Thor Power Products Corporation permits its directors to be elected by cumulative
voting. This
a. allows minority shareholders to be represented on the board.
b. assures directors that they will be selected by their peers.
c. guarantees Thors executive officers of the final choice.
d. ensures against persons who may “cloud the corporate direction.
Global Services Corporation engages in trade practices that may violate antitrust law.
The Federal Trade Commission has the power to act against unfair trade practices under
a. the Clayton Act.
b. the Federal Trade Commission Act.
c. the Sherman Act.
d. no law.
The board of directors of Integral Components Corporation consists of Frida, Gayla,
and Hart. A quorum is the minimum number of these directors
a. who must be at odds in a dispute to call for its resolution.
b. who must be present to validly transact business.
c. that the shareholders may remove from office at any one time.
d. whose positions must be vacant to warrant an election.
Hemisphere Financial Corporation, a U.S. firm, files a suit against Italy in a U.S. court.
Italy claims foreign sovereign immunity. Under the Foreign Sovereign Immunities Act,
this claim is determined by
a. a neutral third-party court.
b. an international law court.
c. an Italian court.
d. the U.S. court in which the suit is filed.
Hydraulic Equipment Company makes its products without required pollution control
technology, causing a discharge of oily waste into the nearby Idle Lake. This activity
can result in
a. a criminal fine or imprisonment only.
b. a criminal fine, imprisonment, or an injunction only.
c. a criminal fine, imprisonment, an injunction, or damages.
d. an injunction only.
In Harleys suit against Irma, the parties meet before going to trial, and each partys
attorney argues the partys case before the other party. A third party renders an opinion
as to how a court would likely decide the dispute. This is
a. a mini-trial.
b. arbitration.
c. a summary jury trial.
d. early neutral case evaluation.
Crater Tools Company is subject to regulations issued by the Occupational Safety and
Health Administration (OSHA). Like other federal administrative agencies, the OSHA
was created by
a. Congress, through enabling legislation.
b. the Federal Trade Commission, through the rulemaking process.
c. the president, through an executive order.
d. the U.S. Department of Labor, through a final order.
Fact Pattern 8-3
Dex and Carmen are in an auto accident. Dex offers Carmen $2,000 if she promises not
to pursue her potential legal claim against Dex. Carmen agrees. Later, Carmen
discovers that it will cost $1,500 to repair her car and $4,000 to cover the medical
expenses for a latent injury.
Refer to Fact Pattern 8-3. The agreement between Dex and Carmen is
a. a covenant not to sue.
b. an accord and satisfaction.
c. a release.
d. promissory estoppel.
Riley, an engineer for Shur-2-Gro Seed Corporation, learns that Shur-2-Gro has
developed a corn hybrid to triple the output of any farm. Riley buys 20,000 shares of
Shur-2-Gro stock. He tells Tess, who buys 15,000 shares. After the new hybrid is
announced publicly, the price of Shur-2-Gro stock increases. Riley and Tess sell their
shares for a profit. Under the Securities Exchange Act of 1934, liability may be
imposed on
a. none of these parties.
b. Riley and Tess only.
c. Riley only.
d. Riley, Shur-2-Gro, and Tess.
First Community Bank agrees to accept a check by setting aside sufficient funds to
cover the amount. This check is considered
a. cashed.
b. certified.
c. deposited.
d. provisionally credited.
HVAC Parts Company charges different buyers different prices for identical goods.
HVACs prices are subject to evaluation under
a. the Clayton Act.
b. the Federal Trade Commission Act.
c. the Sherman Act.
d. no antitrust law.
Lloyd and Milly are employees of NuTech Corporation. They have the same job. Under
the Equal Pay Act, NuTech can legitimately pay Lloyd more than Milly on the basis of
a. Lloyds greater production only.
b. Lloyds greater production or seniority.
c. Lloyds greater seniority only.
d. neither Lloyds greater production nor his greater seniority.
Fact Pattern 8-1
Daves Hobby Town and Evas Yarn Shoppe are adjacent stores with adjoining parking
lots. Dave offers Eva a discount on purchases from Daves store if Eva will not tow the
cars of Daves customers who park in Evas lot.
Refer to Fact Pattern 8-1. Daves discount is legally sufficient consideration
a. because it is a promise of something of value.
b. only if Dave adds a cash rebate.
c. only if Eva uses it.
d. under no circumstances.
Bret enters into a contract with Collegiate University over the Internet to take an online
course titled “Internet Law. This is an e-contract because
a. the contract was entered into over the Internet.
b. the contract was formed between a student and a university.
c. the contract will be performed online.
d. the subject matter of the contract is “Internet Law.
Mias voluntary petition for bankruptcy is found to be proper. The order for relief is
effective as soon as
a. Mia files the petition.
b. Mia posts a bond to cover the costs of the proceedings.
c. Mias creditors agree to the terms.
d. the trustee collects and distributes the property of Mias estate.
Network Corporation files a suit against Omega, Inc., alleging that Omega breached a
contract to sell Network a computer system. Network is
a. the appellant.
b. the appellee.
c. the defendant.
d. the plaintiff.
Good Tire Company and Hiway Auto Service enter into a contract for a sale of tires.
Good Tire is a merchant who deals in goods of the kind sold. Under the UCC, an
implied warranty of merchantability arises
a. automatically in sales contracts.
b. only if the buyer asks for it.
c. only if the seller does not expressly disclaim it.
d. only in conjunction with lease contracts, not sales contracts.
Bud approves on behalf of Codybut without authorizationa contract with Dik to build a
new silo. Cody does not ratify the contract. Later, Dik tries to enforce the deal. This
attempt will be
a. partly successful.
b. partly unsuccessful.
c. totally successful.
d. totally unsuccessful.
Rusty and Sylvia are shareholders of Triad Hotel Corporation. Triads directors fail to
declare a dividend. Rusty and Sylvia could succeed in asking a court to order the
directors to meet and declare a dividend
a. if Triad has sufficient earnings available to pay a dividend.
b. if Triad has cash reserves, even if earmarked for a different purpose.
c. if withholding a dividend is an abuse of the directors discretion.
d. under no circumstances.
Delta, Inc., agrees to assume a debt of Excel Company to First State Bank. The
agreement is not in writing. To be enforceable, the promise must be for the benefit of
a. any party.
b. Delta.
c. Excel.
d. First State.
Ellen publishes a book titled First Place, which includes a chapter from Franks
copyrighted book Great Racecar Drivers. Ellens use of the chapter is actionable
provided
a. consumers are confused.
b. Ellens use is intentional.
c. Ellens use reproduces Franks chapter exactly.
d. Ellen does not have Franks permission.
Skyla and Terry want to form and do business as Unique Boutique Corporation. The
state statute governing the formation and operation of their corporation is most likely
guided by
a. city or county corporate codes.
b. the Entrepreneurs Corporate Handbook.
c. the federal Administrative Procedure Act.
d. the Revised Model Business Corporation Act.
Region Construction Company has a right to drive its trucks across Staple Business,
Inc.s property, which is adjacent to Regions office. This right is
a. a leasehold estate.
b. a license.
c. an easement.
d. a profit.
Frida hires Gert, a real estate broker, to act as her agent to sell her house. The house
burns down before being sold. The agency agreement is likely
a. still in force if Frida gives Gert additional consideration.
b. still in force if Gert does not tell prospective customers.
c. terminated by mutual consent of the parties.
d. terminated by operation of law.
Boris programs software to prompt a computer to continually crash and reboot. Boriss
goal is to install this program on various companies computer systems without the
companies knowledge. The program can reproduce itself, but must be attached to a host
file to travel from one computer network to another. This program is
a. a hacker.
b. a bot.
c. a virus.
d. a worm.
Elmer can write checks on his account at Finance Bank. Gina steals the checks, forges
Elmers signature, and cashes the checks at Finance. The bank is excused from any
liability if, after receipt of the first forged check, Elmer fails to report the forgeries
within
a. five business days.
b. fourteen consecutive days.
c. one year.
d. three years.
Fact Pattern 22-1
Cardio, Inc., makes and sells Drawdown, the most prescribed name-brand heart
medication. Emitate Corporation has the potential to make a generic version of the
same drug.
Refer to Fact Pattern 22-1. A court would most likely rule that the agreement between
Cardio and Emitate is
a. a deal that neither restrains trade or harms competition.
b. a legal restraint of trade.
c. a per se violation of the Sherman Act.
d. subject to analysis under the rule of reason.
Frank and AgriShip, Inc., enter into a contract for AgriShip to transport a silo of
soybeans for which Frank agrees to pay. When AgriShips schedule conflicts, the firm
contacts Hybrid Transport Company, to which AgriShip “assigns all rights under the
contract. This transfer is
a. an assignment and a delegation.
b. an assignment only.
c. a delegation only.
d. neither an assignment nor a delegation.
Fact Pattern 9-2
Grover contracts to sell two tracts of land to Hank. Both parties believe that the two
tracts are adjacent, but in fact they are not. Grover is still willing to sell the land, but
under these circumstances the deal would adversely affect Hank.
Refer to Fact Pattern 9-2. The parties belief about the adjacency of the property is
a. a bilateral mistake.
b. a fraudulent misrepresentation.
c. a unilateral mistake.
d. unconscionable.
Precision Press Corporation, a disk manufacturer, sells its DVDs in certain quantities to
Quik Shows, a retailer, for $275 but charges Rite Views, a competitive retailer, $350.
This is most likely a violation of
a. the Clayton Act.
b. the Federal Trade Commission Act.
c. the Sherman Act.
d. no antitrust law.
Misrepresentation of an opinion is an element of fraud.
If it can be shown that a trespass to land was warranted, a complete defense exists.
A collective mark distinguishes products that are likely to be of interest to collectors.
The dishonor of an instrument relieves secondary parties of liability.
If a buyer breaches a contract while the seller is still in possession of the goods, the
seller can resell the goods and hold the buyer liable for any loss.
Waterfront Hotels Corporation in Boston offers a job to Carol, who lives in Denver.
Carol orally agrees to work for Waterfront for two years. She moves her family to
Boston and begins work. Three months later, she is fired for no stated cause. She files a
suit against the employer for reinstatement or pay. Waterfront pleads the lack of a
written contract. In whose favor is the court likely to rule, and why?
Shareholders have no responsibility for the day-to-day management of a corporation.
Recreation & Sports Equipment Corporation sells a product that is capable of seriously
injuring consumers who misuse it in a foreseeable way. Does the firm owe an ethical
duty to take this product off the market? What conflicts might arise if the firm stops
selling this product?
Antidumping duties are the responsibilities of international environmental polluters.
A power of attorney can be given only to an actual attorney.
Rules and regulations adopted by federal administrative agencies are compiled in the
Code of Federal Regulations.
Once an employee receives workers compensation, he or she can maintain a suit against
the employer for negligence.
A bank that pays a customers check with a forged drawers signature can generally pass
the loss onto the customer.
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 security interest in Efrems present inventory
and any after-acquired inventory as collateral for the loan. The bank properly perfects
the security interest 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 entire 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.
A person may not be responsible for a criminal act if, as a result of a mental defect, he
or she did not appreciate the wrongfulness of the act.