Kennedy Capital Corporation provides other firms with funds to expand operations. If
Kenney strictly complies with existing laws, the firm will
a. fulfill all business ethics obligations.
b. fulfill no business ethics obligations.
c. fulfill some business ethics obligations.
d. not need to fulfill any business ethics obligations.
Truckers Storage Depot, a private company, wants to build a warehouse on private land.
For this action, an environmental impact statement is
a. prohibited.
b. required.
c. unnecessary.
d. voluntary.
Uri sells 100 cases of vitamins to Wanda, but before she takes physical possession, the
cases are lost. Under the UCC, the parties rights and obligations with respect to the loss
depend on the concept of
a. physical possession.
b. product liability.
c. risk of loss.
d. title.
Kristen receives unsolicited merchandise in the mail. Kristen
a. may keep the merchandise without any obligation to the sender.
b. must return the merchandise within five days to avoid payment.
c. must return the merchandise within fifteen days to avoid payment.
d. must return the merchandise within thirty days to avoid payment.
Eden, the chief executive officer of Flo-Thru Piping Corporation, wants to ensure that
Flo-Thrus activities are legal and ethical. The best course for Eden and Flo-Thru is to
act in
a. good faith.
b. ignorance of the law.
c. regard for the firms shareholders only.
d. their own self interest.
Jamal signs a lease with Kelvin to occupy a house on Leech Lake in Minnesota for the
summer. Jamals tenancy is
a. a fixed-term tenancy.
b. a periodic tenancy.
c. a restrictive covenant.
d. a tenancy at will.
Patsy possesses twenty-four acres of remote, rugged land. Patsy has the right to use the
property, including extracting silver from an existing mine, for life. Patsy also has the
right to lease the land for a period not to exceed her life. Patsys ownership interest is
a. a fee simple absolute.
b. a leasehold estate.
c. a life estate.
d. the power of eminent domain.
Sandy, a businessperson, is convicted of RICO offenses. Sandys penalties may include
a. closing down a business, but not forfeiting its assets or selling it.
b. forfeiting business assets, but not closing it down or selling it.
c. selling a business, but not closing it down or forfeiting its assets.
d. closing down a business, forfeiting its assets, or selling it.
Kofi files a petition for bankruptcy. Kofi must include with the petition
a. a list of creditors and the amount of the debt owed to each only.
b. a list of creditors and the amount of the debt owed to each, a list of property, and a
statement of financial affairs.
c. a list of property only.
d a statement of financial affairs only.
Ollie negotiates an order instrument to Phil by
a. assignment of its rights under a contract.
b. delivery with any necessary indorsement.
c. making an unconditional promise to pay.
d. presenting it in response to a demand by B.
In posts in online chat-rooms, Ramona makes repeated credible threats to Pierce that
put him in reasonable fear for his safety. This is a crime in
a. most states.
b. only a few states.
c. no state.
d. California only.
DeLouse Plastics Corporation pays its executives an excessive amount relative to other
employees and to what executives at competitive companies are paid. This is most
likely to be challenged as
a. illegal and unethical.
b. illegal only.
c. neither illegal nor unethical.
d. unethical only.
Eye Appliance Company and Fast Courier, Inc., wish to combine all of their assets,
stock, and personnel into a new firm to be called Glasses2Go Corporation. This is
a. a consolidation.
b. a merger.
c. an exchange of assets.
d. a takeover.
Paychex Loan Company extends credit in the ordinary course of its business. Under the
Truth-in-Lending Act, Paychex must inform potential borrowers of
a. credit terms offered by other lenders and its own credit terms.
b. only credit terms offered by other lenders.
c. only its own credit terms.
d. only the credit terms that will convince borrowers to “close the deal.
Mary, who is charged with a crime, claims that Nick, a government agent, entrapped
her. For entrapment to be a valid defense
a. Mary must not have been predisposed to commit the crime.
b. Nick must have pressured Mary into committing the crime.
c. Nick must have suggested that the crime be committed.
d. all of the choices.
Business Markets Coalition (BMC), a political lobbying group, wants a certain policy
enacted into law. If BMCs policy conflicts with the U.S. Constitution, a law embodying
it can be enacted by
a. any state legislature and Congress.
b. any state legislature but not Congress.
c. Congress but not any state legislature.
d. none of the choices.
Fact Pattern 21-3
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 21-3. If Dhani is liable under the Securities Exchange Act of 1934,
it will be because the information on which he based his purchase of Eureka stock was
a. a forward-looking forecast.
b. not material.
c. not yet public.
d. not yet true.
Rockstar Software, Inc., develops a new series of performance-related video games.
This software is most likely protected by
a. copyright law.
b. patent law.
c. trademark law.
d. trade secrets law.
Kris presents an instrument that states “pay to the order of Liv to Metro Bank for
payment. This is a special type of draft drawn on a bank, ordering the bank to pay a
fixed amount of money on demand. This is
a. a certificate of deposit.
b. a check.
c. a debit card transaction receipt.
d. a trade acceptance.
Superior Company draws a check payable to Ted. Uri makes a note payable to Vital
Finance Corporation. Primarily liable parties include
a. neither Superior nor Uri.
b. Superior and Uri.
c. Superior only.
d. Uri only.
Jody is an agent for Insta Cross Country Trucking Inc. In the course of Jodys
performance for the firm, Jody pays Heck for certain vehicle maintenance and repair
services. Jodys right to obtain the amount of those payments from Insta arises under the
principals duty of
a. avoidance.
b. cooperation.
c. indemnification.
d. reimbursement.
Fabiola, or any foreign citizen, can bring a civil suit in a U.S. court for
a. a violation of a treaty of the United States only.
b. a violation of a treaty of the United States or of the law of nations.
c. a violation of the law of nations only.
d. no purpose.
Yvon is charged with the crime of theft for taking Zachs briefcase, which Yvon
mistakenly thought was hers. A mistake of fact is a defense
a. if the fact was not reasonably made known to the public.
b. if the mistake negates the mental state necessary to commit a crime.
c. if the perpetrator was intoxicated.
d. under any circumstances.
Cara and Dru are officers of EZ Trucking Corporation. As corporate officers, the rights
of Cara and Dru are
a. determined by their employment contracts.
b. specified in state corporation statutes.
c. the same as those of the directors.
d. the same as those of the shareholders.
Capital Diversified Corporation (CDC) owns assets in Dagistan, a new country in Asia.
The government of Dagistan wants to nationalize all assets owned by foreign firms and
investors. What can CDC do? Can it at least obtain payment for the assets?
Used Car Lots salesperson Vic offers to sell Will, who is twenty years of age, a car
about which Vic intentionally misrepresents several material facts. In reliance on the
misrepresentations, Will buys the car. To prove fraud in this transaction, Will would not
have to show that
a. Vic intentionally deceived Will.
b. Vic misrepresented several material facts.
c. Will is under twenty-one years of age.
d. Will justifiably relied on Vics misrepresentations.
Todos Ltd. agrees to supply United Steel, Inc., with minerals from Venezuela. When the
government is unexpectedly overthrown in a revolution, Todos can obtain the goods
only at a much higher price. United agrees to pay but later files a suit to recover the
difference. The court will most likely rule that
a. a change in government is a risk ordinarily assumed in business.
b. an unforeseen difficulty supported the contract modification.
c. Todos engaged in extortion or the so-called holdup game.
d. Todos had a preexisting duty to supply the goods at the initial price.
Mountain Mining Company, a U.S. firm, owns property in Bolivia. The government of
Bolivia seizes the property for an illegal purpose without paying just compensation.
This is
a. confiscation.
b. defalcation.
c. dumping.
d. expropriation.
Ralph, a van driver for Speedy Delivery Company, causes a multi-vehicle accident on a
city street. Ralph and Speedy are liable to
a. all those who were injured.
b. only those who were uninsured.
c. only those whose injuries could have been reasonably foreseen.
d. only those whose vehicles were closest to Ralphs van.
Harvey puts up a guitar for bids on eWay, a Web auction site. Faith makes the highest
bid and sends the payment, which Harvey receives, but he does not send the guitar to
her. This is online
a. auction fraud.
b. puffery.
c. retail fraud.
d. frustration but not fraud.
Kerin obtains a property insurance policy for her art collection from Lawton Insurance
Company. Kerin can cancel the policy
a. at any time.
b. only at the end of a period for which a premium has been paid.
c. only if Kerin no longer has an insurable interest in the property.
d. only on advance written notice.
Bob writes a check on his account at County Bank to Dona, a famous singer. The
person claiming to be Dona is an imposter, however, named Edy. Edy indorses the
check to Frank, for whom County Bank cashes it. Ultimately, the loss will most likely
fall on
a. Bob.
b. County Bank.
c. Dona.
d. Frank.
Hu believes that he is a victim of a form of employment discrimination that falls under
Title VII of the Civil Rights Act. Compliance with this statute is monitored by
a. employees and job applicants, not an administrative agency.
b. employers and businesses, not an administrative agency.
c. the courts and Congress, not an administrative agency.
d. the Equal Employment Opportunity Commission.
Chiang Ltd., a Chinese firm, imports its goods into the United States and offers those
goods for sale at “less than fair value. This is
a. confiscation.
b. defalcation.
c. dumping.
d. expropriation.
Sweet Candy, Inc., and Tasty Treats Stores enter into a contract for a sale of candy.
Sweet, a merchant who deals in goods of the kind sold, makes express warranties in
connection with the sale. Under the UCC, at the time a contract is formed, an express
warranty can be disclaimed or modified
a. by clear, conspicuous language called to the buyers attention.
b. by implied affirmations of fact relating to the goods.
c. in any way that the seller sees fit for the ordinary purpose.
d. in no way.
Whistleblower statutes protect employers who retaliate against their employees for
“blowing the whistle.
An implied-in-fact contract is implied from the conduct of the parties.
A sale of all of a corporations assets requires the approval of the state.
A seller must provide a written warranty for consumer goods.
A licensed professional can employ an unlicensed agent to perform professional
actions.
Compensatory damages are foreseeable damages that arise from a partys breach of a
contract.
A complex criminal scheme cannot be initiated on a personal computer in a persons
home.
In an ordinary bailment, a bailee has the right to limit his or her liability.
In determining the legality of a merger, a crucial consideration is market concentration.
Title is one concept that the UCC has substituted for the common law concept of risk of
loss.
A future advance against a line of credit must be of the same type as the original
advance to be subject to the same collateral.
The jurisdiction of a state court of appeal is substantially limited to hearing appeals.
If there is a statute that prohibits a certain action, a contract to do it is unenforceable.
For action to be taken during a shareholders meeting, a forum must be present.
All nations have restrictions on imports.
To vote their shares, shareholders must attend a meeting and vote in person.
A consumer who believes that he or she has been or may be victimized by identity theft
may place an alert on his or her credit file.