Employees who receive tips on the job cannot be paid less in direct wages than the
federal minimum wage.
a. True
b. False
Failure to live up to a standard of care may be an act or an omission.
a. True
b. False
Sarah believes that she was rejected for a position at Trekking Travel Agency due to her
race. Sarah files a suit against Trekking Travel Agency under Title VII on the basis of
disparate-treatment discrimination. Sarah must show all of the following except that
a. she is a member of a protected class.
b. she applied and was qualified for the job in question.
c. she was rejected by Trekking Travel Agency.
d. other people of her race hold similar positions with other employers.
Lia works for Media Marketing Company. Her job includes putting ‘spin on the firms
successes and failures. In this context, ethics consist of
a. “bad versus “good publicity.
b. questions of rightness and wrongness.
c. the firms quarterly revenue.
d. whatever is legal.
At age seventeen, Daryl enters into a contract to buy a dozen movies from eHD TV
Stream, Inc., an online video service. Soon after reaching the age of ma-jority, Daryl
attempts to disaffirm the contract. eHD files a suit against him. The court will most
likely consider the contract ratified if it is
a. executed.
b. exculpatory.
c. express or implied.
d. emancipated.
Selecting the state in which to incorporate is an important step in the incorporation
procedure.
a. True
b. False
Trevors operates The Spicy Chocolatier Café chain of restaurants. “The Spicy
Chocolatier Café is
a. acertification mark.
b. acollective mark.
c. aservice mark.
d. atrade name.
The extreme risk of an activity is a defense against imposing strict liability.
a. True
b. False
Clyde issues a check payable to Discount Mart. Elle, Discounts cashier, forges the
stores indorsement and deposits the check in her bank ac-count. Clydes bank, Main
Street Bank, pays the check. Clyde can recover from
a. Elle, but not Main Street Bank.
b. Main Street Bank, which cannot recover from Elle.
c. Main Street Bank, which can recover from Elle.
d. no one.
In contracts involving a carrier, a seller can complete performance through a shipment
contract or a destination contract.
a. True
b. False
To initiate a lawsuit, Darla files a complaint against E-Sales Company, which re-sponds
with an answer. Together, the complaint and answer are
a. a motion to dismiss.
b. a summons.
c. a writ of certiorari.
d. the pleadings.
Gigi, a twenty-year-old, wants to execute a will before she undertakes a
moun-tain-climbing trip on a peak in the Himalaya Mountains. In most states, the legal
age for executing a will is
a. sixteen years of age.
b. eighteen years of age.
c. twenty-one years of age.
d. twenty-five years of age.
InterComp normally sells $50,000 worth of software to Power Source, a retail
elec-tronics store, each summer on terms requiring payment in sixty days. One year,
InterComp wants cash, but Power Source wants the usual sixty days. To meet both
needs, the parties can arrange
a. a certificate of deposit.
b. a bearer bond.
c. a trade acceptance.
d. an international letter of credit.
Alpha Company issues a trade acceptance with itself and Beta Company as parties. A
trade acceptance is
a. a draft.
b. an order to accept delivery of money.
c. a promise to accept delivery of goods.
d. a promise to deliver goods.
If a bank is both the drawer and the drawee with regard to a draft, then the draft is a
a. certificate of deposit.
b. cashiers check.
c. nonnegotiable instrument.
d. promissory note.
Liz offers to sell Jock her iPad for $500 without any accessories. Under the mirror
image rule, Jocks response will be considered an acceptance ifthe terms of the
acceptance
a. exactly mirror those of the offer.
b. change the items offered, but do not change the price.
c. change the price, but do not change the items offered.
d. change both the price and the items offered.
According to the terms of Diegos will, specific gifts are made, and taxes and other
es-tate expenses and debts are paid. The assets of Diegos estate that remain are most
likely to be distributed
a. by codicil.
b. holographically.
c. per capita.
d. through a residuary clause.
Alan, the president of Bayside Investments, Inc., and Colin, Baysides accountant, are
charged with a crime, after the police search Baysides offices. Under the exclusionary
rule
a. certain Bayside records are excluded from subpoena.
b. certain parties to a criminal action may be excluded from a trial.
c. illegally obtained evidence must be excluded from a trial.
d. persons who have biases that would prevent them from fairly decid-ing the case may
be excluded from the jury.
A person who enters into a contract when he or she is intoxicated can void the contract
if he or she did not comprehend the legal consequences.
a. True
b. False
A corporation does not possess the same right of access to the courts as natural persons.
a. True
b. False
Jo files a suit against Lara in a Missouri state court. Laras only connection to Missouri
is an ad on the Web originating in Nebraska. For Missouri to ex-ercise jurisdiction, the
issue is whether Lara, through her ad, has
a. a commercial cyber presence in Missouri.
b. conducted substantial business with Missouri residents.
c. general maximum contact with Missouri.
d. solicited virtual business in Missouri.
Green Grocers, Inc., enters into a contract with Hiway Transport Company for the
deliv-ery of a shipment of fresh produce. In a later dispute between these parties over
the delivery, the doctrine of quasi contract cannot be used because
a. both of the parties involved are businesses.
b. at least one of the parties had greater bargaining power.
c. the subject of the contract was a service.
d. there is an actual contract covering the subject in dispute.
Revocation is effective on dispatch.
a. True
b. False
Marcy goes hunting out of season and shoots an endangered species of deer in a
national park. Marcys acquisition of the deer is
a. by production.
b. illegal.
c. by confusion.
d. by possession.
On Monday, Michelle deposits in her account at Fiscal Bank a local check for $500.
After 5:00 p.m. on Friday, from these funds, Michelle can withdraw no more than
a. $100.
b. $400.
c. $500.
d. $600.
Dizzy is not Edwinas agent but enters into a contract with Frida on Edwinas behalf.
Edwina later contacts Frida to affirm the contract. This is
a. an agency by agreement.
b. an agency by estoppel.
c. anagency by ratification.
d. not the creation of an agency relationship.
Scott presents an instrument that states “pay to the order of Scott to Town Bank for
payment. This instrument is the most common type of negotiable instrument, which is
a. a commercial wire transfer.
b. a check.
c. a note.
d. a substitute check.
Sangfroid Business Corporation can be compelled to dissolve by
a. its creditors only.
b. itself, through its shareholders and directors, only.
c. itself, through its shareholders and directors, or the state.
d. the state only
Statutory law includes state statutes and ordinances passed by cities and counties.
a. True
b. False
Olive Grove Enterprises, Inc., completes its registration process and issues a
free-writing prospectus. This tells pro-spective investors
a. about investing freely.
b. how to write their own prospectus.
c. that they can “freely write their own ticket to buy Olives securities.
d. that they may obtain the prospectus at the SECs Web site.
Guy is Hot Java Companys majority shareholder. Guy decides to sell his Hot Java
stock. The sale will be an effective transfer of the control of the company. Does Guy
owe a duty to Hot Java or its minority shareholders in this situation?
Healthy Harvest Company runs a candy and fruit processing and packaging plant. Most
of Healthy Harvests business is done during holiday seasons, especially between
Halloween and New Years Day, and in the spring. The company hires a large temporary
workforce during its busiest times. Occasionally, a position opens for an individual with
highly specialized skills, particularly to operate and maintain the companys inventory
and sales control systems. Can Healthy Harvest hire noncitizens for its temporary,
seasonal work? Can the company hire a noncitizen with special skills for certain jobs?
If so, what procedures must the employer follow in both situations to do this hiring? If
not, how can Healthy Harvest be assured that it is hiring only citizens?
An unknown individual launches a series of attacks against the Web sites of Prime Sales
Corporation. The attacks significantly slow the sites, leading to $100 million in damage
in terms of lost work time, lost revenue, site repair costs, and other expenses. The
attacker does not intend to profit from the onslaught and in fact does not realize any
financial benefit from the effects. How is this attack most likely orchestrated? Who is
most likely to engage in this actthat is, whose habits and limitations are clearly suited to
such conductand why?
Secure Courier, Inc., has a requirements contract with Petro Distribution Corporation
that obligates Petro to supply Secure with all the gasoline it needs for its delivery
vehicles for one year at $2.30 per gallon. A clause inserted in small print in the contract
by Secure, and not noticed by Petro, states, “The buyer reserves the right to reject any
shipment for any reason without liability.” For six months, Secure orders and Petro
delivers under the contract without any controversy. Then, because of a war in the
Middle East, the price of gasoline to Petro increases substantially. Petro tells Secure it
cannot possibly fulfill their contract unless Secure agrees to pay $2.50 per gallon.
Secure, in need of the gasoline, agrees in writing to modify the contract. Later that
month, Secure learns it can buy gasoline at $2.40 per gallon from Refined Oil
Company. Secure refuses delivery of its most recent order from Petro, claiming, first
that the contract allows it to do so without liability, and second, that it is required to pay
only $2.30 per gallon if it accepts the delivery. Discuss Secures contentions.
Patty, who is divorced, owns a house. She has no reasonable expectation of benefit from
the life of Quinn, her ex-spouse, but she applies for insur-ance on his life anyway. She
also obtains a fire insurance policy on the house, which she later sells. Five years later,
Quinn dies and the house is destroyed in a fire. Can Patty obtain payment on either the
death of Quinn or the loss of the house? Explain.
In 2005, Hawk Corporation begins making and selling electric motorcycles under the
mark “Hawk. Ten years later, Hawk.com, Inc., a differ-ent company selling medical
equipment and supplies, begins to use “hawk as part of its URL and registers it as a
domain name. Can Hawk Corporation stop Hawk.coms use of “hawk? If so, what must
the motorcycle-maker show?
Pam borrows $5,000 from Quality Auto Sales to buy a car. When Pam does not pay the
loan or return the car, Quality wants to transfers the right to the payment to Rapid
Collection Agency. Rapid agrees to pay Quality for this right, but for a price that is less
than the amount owed. Can Quality transfer this right to Rapid without Pams consent?
If so, and Quality committed fraud in the deal with Pam, could Pam legiti-mately refuse
to pay Rapid? Explain.
Efrem owns Fans & Players, a retail sporting goods shop. When Great Hill Lodge, a
new ski resort, is built in the area, Efrem decides to expand and borrows a large sum
from Hometown Bank. The bank takes a secu-rity interest in Efrems present inventory
and any after-acquired inven-tory as collateral for the loan. The bank properly perfects
the security in-terest by filing a financing statement. Efrems business is profitable, and
he begins doubling his inventory. A year later, an avalanche destroys the ski slope and
lodge. Efrems business takes a turn for the worse, and he defaults on his debt to the
bank. The bank seeks possession of his en-tire inventory, even though the inventory is
twice as large as it was when the loan was made. Efrem claims that the bank has rights
to only half of his inventory. Is Efrem correct? Explain.
Sonya and other employees of TransGlobal Inc. maintain a password-protected social
media page on which they post comments on work-related issues. The posts range from
positive to negative, supporting the pages purpose to “vent about work. When
TransGlobal learns of the page, the company intimidates Sonya into revealing the
password,and after reviewing the posts, fires her and the other participants. Which
federal law discussed in this chapter most likely applies to this situation? Has this law
been violated? Discuss.
Ellen contracts to buy six cases of vintage Fertile Valley wine from Grapes & Vines
Winery for $1,200. The contract states that delivery is to be made at Ellens residence
“on or before May 1, to be used for daughter’s wedding reception on May 2.” On May
1, Grapes & Viness delivery van is involved in an accident, no wine is delivered that
day, and no one from Grapes & Vines tells Ellen. On the morning of May 2, Ellen buys
the wine from Happy Hill Winery. That afternoon, just before the reception, Grapes &
Vines tenders delivery of the wine at Ellens residence. She refuses tender. Grapes &
Vines sues her for breach of contract. How is the court most likely to rule?
Best Products, Inc., hires Cole to develop and implement an e-commerce strategy for
marketing Bests products. Cole signs a contract that in-cludes a clause prohibiting him
from competing with Best during and af-ter the employment. Before the strategy is
implemented, Cole resigns from Bests employ and opens a business to compete with
Best. In Bests suit against Cole, what is the most important factor the court should
consider in determining whether Cole should be allowed to compete with Best?
Discount Mart, Inc., files a suit in a state court against Elements Computer Corporation,
alleging that Elements breached a contract to sell 500 notebook computers to Discount.
During the course of the suit, Discount files a motion for judgment on the pleadings,
Elements files a motion for a directed verdict, and both parties file motions for
summary judgment. When and for what pur-pose are each of these motions made?
Dominique, a certified public accountant, provides accounting serv-ices to Eagle
Corporation. The services include preparing Eagles financial re-ports and issuing
opinion letters based on the reports. In 2008, Eagle falls into serious financial trouble,
but neither Dominiques reports nor her opinion let-ters indicate this situation. Relying
on Dominiques portrayal of Eagles finan-cial situation, Eagle borrows a large sum of
money to build a new ship-ping facility. In lending Eagle the money, First National
Bank relies on Dominiques opinion letter. Dominique is aware of this reliance. If
Dominique did not en-gage in intentional fraud but was negligent, what is her potential
liability?
Colby contracts in writing to sell his 2005 Dodge-brand pick-up truck to Efrem for
$10,500. Colby agrees to deliver the truck on Friday, and Efrem promises to pay the
$10,500 on the following Monday. On Thursday, Efrem tells Colby that he changed his
mind and will not buy the truck. Over the weekend, Efrem changes his mind again and
tenders $10,500 to Colby on Monday. Colby has not sold the truck to another party but
refuses the tender and refuses to deliver. Efrem claims that Colby has breached their
contract. Colby contends that Efrems repudiation released him from his duty to perform
under the contract. Who is correct, and why?
Olaf, an executive with Pharma Product Distribution, Inc., has to decide whether to
market a product that might have undesirable side effects for a small per-centage of
users. How should Olaf de-cide whether to sell the prod-uct? How does the standard of
ethics that is applied affect this answer?
Bob is shopping in Carls Hardware Store when a nail gun in use by Dan, one of Carls
employees, fires without warning and hits Bob in the leg. Carl checks the gun and
discovers that it was assembled improperly. Bob files a suit against Eagle Tools, Inc.,
the manufacturer of the gun, for product liability, on the ground of strict liability. What
are the elements for an action based on strict liability? In whose favor is the court likely
to rule and why?
Starr Cardio, Inc., is a small business. Ted, Uma, and eleven other members of the Starr
family own all of its stock. Currently, Starrs income is taxed at the corporate level and,
after being distributed to the family members, at the shareholder level. Can Starr retain
its corporate status but oth-er-wise avoid this double taxation? If so, how?
Hoppy steals two checks from Eagle Retail Stores, Inc.a blank check and a check
payable to the order of General Supplies Company (GSC), drawn on Eagles account
with First National Bank. Hoppy forges Eagles signa-ture on the blank check and makes
it payable to himself. Hoppy forges GSCs indorsement on the back of the check payable
to GSC, and adds “Pay to the order of Hoppy. At Friendly Credit, Inc., Hoppy indorses
the back of both checks with his own name and gives them to Friendly for cash.
Friendly does not know about the theft or the forged signatures and presents the checks
to First National, which pays them. Eagle, which was not negli-gent, discovers the
forgeries and asks First National to recredit its ac-count. Who suffers the loss on each
check?
When Looking Glass Corporation wishes to issue certain securities, it must provide
sufficient in-for-mation for Alice, and other unsophisticated investors, to evaluate the
fi-nancial risk involved. Specifically, the law imposes liability for making a false
statement or omission that is “material. What sort of information would Alice consider
material?