not liable because Fay did not solicit information from Dhani.
d. not liable because Fay does not work for Eureka.
Mike owes $12,000 to Nora, $6,000 to Owen, and $6,000 to Pat. The three creditors
enter into an agreement with Mike to discharge the debts on payment of a sum of
$12,000 to them, to be divided proportionately. This is
a. a composition agreement.
b. a guaranty agreement.
c. a judicial lien.
d. a suretyship agreement.
To assist in detecting illegal bribes, Cut Rite Contractors, Inc., and all U.S. companies,
must
a. conceal financial records that reveal past bribes.
b. keep records that “accurately and fairly reflect financial activities.
c. make bribes through third parties rather than directly to officials.
d. permit payments to foreign officials that are unlawful in that country.
Fact Pattern 42-1B
Sid, a director of Tech Software Company, learns that a Tech engineer has developed
“Ur Call, a new, exciting video game. Sid buys Tech stock and tells his friend Velma,
who also buys Tech stock. When the new game is released three weeks later, Sid and
Velma sell their stock for a big profit.
Refer to Fact Pattern 42-1B. Regarding Sids profits on the purchase and sale of Tech
stock, under Section 16(b) of the Securities Exchange Act of 1934 Tech may recapture
a. all of Sids profits.
b. half of Sids profits.
c. 10 percent of Sids profits.
d. none of Sids profits.
Twisted Dipsy Pretzels Inc. offers entrepreneurs the opportunity to operate a franchise
under the Twisted Dipsy trade name as a member of a select group of dealers that
engage in the retail pretzel-concession business. To potential investors, Twisted Dipsy
makes earnings claims. For those claims, the franchisor must have
a. a hypothetical basis.
b. a reasonable basis.
c. an actual basis.
d. no basis.
Elegant Carpets, Inc., and Fantastic Floors Stores enter into a contract for a sale of
carpeting. Under a shipment contract, the seller must
a. allow the buyer to reject the goods for any reason.
b. deliver the goods to a particular destination.
c. inspect the goods before shipping them.
d. place the goods into the hands of a carrier.
Leo is asked to serve as a witness to Monas will. To qualify, Leo must be
a. a collateral heir.
b. a lineal descendant.
c. eighteen years of age or older.
d. mentally competent.
Flux Corporation is a public company whose shares are traded in the public securities
markets. Under the Sarbanes-Oxley Act of 2002, Flux is subject to the direct corporate
governance requirements of
a. any other public company with which Flux exchanges shares.
b. any state in which Flux does business.
c. the federal government.
d. the state in which Flux incorporated.
China and India form an agreement to govern their commercial exchanges with one
another. This is
a. a bilateral agreement.
b. a lateral agreement.
c. a multilateral agreement.
d. a unilateral agreement.
If a sale involves unborn animals to be born within twelve months after contracting,
identification takes place when the animals are born.
The UCC has replaced the common law concept of title in part with the concept of risk
of loss.
Defense of others is a defense to an allegation of battery.
The average prime offer rate is the rate offered to the least qualified borrowers as
established by a survey of potential borrowers.
A franchisee ordinarily pays an initial fee or lump sum price for a franchise license.
If two conflicting security interests are unperfected, neither interest has priority.
A drawer must have a valid legal ground for issuing a stop-payment order, or the holder
can sue the drawer for payment.
To rescind a contract for fraud, a plaintiff must prove an injury.
A professional can be liable for fraud whether or not he or she acted with fraudulent
intent.
In the distribution of the debtors estate, secured creditors take priority over unsecured
creditors.
Clean Machines Company makes washing machines. Over the phone, Clean offers to
sell Dealers Appliance Outlet one hundred model EZ2000 washers at a price of $150
per unit. Clean says that it will keep the offer open for ninety days. Dealers responds
that within two or three weeks it will decide whether to accept. One week later, Clean
faxes, and Dealer receives, notice that the offer is withdrawn. Dealer immediately
phones Clean to accept the $150-per-unit offer. When Clean refuses to deliver at that
price, Dealer files a suit. Clean asserts, first, that there is no contract and, second, that if
there is a contract, it is unenforceable. Discuss Cleans assertions.
For works whose jobs have been terminated, federal law provides no right to continued
health-care coverage.
If a contract being executed by an agent is or must be in writing, then the agents
authority must also be in writing.
All agency relationships are based on contract.
If a contract condition is not satisfied, the obligations of the contracting parties are
discharged.
An accountant is not liable for an omission in a registration statement to a purchaser of
securities if the omission had no causal connection to the purchasers loss.
A party who substantially performs his or her duties under a contract can enforce the
contract against the other party.
A minor may disaffirm a contract only if the subject matter is illegal.
A principal may be liable for the tort of an agent committed within the scope of the
agency or employment.
One component of the relevant market is the geographic boundaries of the market in
which the firm and its competitors sell the product or service.