1) Private parties can sue violators of Section 10(b) of the Securities Exchange Act of
1934 and SEC Rule 10b-5 for rescission of a contract to buy securities.
2) To be effective, a gift causa mortis must meet only two requirements: intent and
acceptance.
3) The rights of a third party beneficiary under a contract vest if the third party brings a
lawsuit on the promise.
4) An accountant can avoid liability by proving that his or her negligence was only the
proximate cause of the client’s loss.
5) Any explicit understanding between the buyer and the seller determines when title
passes.
6) A limited liability partnership may exempt its partners from personal liability for any
partnership obligation.
7) Unless a limited liability company indicates otherwise, the Internal Revenue Service
automatically taxes it as a partnership.
8) Any breach of the terms of the security agreement can constitute default.
9) Randall steals a damaged, broken bike that is parked, unlocked, in a dorm bike rack.
He repairs, paints, and replaces parts on the bike until it is like new. The original owner,
Sabi, then claims it. The bike belongs to
a.John and Kim in equal measure.
b.John because he made substantial improvements to it.
c.the state under the applicable estray statute.
d.Kim because John stole it.
10) Metals & Minerals Inc., a resource processor and refiner, generates waste that is
discharged into the air and water, contaminating the environment, which includes
foreign countries. It has been shown that the quickest, most effective, and most efficient
way to reduce pollution is most likely
a.economic development.
b.environmental education.
c.international protocols.
d.persuasive debating points.
11) Global Games Corporation employs Hyacinth as an agent. Global Games gives her
an exclusive territory in which to sell its products. Global Games cannot compete with
her in that territory under the duty of
a.compensation.
b.cooperation.
c.indemnification.
d.reimbursement.
12) The basis for India to give effect to the laws and court decisions of the United States
is primarily
a.courtesy and respect.
b.fear and intimidation.
c.admiration and envy.
d.payments of cash and exchanges of property.
13) Garden Field Farms and Haute Gourmet Restaurant, Inc., enter into a contract for a
sale of lettuce. After Garden Field ships the lettuce but before Haute Gourmet receives
it, the buyer declares bankruptcy. Garden Field can stop delivery of the goods in transit
a.only if the quantity is deficient.
b.only if the quantity exceeds the contract amount.
c.only if the quantity is at least a truckload.
d.regardless of the quantity.
14) Cloud Computing & Processing Corporation wants to hire Dhani, a noncitizen of
“extraordinary ability.” To hire Dhani, Cloud Computing must petition
a.U.S. Citizenship and Immigration Services.
b.the Social Security Administration.
c.U.S. Immigration and Customs Enforcement.
d.the National Labor Relations Board.
15) Sauces n’ Syrups, Inc., and Thad’s Sweet & Spicy Bottling Planthave a
manufacturing franchise arrangement. This involves the transfer of
a.a license.
b.a trade name.
c.the formula to make a certain product.
d.the ownership of the business.
16) 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.
17) Ricardo suspects his supervisor Simone of unethical accounting practices. But
Ricardo does not want to report Simone if she will find out who reported her and fire
Ricardo. An important feature of online reporting systems like EthicsPoint is that an
employee reporting unethical behavior
a.can do so anonymously.
b.is financially compensated if he or she is fired as a result of a report.
c.must fully identify themselves when making a report.
d.must have additional employee support to make a report.
18) Lewis offers to make digital copies of Motivational Sales Company’s business
conference videotapes, CDs, DVDs, and other media for $500. Under the mailbox rule
and the UETA, Motivational Sales’ acceptance by e-mail will be considered effective
when
a.received.
b.sent.
c.followed up by a confirmation letter sent by regular mail.
d.composed on a Motivational Sales computer.
19) During a union election campaign, Auto Body Paint & Repair, Inc., prohibits on-site
solicitations by any party, including Mechanics Union, which is seeking the workers’
unionization. This violates
a.federal labor law.
b.federal elections law.
c.federal employment discrimination law.
d.no federal law.
20) Cookie Shops, Inc., sells a franchise to Donuts & Desserts, a mall food-court
vendor. Cookie Shops is
a.a franchisee.
b.a franchisor.
c.an agent.
d.a principal.
21) QuikPay Inc. extends credit to consumers. QuikPay is subject to the Equal Credit
Opportunity Act, which prohibits credit discrimination based on
a.intelligence.
b.education.
c.income.
d.race.
22) The Constitution sets forth specific powers that can be exercised by the national
government and provides that the national government has the implied power to
undertake actions necessary to carry its expressly designated powers. Under the Tenth
Amendment, all other powers are expressly reserved to
a.none of the choices.
b.the states.
c.the national government.
d.the people.
23) Commerce & Trade Corporation and Distance Shipping & Transport, Inc., form a
business trust. eCharge Auto Company and Fleet Electric Corporation form a joint stock
company. Green AgriCorp and Harvest Farms, Inc., form an incorporated cooperative.
What features do these combinations of business organization have in common?
24) In a Chapter 11 case, the court cannot confirm a reorganization plan over the
objections of a class of creditors.
25) A disclosed principal is liable to a third party for a contract made by the agent
acting within the scope of his or her authority.
26) The alter-ego theory can be applied to a corporation, but not a limited liability
company.
27) An executive officer of a corporation normally can conduct ordinary business
transactions without obtaining written authority from the corporation.
28) Veronica is a repairperson for Wind Power Company. The job requires traveling to
remote areas to make repairs to windmills, transmission towers, and power stations
under any conditions. Veronica has had the job longer than other employees. Veronica
applies for a promotion to a supervisory position that requires constant communication
with others in the field. Wind Power rejects the application on the ground that Veronica
is hearing impaired. Wind Power acknowledges that Veronica is otherwise qualified, but
asserts that it “needs someone who does not have a hearing problem.” Veronica files a
suit against Wind Power under the Americans with Disabilities Act of 1990. What is the
issue, and what are the relevant considerations on which its resolution depends?
29) Acting in good faith gives a business firm a better chance of defending its actions in
court.
30) Finola, a certified public accountant, provides accounting services to Global Trade
Corporation. The services include preparing Global Trade′s financial reports and issuing
opinion letters based on the reports. In 2014, Global Trade falls into serious financial
trouble, but neither Finola′s reports nor her opinion letters indicate this situation.
Relying on Finola€s portrayal of Global Trade′s financial situation, the firm borrows a
large sum of money to build a new shipping facility. In lending Global Trade the
money, Harbor City Bank relies on Finola′s opinion letter. Finola is aware of this
reliance. If Finola did not engage in intentional fraud but was negligent, what is her
potential liability?
31) An agreement that includes an option to purchase real property must be in writing
for the option to be enforced.