Beyond-the-Sea Corporation and Homeport Company make a deal for Homeport’s
products, via e-records. Under the UETA, an e-record is considered sent when it
a. is signed and encrypted, and will be sent without changes.
b. is stored in the sender’s back-up system.
c. is composed on the sender’s computer.
d. leaves the sender’s control.
Augustus, who is Bertha’s guardian, convinces her to buy a certain parcel of land from
Christy at a greatly inflated price. Augustus may be liable for
a. mistake.
b. puffery.
c. unconscionability.
d. undue influence.
In deciding questions of corporate social responsibility, Valley Disposal & Recycling,
Inc., is concerned with
a. how the corporation can best fulfill any ethical duty to society.
b. the effect on corporate profits of ignoring any ethical duty to society.
c. whether the corporation owes any ethical duty to society.
d. all of the choices.
Sights Unseen, Inc., (SUI) sells scopes with distinctively designed and made lenses and
mirrors to scientists. Telescopes, Etc. Corporation later begins to sell scopes with
identical set-ups of lenses and mirrors, without SUI’s permission, to consumers. This is
most likely
a. copyright infringement.
b. patent infringement.
c. trademark infringement.
d. not infringement.
Niki owns O.K. Oil Corporation. Niki uses O.K.’s funds to pay her personal expenses,
creates Pure Fuel Corporation to engage in the same business as O.K., transfers O.K.’s
assets to Pure Fuel, and petitions O.K. into bankruptcy. This most likely warrants
a. a bonus to Niki for financial maneuvers.
b. a discharge for O.K. in bankruptcy.
c. a piercing of O.K.’s corporate veil.
d. a review of Pure Fuel’s articles of incorporation.
Research Statistics Corporation uses a merit system to pay its employees according to
their job performance. Suki, a female, and Troy, a male, are Research employees with
comparable jobs. Due to superior performance, Suki is paid more than Troy. This is
a. disparate-impact discrimination.
b. gender discrimination.
c. not discrimination.
d. reverse discrimination.
Applied Business Corporation makes and markets its products nationwide. Under the
stakeholder approach, to be considered socially responsible when making a business
decision, Applied must take into account the needs of
a. its consumers, the community, and society only.
b. its employees and owners only.
c. its employees, owners, consumers, the community, and society.
d. no one.
Brandy forges Caleb’s signature on a check “payable to the order of Brandy” drawn on
Caleb’s account in Downtown Bank. Caleb’s forged signature is
a. effective if an innocent third party accepts the check.
b. effective to the degree that it matches Caleb’s genuine signature.
c. effective to the extent that Downtown Bank debits Caleb’s account.
d. not effective.
Fanny buys clay to throw pottery, which is glazed and fired in a kiln. The finished
products are sold to Gifte Shoppe, which sells these items and others to customers who
often present them as gifts. Thus, property can be acquired in various ways. The most
common way to acquire personal property, however, is to
a. buy it.
b. commingle it.
c. produce it.
d. receive it as a gift.
In newspaper ads, Lo-Price Autos falsely accuses My-T Value Vehicles, a competitor, of
selling stolen cars. My-T’s sales decrease. Lo-Price has most likely committed
a. slander of quality.
b. slander of title.
c. wrongful interference with a business relationship.
d. none of the choices.
Rhonda’s debt to Skyler is past due. Skyler brings a legal action against A to collect the
debt. To ensure that a judgment in Skyler’s favor will be collectible, Skyler asks the
court to order the seizure of Rhonda’s property. Exempt from such an order in most
states would be
a. all of Rhonda’s real property.
b. as much of Rhonda’s real property as Rhonda opts to exempt.
c. none of Rhonda’s real property.
d. Rhonda’s family home in its entirety or up to a specified amount.
Over the course of a year, Retail Marketers, Inc., sells goods from its inventory and one
of its warehouses. In exchange, Retail receives checks and other items that substitute
for cash, which Retail uses to repay a loan from Savings Bank. Article 2 of the UCC
governs
a. the checks.
b. the payment of the loan.
c. the sale of the buildings.
d. the sale of the goods.
In 2010, Congress enacts the Act to Restrict Commercial Speech (ARCS). The ARCS
will be considered valid
a. if it directly advances a substantial government interest but goes no further than
necessary.
b. if it directly advances a substantial government interest regardless of how “far” it
goes.
c. under any circumstances.
d. under no circumstances.
Lucy is a limited partner in Metro Contractors, a limited partnership, which cannot pay
its debts. Lucy is personally liable for the debts
a. in proportion to the number of partners in the firm.
b. to no extent.
c. to the extent of her capital contribution.
d. to the full extent.
Olaf is the creditor in a transaction with Phil. Once certain requirements are met, Olaf’s
rights will attach, which means that Olaf will have
a. an indivisible ownership right to Phil’s property.
b. an enforceable security interest in Phil’s property.
c. a notice affixed to Phil’s property.
d. the permission of a court to seize Phil’s property.
Moby, a resident of New Jersey, has an accident with Ogden, a resident of New York,
while driving through that state. Ogden files a suit against Moby in New York.
Regarding Moby, New York has
a. federal question jurisdiction.
b. in personam jurisdiction.
c. in rem jurisdiction.
d. no jurisdiction.
Omega Corporation and Precision Coding, Inc., two software firms, wish to combine
their research and development capabilities to make a special, limited edition computer
game. The most appropriate legal entity for this project might be
a. a business trust.
b. a joint stock company.
c. a joint venture.
d. a syndicate.
Tilly, the chief financial officer for USA Products Corporation, attempts to apply
Christian precepts in making ethical decisions and in doing business. In applying
duty-based ethical standards that are derived from a religious source, Tilly would
consider the motive behind an act to be
a. irrelevant.
b. the least important consideration.
c. the most important consideration.
d. the only consideration.
Meri, an accountant, includes a false statement in a report for Novelty Paper Products,
Inc. (NPPI) that is filed with the Securities and Exchange Commission. When Otho
buys stock in NPPI and loses money on the investment, he files a suit against Meri,
alleging fraud under the 1934 Securities Exchange Act. To avoid liability, Meri can
show that she
a. intended to defraud NPPI, not Otho.
b. intended to profit on stock trades generally, not only with Otho.
c. is an otherwise competent accountant.
d. was not aware her statement was false.
Bree is a real estate broker licensed only in Minnesota. She concludes a sale in North
Dakota on O”Reilly’s behalf. Bree’s contract with O”Reilly to be paid a certain
commission for the sale is
a. enforceable if O”Reilly comprehended the consequences.
b. enforceable if O”Reilly knew Bree was not licensed in North Dakota.
c. enforceable if the amount of her commission is reasonable.
d. unenforceable.
Fact Pattern 37-3
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. Both Geoff and Hu buy 100
shares. They know that Fay got her information from Dhani. When Eureka publicly an-
nounces its new laptop, Dhani, Fay, Geoff, and Hu sell their stock for a profit.
Refer to Fact Pattern 37-3. 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.
Commercial Shipping, Inc., and Dock Services Corporation enter into a contract under
which Commercial agrees to pay Dock to load Commercial’s trucks. Dock transfers its
duty to load the trucks to East Harbor Transport Company. Dock is
a. a delegator.
b. an assignor.
c. a payor.
d. a righter.
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.
Cheesy Pizza Company contracts to sell 1,000 cases of frozen pizzas to Roller Rinks,
Inc., but refuses to deliver. Due to a spice shortage, Roller Rinks cannot obtain pizza
elsewhere. Roller Rinks’s right to recover the goods from Cheesy is the right of
a. cover.
b. cure.
c. replevin.
d. specific performance.
Farm Equip, Inc., makes farming machinery. Gail discovers that her Farm Equip tractor
is defective and sues the maker for product liability based on negligence. To win, Gail
must show that
a. Farm Equip sold the tractor to Gail.
b. Gail knew and appreciated the risk caused by the defect.
c. Gail suffered an injury caused by the defect.
d. the “defect” was a commonly known danger.
Plastix Produx Company is subject to a decision by the Consumer Product Safety
Commission. Opposed to the decision, Plastix Produx wants a court to review it. First,
however, the firm must use all of the potential administrative remedies. This is
a. an actual controversy at issue.
b. standing to sue.
c. the exhaustion doctrine.
d. the ripeness doctrine.
Flynn, an accountant, helps Grange Supply Company prepare and file a false federal
corporate income tax return. Under the Internal Revenue Code, this is
a. a felony punishable by a fine and imprisonment.
b. a felony punishable only by a fine.
c. a misdemeanor punishable only by a fine.
d. a civil violation subject to a liability suit but not a crime.
In 2010, Sara writes Terror at the Track, a novel about racecar driving. Sara does not
register the work with the appropriate government office. Under federal copyright law,
Sara’s work is protected
a. for ten years.
b. for twenty years.
c. for the life of the author plus seventy years.
d. forever.
Kelly transfers shares of stock that she owns in Lone Starz Company to Max. A
shareholders’ meeting takes place before Max’s ownership is entered in Lone Starz’s
stock book. A vote at the meeting can be cast by
a. Kelly and Max.
b. Kelly only.
c. Max only.
d. neither Kelly nor Max.
Sam contracts to harvest Tina’s crop on August 1. Due to an unexpected regional fuel
shortage, Sam cannot perform on the specified date. This
a. breaches the contract.
b. discharges the contract.
c. has no effect on the contract.
d. suspends the contract.
Kris contracts to work exclusively for Little Manufacturing Company during May for
$5,000. On April 30, Little cancels the contract. Kris finds another job during May but
earns only $3,000. Kris files a suit against Little. As compensatory damages, Kris can
recover
a. $3,000.
b. $2,000.
c. $1,000.
d. $0.
Lava Excavators, Inc., needs a drill to continue its operations and orders one for $3,000
from Mining Supplies Company. Lava tells Mining that it must receive the drill by
Tuesday or it will lose $10,000. Mining ships the drill late. Lava can recover
a. $13,000.
b. $10,000.
c. $3,000.
d. $0.
Little’s Video Store and Major TV Sales Corporation enter into an oral contract for
Major’s sale to Little’s of eighteen DVD players for $80 each. After Little’s takes
possession of the players, but before it makes payment, this contract is
a. enforceable only if it is in writing.
b. enforceable only if it is oral.
c. enforceable whether it is oral or in writing.
d. not enforceable.
Big Valu Grocery Stores is an unincorporated cooperative. Big Valu and other
unincorporated cooperatives are generally treated like
a. business trusts.
b. corporations.
c. joint stock companies.
d. partnerships.
Payment of the principal obligation will not discharge the guarantor from the
obligation.
International Exports, L.P., is a limited partnership, with $100,000 in declared but
unpaid profits. International’s creditors include Friendly Credit Corporation for $5,000
and Gwen, one of International’s limited partners, also for $5,000. When Harry, one of
International’s general partners, decides to retire, the other general partners vote to
liquidate and dissolve the firm. The limited partners, who are not asked their opinions,
want International to continue in business and file a suit against the general partners to
compel this result. Can the court order International to continue? If not, what is the
priority of the distribution of International’s assets on its dissolution?
The key federal statute regulating the credit and credit-card industries is basically a
disclosure law.
Good Health & Life Insurance Corporation suffers a security breach in its computer
network. Before the company discovers the breach, the perpetrator obtains corporate
financial records and other confidential data, including marketing plans. Is this a crime?
If so, what are its elements? What steps might Good Health & Life take to ensure that
going forward only authorized users access the data on its computers? Whose
effortsthose of the federal government or Good Health & Lifeare most important in
securing the company’s computer infrastructure and why?
Under the principle of rights theory, one person’s set of values is as “right” as another’s.
If a buyer wrongfully refuses to accept goods that conform to a contract, the seller can
maintain an action to recover the damages sustained.
To violate antitrust law, an attempt to monopolize a market must be intended to exclude
competition and garner monopoly power.
When the corporate privilege is abused for personal benefit, the courts will require the
owners to assume personal liability.
An unconscionable contract is a contract so one-sided and unfair at the time it is made
that enforcing it would be unreasonable.
Preferred shares normally have a fixed maturity date on which the firm must pay them
off.
An integrated contract is the final embodiment of the terms of an agreement.
A buyer who rightfully rejects nonconforming goods can resell the goods and keep the
proceeds.
Federal laws often provide more sweeping and significant protections for the consumer
than state laws.
In choosing a form of business organization for a new enterprise, important factors
include the titles of the organization’s officers.
An assignment is effective only after notice is given to the obligor.
Only the states set safety standards governing workplaces.