If a court determines a manager’s corporate decision amounted to self-dealing:
a. the business judgment rule will not apply.
b. the transaction being challenged will be automatically voided.
c. the manager is automatically personally liable to the corporation.
d. All the above.
Two universities located within 30 miles of each other agree to divide their market so as
to help them both. The two schools draw a line down a map and each university agrees
to accept students only on their side of the line.
This agreement violates the:
a. Sherman Act.
b. Clayton Act.
c. Robinson-Patman Act.
d. None of the above.
Which of the following is a possessory interest in land?
a. Fee simple absolute.
b. Easement.
c. Profit.
d. License.
Link negligently ran his car into John, causing $50,000 in injuries. Link was intoxicated
at the time of the accident. Can Link discharge this debt in bankruptcy?
a. Yes, claims based on negligence are dischargeable.
b. Yes, as long as he didn’t intend to hit John’s car.
c. No, such claims are not dischargeable in bankruptcy.
d. No, because Link breached a fiduciary duty.
Which of the following relationships will ordinarily not create an insurable interest?
a. Husband and wife.
b. Doctor and patient.
c. Debtor and creditor.
d. Chief executive officer and corporation.
Byron bought a 50′ yacht from Myrtle’s Marina by entering into a note and security
agreement promising the yacht as collateral for the purchase money security interest.
When Byron faced some tough financial times, he failed to make three monthly
payments. Myrtle’s Marina repossessed the yacht by removing the yacht engine and
advertised a public auction of the yacht. Byron appealed to his good friend Charles and
managed to pay off the debt balance and the Marina’s expenses of repossessing and
advertising the sale. Byron’s actions represent:
a. strict foreclosure.
b. redemption.
c. silent bidding at the auction.
d. an artisan’s lien.
Which of the following statements is correct?
a. Investors generally receive a copy of the registration statement.
b. Investors generally do not receive the company’s prospectus.
c. A prospectus provides disclosure about the offering but does not include as much
information as the registration statement, such as information that would be of interest
to the SEC but not the typical investor.
d. All the above.
In the case of United States v. Waste Management, Inc., the U.S. Court of Appeals had
to consider whether a merger of two large trash removal services was illegal. The
merger created a company that controlled nearly 50 percent of the Dallas, Texas
regional market. The court ruled that:
a. such merger created a presumption of illegality.
b. the merger was not illegal since it did not substantially lessen competition in the
relevant market.
c. Both of the above are correct.
d. None of the above.
Lemon laws, which assist consumers who have purchased automobiles that turn out to
be “lemons,”:
a. are enacted by state legislatures.
b. are enacted by Congress.
c. are included in the warranty provisions of the UCC.
d. come from common law equitable remedies.
Which of the following represents a unilateral offer?
a. “I will pay you $50 if you mow my lawn.”
b. “I will pay you $50 if you promise to trim that tree.”
c. “I will pay you $50 for your CD player.”
d. “I will pay you $50 for your backpack.”
Dusty dissociated from a partnership. To protect himself from debts of the partnership
after he leaves, Dusty should:
a. secure an indemnity bond.
b. file a statement of dissociation with the Secretary of State.
c. execute a formal written agreement with the remaining partners.
d. demand that the partnership terminate.
The privacy of e-mail is regulated by:
a. the federal ECPA.
b. spyware.
c. both a and b.
d. neither a nor b. There is currently no regulation of e-mail privacy.
A buyer who accepts goods but notifies the seller the goods are non-conforming:
a. cannot recover any damages.
b. can recover the difference between the goods as promised and as delivered, plus
incidental and consequential damages.
c. cannot recover incidental damages.
d. cannot recover consequential damages.
The Uniform Electronic Transmission Act (UETA):
a. declares that a contract or signature may not be denied enforceability just because it
is in electronic form.
b. was passed by Congress in 2002.
c. creates a safe cyberspace environment in which business communications cannot be
intercepted or fraudulently altered.
d. All of the above.
The 1933 Act exempts all but which of the following from its registration requirements?
a. Short-term notes.
b. Treasury stock.
c. Government securities.
d. Annuity contracts.
Jessica was a former employee of Mark. When potential employers called Mark for a
reference about Jessica, he stated she was not a very good worker and had been fired for
excessive absences. He said he believed Jessica was on drugs, but he did not know for
sure. Jessica learned what Mark was saying and sued him. In most states:
a. it was legal for Mark to say what he said if it was true and Mark was not motivated
by ill will.
b. it was legal for Mark to say what he said, since courts have consistently ruled that
former employers are immune from lawsuits for giving references.
c. it was not proper for Mark to say what he said, since courts have consistently ruled
that former employers should not give references over the telephone or in writing
without the former employee’s written authorization.
d. though it was proper for Mark to talk about Jessica’s work-related history, he acted
improperly when he said he thought she was on drugs.
A group of accounting alumni decided to hold a fundraiser to establish a scholarship for
an accounting student. This enterprise is:
a. a limited partnership.
b. a general partnership.
c. a charitable partnership.
d. None of the above.
When a negotiable instrument is transferred, the transferor warrants all EXCEPT:
a. that the transferor is a holder in due course of the instrument.
b. all signatures are authentic.
c. as far as she knows the issuer is solvent.
d. the instrument has not been altered.
Phillip was waiting for a bus at a bus stop. Across the street and down the block, a
mechanic negligently overinflated a tire he was intending to put onto Marshas pickup
truck. The exploding tire injured Marsha and frightened a neighborhood dog, which ran
down the street and knocked Phillip down, injuring his knee. Phillip sued the mechanic.
In applying the Palsgraf v. Long Island Railroad Co. decision to this case, Phillip
would:
a. win because the mechanic was negligent in overinflating the tire, which led to
Phillips injury.
b. win based on negligence per se.
c. lose because the court would apply the doctrine of res ipsa loquitur.
d. lose because, although the mechanics conduct was negligent toward Marsha, it was
not a wrong in relation to Phillip, who was far away. The mechanic could not have
foreseen injury to Phillip and therefore had no duty to him.
One morning, Miles placed a thumbtack on the chair of the office manager where he
worked. He had no quarrel with the office manager, but thought this would be funny.
Two days after sitting on the tack, the office manager was hospitalized with an infection
caused by the tack. Which of the following is correct?
a. Miles actions were negligent.
b. No tort has been committed.
c. Miles committed an intentional tort.
d. Miles is strictly liable.
As set forth in the Restatement Second of Contracts, which of the following duties are
imposed on the parties in the performance and enforcement of a contract?
a. perfect performance; honesty
b. strict performance; team work
c. good faith; fair dealing
d. negotiation; arbitration
E-mation, Inc hires Marvin to steal trade secrets from one of its competitors for
$10,000. Marvin demands half of the money up front. E-mation pays Marvin $5000 but
Marvin decides not to pursue theft of the trade secrets. E-mation sues Marvin for the
return of the $5000. What will the court do with this contract?
a. The court will order Marvin to return the $5000.
b. The court will order Marvin to return the $5000 with interest.
c. The court will order Marvin to obtain the trade secrets.
d. The court will not do anything to help E-mation get its money back.
Preemptive rights are:
a. not legal in the majority of states.
b. designed to prevent dilution of a shareholder’s ownership in the company.
c. required to be offered to shareholders by the Model Act.
d. designed to indemnify managers who act in good faith.
Brandon orally assigned his right to $100 from a lawn mowing contract to Will as a gift.
This assignment is:
a. not valid because it was not in writing.
b. valid even though it was oral and there was no consideration from Will.
c. irrevocable once Brandon has told Will about the gift.
d. not valid because Will gave no consideration for the assignment.
Public policy means the law that comes from the:
a. state legislature.
b. executive branch of the government.
c. courts that decide what would have a negative impact on society.
d. Constitution.
In a breach of warranty case, the buyer must:
a. notify the seller of defects within a reasonable time.
b. bring any lawsuit no later than three years after the defect was discovered.
c. extend the statute of limitations in writing rather than orally if they choose to allow a
longer time for bringing suit.
d. notify the seller of defects within six months of their discovery or they cannot bring a
lawsuit.
Beth owned an original United States flag. She had previously loaned the flag to Ross, a
lawyer, so that he could display the flag on the wall behind his office desk. One day
while visiting Ross in his office and admiring the flag, Beth said to Ross, “You are so
fond of that flag, I would like you to have it!” Ross responded with a gracious “thank
you.” In this situation:
a. Beth has not made a valid, binding gift of the flag because gifts are never binding and
can always be revoked by the donor.
b. Beth has not made a valid, binding gift of the flag because the donor must deliver the
property to the donee, which was not done here.
c. Beth has made a valid, binding gift if Beth agreed to give the flag in exchange for
Ross’s legal services.
d. Beth has made a valid, binding gift because she intended to transfer present
ownership to Ross and Ross accepted the flag.
Laura intends to file a Title VII lawsuit against her employer. Which of the following is
true?
a. Laura is required to first submit her claim to the Equal Employment Opportunity
Commission.
b. Laura must first submit her claim to a state civil rights commission before she may
proceed with her lawsuit.
c. If the EEOC determines Laura has no case against her employer, she may not file a
lawsuit.
d. Laura may initiate a lawsuit or file with the EEOC as she so elects.
The observation that “The one and only social responsibility of business is to increase
its profits” can be attributed to:
a. Justice Potter Stewart.
b. John Akers.
c. Milton Friedman.
d. Jeffrey Sachs.
The states have a severely restricted power to enact laws that affect interstate
commerce. This concept is called:
a. federalism.
b. the undue burden concept.
c. constitutional hierarchy.
d. the dormant aspect of the Commerce Clause.
A corporate charter is filed with:
a. a state’s Secretary of State office.
b. a state’s Treasury and/or Revenue Division.
c. the United States Department of Commerce.
d. All the above.
The Children’s Online Privacy Protection Act:
a. deals only with the collection of data that will be disclosed to children.
b. deals only with collecting, from children, information that will be disclosed publicly.
c. regulates the activities of Internet operators.
d. is enforced by the EEOC.
e. Both b and c.
In the case of In re Couchot, the court held that Kathy Couchot:
a. is liable to Star Bank only for the consideration she directly received from the loan.
b. was not liable for the note, since there was a material alteration.
c. must pay the note since she signed as an accommodation party.
d. fraudulently altered the note.
The Foreign Corrupt Practices Act makes it a crime:
a. for U.S. companies to sell unregistered stock in other countries.
b. for non U.S. companies to sell unregistered securities in the U.S.
c. to “bribe” foreign governments or officials.
d. to conspire to defraud stock purchasers in other countries.
The “business judgment rule” has been replaced by “good faith statutes in most states.
Oceanside entered into a contract with the seller Old Tennessee, for the purchase of
$6,431 worth of plants. The terms were sale and delivery C.O.D. with the express
provision of “No Risk to Supplier,” and a large logo at the top of papers stating:
“NOTICE: ALL SHIPMENTS TRAVEL AT RISK AND COST OF PURCHASER.”
The plants were shipped by an experienced truck common carrier. Upon arrival in New
York, it appeared as though some plants were in a poor state because of excessive heat.
Although the carrier on its own marked the bill of lading to indicate that the
temperature in the truck should be 50 degrees, this was not done for at least a portion of
the journey. Oceanside rejected the shipment by writing “rejected” on the back of the
trucker’s bill of lading. However, the plants were retained “on consignment” at
Oceanside’s premises. There were no other formal written rejections or official notices
of breach or defects given by the buyer to seller at any point prior to trial. Discuss who
has the risk of loss.
Congress can create a statute on any topic at all.
The European Union is one of the worlds most powerful regional associations with 42
member nations as of 2011.
Per capita means each heir gets an equal share of an estate.
Jolene hired Lacy to find a buyer for her house. Adam was interested in buying the
house. If both Jolene and Adam agree, Lacy, a real estate agent, may represent both
parties.
Peter purchased a new car from Monster Motors. As he drove away from the dealership
in the new car, the steering mechanism failed. Peter lost control of the car and plunged
down an embankment. Peter was seriously injured. If Peter sues the car manufacturer
under strict liability, what does he have to prove? Will Peter be successful?
Boris sky dives out of a plane and gets hung up in a tree, hopelessly suspended and
swinging precariously in his parachute from the branches of the tree. Natasha sees that
he is in trouble and comes to his rescue. Once Boris is safely on the ground, he
gratefully promises to give Natasha half of his life savings. When he changes his mind,
Natasha will probably be unsuccessful in enforcing his promise.
It is illegal for shareholders to transfer their stock to a trust and give the trustee the
power to vote the shares.
Myrtle walks into Hank’s Hardware Store and says, “I need metal storage shelves that
can hold 500 pounds.” Hank directs her to a metal storage shelving system, which
Myrtle buys. When Myrtle puts 475 pounds of weight on the shelves, they collapse.
Hank’s Hardware breached the warranty of merchantability.
Travis had too many beers at the baseball game. Ed realized Travis was so intoxicated
he wouldnt know what he was doing, so he got Travis to sign a promise to sell his
motorcycle to Ed for $50. When Travis gets sober, he may void the contract.
Res ipsa loquitur shifts the burden of proof from the plaintiff to the defendant.
Antitrust laws in the United States remained constant through most of the 1900s.
On Monday, Mick puts an offer in the mail to Sheri to sell his guitar for $50. Monday
night when jamming with his buddies, he decides he will really miss his old guitar and
has second thoughts about selling it. Tuesday morning he puts a revocation in the mail
informing Sheri he has changed his mind and the guitar is no longer for sale. The
revocation is effective on Tuesday morning.
Section 2-306 of the UCC expressly disallows output contracts in the sale of goods.
Douros Realty & Construction Co. had a lead on a “prime” piece of real estate.
Although Douros did not have a listing agreement with the seller of the property, he
contacted Kelley Properties. Douros knew that Kelley was looking for a location for a
commercial development. Douros contacted Kelley stating only that he had the “finest,
most outstanding, viable location in the county and it just came on the market.” Douros
said he would reveal the location of the property and the owner’s name if Kelley would
sign an agreement which would require Kelley to pay a 10% commission if a sale of the
property resulted. The agreement was signed. Four months later, Kelley bought the
property after negotiating the deal himself. Kelley claims he does not owe a
commission to Douros because there was insufficient consideration to support the
payment of commission so large. Kelley claims that all Douros did in the entire
transaction was to reveal the location of the property and the owner’s name. Was there
sufficient consideration to make this promise enforceable?
Administrative agencies exist at the federal, state, and local levels.