Precise Device Corporation and Quality Instruments, Inc., decide to merge. This
corporate combination does not require the approval of
a. Precise and Quality’s directors.
b. Precise and Quality’s officers and employees.
c. Precise’s shareholders.
d. Quality’s shareholders.
Bean Vendors, Inc., and Java Bistros Corporation dispute a term in their contract.
Refer to Fact Pattern 3-1. The least expensive method of resolving the dispute between
Bean and Java may be
a. arbitration because the case will be heard by a mini-jury.
b. litigation because each party will pay its own legal fees.
c. mediation because the dispute will be resolved by a non-expert.
d. negotiation because no third parties are needed.
Julia, the head executive of Fine Woolen Sweaters, Inc., is a committed Christian who
strongly adheres to the Ten Commandments. One of Julia’s employees is found to be
stealing sweaters and giving them to a local homeless shelter. Julia is likely to
a. punish the employee for stealing even though the employee’s motive was benevolent.
b. view the employee’s actions as justified because the employee was clothing the poor.
c. contribute more sweaters to the homeless shelter.
d. gently reprimand the employee without suggesting that the employee’s actions were
unethical.
To resolve a dispute, Amy in Boston and Chris in Denver utilize E-Solution, an online
dispute resolution (ODR) service. This limits these parties’ recourse to the courts
a. not at all.
b. until the ODR service has issued a decision.
c. with respect to any dispute arising between them.
d. with respect to this dispute only.
Jake is charged with embezzlement. Embezzlement may be committed without
a. a criminal act.
b. a criminal intent.
c. taking property from its owner.
d. the use of force or fear.
Wendy works as a weather announcer for a TV station under the character name
Weather Wendy. Wendy can register her name as a
a. a certification mark.
b. a collective mark.
c. a service mark.
d. a trade name.
Carrie Ann works at Paper Products, Inc. She considers taking home a few sheets of
stationery so she can write letters to her ailing grandmother. Since Paper Products
produces thousands of sheets of stationery every day no one will miss the few sheets
she takes and company profits will not be affected. Carrie Ann then considers what
would happen if every employee took some stationery home and decides not to take
any. Carrie Ann is being influenced by
a. the categorical imperative.
b. the principle of rights.
c. a cost-benefit analysis.
d. outcome-based ethics.
Chelsea is a state court judge. Like judges in most state courts, in a particular case, she
may grant
a. a remedy at law only.
b. a remedy in equity or a remedy at law, but not both.
c. a remedy in equity and a remedy at law.
d. a remedy in equity only.
Readmore Bookstore Corporation files a registration statement with the Securities and
Exchange Commission and provides a prospectus describing the securities to investors.
These items are intended to provide sufficient information so that the financial risks
involved can be evaluated by
a. market professionals to explain to all investors.
b. government regulators to disclose to the general public.
c. sophisticated investors only.
d. unsophisticated investors.
Trend-Rite Clothiers, Inc., sells t-shirts to Brand Name Stores, Inc., under an existing
contract. When textile costs increase, Brand agrees to a price increase, but later wants to
cancel the contract. Brand may
a. cancel the contract immediately.
b. cancel the contract only after accepting a final shipment.
c. cancel the contract only on reasonable notice.
d. not cancel the contract.
Fact Pattern 16-2
24-Hour Credit Corporation issues high-cost and high-fee mortgage products to people,
including Benny, who could not easily obtain credit under other loan programs.
Refer to Fact Pattern 16-2. Under federal law, if 24-Hour Credit fails to provide certain
material disclosures with respect to the loan, Benny’s right to rescind the loan
a. expires at midnight on the day the loan is finalized.
b. is immediately revoked.
c. is extended for up to three years.
d. is tolled for the duration of the loan payments.
Richard suspects his supervisor of unethical accounting practices. However, he does not
want to lose his job if he reports the supervisor and the supervisor finds out who
reported him. An important feature of online reporting systems like EthicsPoint is
a. the employee reporting the unethical behavior can do so anonymously.
b. the employee reporting the unethical behavior is financially compensated if he loses
his job as a result of the report.
c. the employee reporting the unethical behavior must give his full name when making
the report.
d. the employee reporting the unethical behavior must have another employee
supporting him.
Coco is considering forms of business organization for her concessions businessCoco’s
Cupcakes. Most states require that a limited liability company have
a. no minimum number of members.
b. at least one member.
c. at least two members.
d. at least three members, including at least one general partner.
A contract between E-Debits, Inc., and First Credit Corporation includes a provision
excluding liability as a result of fraud. This provision is
a. enforceable because the parties are protected from liability.
b. enforceable because the parties consented to it.
c. enforceable if the parties have equal bargaining power.
d. not enforceable.
Kathryn signs a lease agreement for an apartment. Kathryn has entered into a(n)
a. express contract.
b. implied contract.
c. quasi contract.
d. unenforceable contract.
Chloe files a suit against Digital Associates, Inc. (DAI), to enforce a contract. The only
written evidence of the contract is a memo on DAI’s letterhead as signed by a DAI
officer in its files. The contract can be enforced if the memo includes
a. a correct title, such as “Chloe-DAI Contract.”
b. all essential terms.
c. a statement of the consideration.
d. the parties’ addresses.
Shade Tree Lending Corporation advertises loans as fixed-rate loans but, in fact, their
rates or payment amounts will change. This is
a. a legal and ethicalbut morally arguablefinancial ruse.
b. a legalbut unethicalbusiness practice.
c. a necessary tactic to generate a profitable loan in today’s market.
d. a violation of the law.
Barb, a real estate agent, is showing John a house. She tells him that this is a house
where “his family can live happily ever after.” John buys the house, but his wife does
not like it. John
a. can rescind the contract on the ground of fraud.
b. can rescind the contract on the ground of misrepresentation.
c. can rescind the contract on the ground of mistake.
d. was not defrauded.
Louislarger and stronger than Micathreatens to hit Mica before hitting and injuring him.
Mica files a suit against Louis for assault and battery. Mica will most likely recover for
a. assault and battery.
b. assault but not battery.
c. battery but not assault.
d. neither assault nor battery.
Jack and Jill, citizens of Vermont, are involved in a case related to the adoption of their
child. The Vermont state courts
a. have concurrent jurisdiction with federal courts over this case.
b. have original jurisdiction over this case.
c. have exclusive jurisdiction over this case.
d. do not have jurisdiction for over case.
Zoe invents “All for One,” new business inventory control software, and applies for a
patent. If Zoe is granted a patent, it will protect her product
a. for ten years.
b. for twenty years.
c. for the life of the inventor plus seventy years.
d. forever.
Ed is a debtor. Financial Loans, Inc., and the government are Ed’s creditors. For these
parties, a bankruptcy proceeding under Chapter 13 could be initiated by the filing of a
petition by
a. Ed alone or by his creditors jointly.
b. Ed only.
c. Financial Loans only.
d. the government only.
Hi-Yield Agriculture, Inc., makes a pesticide with a one-in-a-million risk to people of
developing cancer from exposure. This substance must be
a. disposed of before anyone develops cancer.
b. registered before it is sold.
c. taken off the market and placed in temporary storage.
d. used only in a way that avoids exposure to people.
Ozzy is an officer of Prudent Financial Corporation. Ozzy serves in a representative
capacity for Prudent Financial’s owners. With respect to binding Prudent Financial to
contracts, Ozzy is
a. an agent and has the authority.
b. an agent but does not have the authority.
c. not an agent and does not have the authority.
d. not an agent but does have the authority.
Rita is appointed as an agent for Superior Sales, Inc. The agency agreement is silent as
to the level of sales that Rita is expected to achieve. She must
a. achieve nothing because the agreement says nothing on the issue.
b. attain the level that Rita achieved with her previous employer.
c. maintain the level Superior attained before Rita became an agent.
d. use reasonable diligence and skill in selling.
Quality Energy Company, a U.S. firm, and Royal Petro, a Dutch firm, enter into a
contract that includes an arbitration clause. This clause must provide that the arbitrator
will be
a. any specified third party.
b. the American Arbitration Association.
c. the Dutch Arbitration Organization.
d. the International Chamber of Commerce.
Great Gates, Inc. has a board of ten directors. Great Gates’ bylaws do not state any
quorum requirements. In most states, a quorum for Great Gates will be defined as
a. two directors.
b. six directors.
c. nine directors.
d. ten directors.
Milo files a suit against Nick in an Ohio state court, noting that Nick operates a Web
site through which Ohio residents have done substantial business with him. The court is
most likely to have jurisdiction over Nick if Milo’s claim arises from
a. anything an Ohio resident has done.
b. Nick’s Web site activities.
c. nothing an Ohio resident has done.
d. something other than Nick’s Web site.
Expert Pavers, Inc., contracts with Fabricated Building Corporation to repave
Fabricated’s parking lot for which Fabricated agrees to pay. The requirements of this,
and any other, contract do not include
a. consideration.
b. capacity.
c. legality.
d. practicality.
FlavorBean Coffee Company agrees to buy an unspecified quantity of coffee beans
from Global AgriCorp. Global breaches the contract. In FlavorBean’s suit to obtain
relief, the court will most likely
a. award a reasonable quantity of beans to FlavorBean.
b. award FlavorBean all the beans that it requires.
c. award Global’s output of coffee beans to FlavorBean.
d. have no basis for determining a remedy.
Absolute mandates such as the commandment “Thou shalt not steal” can be justifiably
broken if there is a benevolent motive.
According to utilitarianism, it matters how many people suffer a negative effect from an
act.
A party to a licensing agreement generally agrees to pay royalties on some basis.
A landlord is usually required to give some period of notice to terminate a periodic
tenancy.
It is presumed that a co-tenancy is a tenancy in common unless it is clear that the parties
intended to establish a joint tenancy.
Violations of the Securities Exchange Act of 1934 may be subject to criminal
prosecution, but not civil liability.
The offense of monopolization does not require the intent to monopolize.
An insurance application is part of the insurance contract.
Generally, acceptance of an offer to lease goods may be made in any reasonable manner
and by any reasonable means.
Entrusting goods to a merchant who deals in goods of the kind gives the merchant the
power to transfer all rights to a buyer in the ordinary course of business.
The amount in controversy in a diversity of citizenship case must be more than $1
million before a federal court can take jurisdiction.
The Environmental Protection Agency sets minimum levels for pollutants in public
water systems.
One goal of bankruptcy law is to protect a debtor.
Patent infringement is a tort.
If the goods or their tender fail to conform to the contract, the buyer can accept part and
reject part.
False imprisonment occurs when a person restrains another intentionally and without
justification.
State limited liability company statutes are uniform.
In most states, state law determines the amount of a debtor’s property that is exempt
from distribution on bankruptcy.