The directors of MegaCorp learn that an outsider is planning on buying enough voting
stock to get herself elected to the board of directors. MegaCorp, which has cumulative
voting, quickly puts together a vote of shareholders to eliminate the company’s
cumulative voting procedure. The shareholders vote to do away with cumulative voting.
The outsider, Dawn, who wanted to get herself elected to MegaCorp’s board, claims that
the company has committed an illegal act. Is she right?
a. Yes. The United States Supreme Court has ruled that a publicly held corporation that
purposefully sets about to eliminate cumulative voting to prevent a person from getting
herself elected to the board has acted illegally.
b. Yes, but only if the company is incorporated in a state that has adopted the Model
Act.
c. No, provided the company did not change its cumulative voting provision solely for
the purpose of preventing a particular person from taking advantage of that right.
d. No. Under the Model Act, regardless of MegaCorp’s motives, it had the right to act as
it did.
In a consignment contract, the consignee:
a. holds title.
b. takes the goods intending to resell them, and the goods are subject to the claims of
the creditors of the consignee.
c. is the party who leaves goods with the consignor to be resold.
d. cannot transfer title since the consignor retains the title.
Max, Jenny, and Craig are partners. They have purchased an elegant Victorian home
and converted it into an office for their partnership. Craig decides to use the
partnership’s office to host some evening parties. Craig has a sideline business of
arranging expensive gatherings and charging each person a handsome price to attend
these “elite” parties. When Max and Jenny find out what Craig is doing, they demand
that he pay them for the use of the property. How much money, if any, is Craig required
to pay the partnership?
a. Nothing. He is free to use partnership property for his own uses.
b. Nothing, but he will be removed from the partnership for violating his fiduciary duty.
c. He must turn over any profits he earned from this activity.
d. He must pay the fair market value for the use of the house.
John loans George money and they sign a written agreement whereby George will
repay John in monthly installments. Is this loan subject to the Truth-in-Lending Act?
a. Yes, if the loan is for more than $1,000.
b. Yes, if John and George live in different states.
c. No, if John is not in the business of offering credit.
d. No, if John and George are related.
The last protected trait added by Congressman Smith of Virginia to the bill which
became Title VII of the Civil Rights Act of 1964 was:
a. sex (gender).
b. sexual orientation.
c. national origin.
d. race.
In the case of Lindholm v. Brant, the court ruled:
a. Brant was a BIOC, entitled to keep the painting in question.
b. Brant could not be a BIOC since the seller had a reputation for dishonesty.
c. Brant could not be a BIOC because he did not act in good faith.
d. no entrustment was involved because Malmberg was not a “merchant who deals in
goods of that kind.
A condition:
a. is created only when the phrase “provided that or a similar phrase introduces it.
b. is an event that must occur before a party becomes obligated under a contract.
c. must be expressly stated, although it can be created by informal language.
d. will not be enforced by the courts unless formal language is used, regardless of the
intent of the parties to create a condition.
The duty of fair representation created by the NLRA and the LMRDA requires that:
a. a union represent all members impartially and in good faith.
b. a union must pursue any members grievance against the employer.
c. an employer, in communications with employees during a union organizing effort,
must fairly represent the effects it believes a union will have on the company.
d. the NLRB certify only proposed bargaining units that it thinks the union can properly
represent.
Oxtron, Inc., a U.S. company, and Leer, an Argentinean company, orally agreed to a
contract under which Oxtron is to ship medical devices to Leer. The contract is
governed by the CISG. Which statement is correct?
a. The contract is not enforceable because it is oral.
b. Whether the contract is enforceable without a written agreement depends on the
value of the medical devices.
c. Whether the contract is enforceable without a written agreement depends on whether
the medical devices are a necessity.
d. The contract is enforceable without a written agreement.
A court:
a. will enforce any express conditions intended by the parties.
b. may refuse to enforce an express condition intended by the parties if the court
determines it is unfair and harmful to the general public.
c. requires strict performance if a clause of the contract expressly demands it.
d. applies an objective standard whenever ruling on a personal satisfaction contract.
Which of the following statements is not true regarding the buyer’s right to cover?
a. The buyer must cover.
b. The measure of damages in a cover is the difference between the cover price and the
contract price.
c. Cover must be done by reasonably obtaining substitute goods.
d. Consequential damages can be recovered in addition to the cover damages.
A study by the Government Accountability Office found:
a. substantial market power in the four largest accounting firms. The Big Four audit 97
percent of all public companies in the United States that have sales over $250 million.
b. evidence of collusion among the top accounting firms in the United States.
c. conclusive evidence that consolidation in the accounting industry led to an increase
in audit fees and a decline in independence.
d. All of the above.
The Consumer Leasing Act requires a lessor to disclose in writing all EXCEPT:
a. number of payments.
b. penalties for late payments.
c. lease rates of the competition.
d. penalties for early termination.
Which of following must be included in a federal Environmental Impact Statement?
a. Available alternatives to the proposed action.
b. Means to mitigate adverse environmental impacts.
c. Direct and indirect effects of the proposed action.
d. All of the above.
After the plaintiff has presented her case, the defendant may be granted a:
a. directed verdict.
b. summary judgment.
c. judgment n.o.v.
d. judgment on the pleadings.
Which statement is true about definitions in a contract?
a. All ambiguous terms must be defined.
b. Definitions must be grouped together in a separate section of the contract.
c. Definitions must be located on the same page where the term is first used.
d. The parties to the contract may be defined with shorter designations than their actual
names.
Which of the following offers are considered to be irrevocable for a given period?
a. Firm offers.
b. Option contracts.
c. A writing signed by a merchant offering to hold open an offer for the sale of goods
for a stated period.
d. All of the above.
The Miranda warning insures that the criminal suspects understand their constitutional
rights relating to:
a. search and seizure.
b. self incrimination.
c. double jeopardy.
d. having a jury trial.
The Good Housekeeping Seal of Approval is an example of a:
a. trademark.
b. service mark.
c. collective mark.
d. certification mark.
The executives of Jornaginn Corporation have decided they need to sell 50,000
additional shares of stock to finance their expansion plans. The executives:
a. cannot sell that many shares unless they were authorized initially in the corporate
charter.
b. can sell as many shares as the market will bear.
c. are limited by the number of shares authorized in the corporate charter, but this
number can be increased by amending the charter and paying a fee.
d. can sell the shares only if the shares have a par value which is close to the current
market price.
Zoe, who works as a retail clerk, wishes to talk with her co-workers about organizing a
union. Her employer forbids her from talking with other workers about union activity in
the presence of customers and threatens to fire her if she joins the union. Does the
employer have a legal right to make this threat to Zoe?
a. Yes, the employer may limit time and place of discussions about union organizing.
b. Yes, but only if expressly authorized by state law.
c. No, an employee has the right of free speech at anytime.
d. No. An employee may limit the time and place of conversation, but may not threaten
to fire the employee.
Trein, Inc. entered into a one-year, $1 million contract with Mia, a sports celebrity, to
promote Trein’s products. E-presto Inc., a competitor of Trein, was interested in having
Mia promote its products and knew of her contract with Trein. E-presto offered Mia a
three-year, $5 million contract. Mia left Trein and signed with E-presto. Which
statement is correct?
a. Trein is liable for tortious interference with a contract.
b. Mia is liable for tortious interference with a contract.
c. E-presto is liable for tortious interference with a contract.
d. Both Mia and E-presto are liable for tortious interference with a contract.
Ernest invents a novel, useful, nonobvious product. He:
a. must apply for a patent within one year of selling the product commercially.
b. is entitled to a patent over someone else who invents the same product if he is the
first to file an application.
c. may receive patent protection for two years by filing a simpler, shorter, cheaper
provisional patent application while he is working on his complex, regular patent
application.
d. may sell his product for up to five years to see how well it sells before going through
the complex process of filing a patent application with the PTO Office.
In a comparative negligence state, if the plaintiff in a negligence lawsuit is found to be
30 percent negligent, the plaintiff would recover:
a. 70 percent of the damages.
b. all of the damages.
c. none of the damages.
d. 30 percent of the damages.
“Hacking” is:
a. gaining unauthorized access to a computer system.
b. a major crime.
c. illegal under the federal Computer Fraud and Abuse Act, which applies to any
computer attached to the Internet.
d. All of the above are correct.
Francenie has a checking account at Corner Bank. She wants tickets to an upcoming
concert. She writes a check to Ticketmaster for the cost of two tickets. In this scenario:
a. Francenie is the drawee, Corner Bank is the drawer, and Ticketmaster is the payee.
b. Francenie is the maker, Corner Bank is the drawee, and Ticketmaster is the payee.
c. Francenie is the drawer, Corner Bank is the drawee, and Ticketmaster is the payee.
d. Francenie is the payee, Corner Bank is the drawer, and Ticketmaster is the maker.
Which of the following requires companies to file annual reports containing audited
financial statements?
a. The 1933 Act.
b. The 1934 Act.
c. Regulation A.
d. Regulation B.
Mason bought a rotisserie in preparation for a party he was planning. When he put a
chicken on the rotisserie, it would not rotate, but stayed in one position where it burned
the chicken on one side and left it raw on the other. When he returned the rotisserie to
the store, the salesperson disclaimed any responsibility because he had never told
Mason the rotisserie would rotate the food as it cooked. Does Mason have any
recourse?
a. No, the salesperson did not make any express warranties.
b. Yes, the salesperson made an express warranty just by selling the goods.
c. Yes, although the salesperson did not make any express warranties, the UCC imposes
an express warranty on the sale.
d. Yes, although the salesperson did not make any express warranties, the UCC imposes
an implied warranty of merchantability under which the rotisserie is guaranteed to be fit
for the ordinary purposes for which it is used.
Which of the following played a role in the creation of the U.S. government by solving
the problem of federalism?
a. The Visigoths.
b. The Iroquois Native Americans.
c. Confucius.
d. Alexis de Tocqueville.
Office Plus, an office supply store, ordered 600 blank CDs from Curtis Co., a
manufacturer of computer products. Office Plus placed the order using a preprinted
purchase order form; Curtis acknowledged the order by sending a preprinted acceptance
form back to Office Plus. Unlike Office Plus’ form which says nothing about packaging,
Curtis’s form specifies that the CDs will be packaged in cases of 10 CDs per box, 10
boxes per case. Which statement is correct?
a. The UCC does not cover computer CDs.
b. Curtis’s packaging term is a different term which materially changes the offer. There
is no contract.
c. Curtis’s packaging term is an additional term and therefore a part of the contract
unless Office Plus promptly objects to the term.
d. The UCC does not cover the contract because both parties are merchants.
Statutory law is to legislative bodies as common law is to:
a. England.
b. precedent.
c. courts.
d. administrative regulations.
Liquidated damages are awarded to parties who have experienced an injury to their
legal rights but have no actual loss.
In 1970, Continental Airlines agreed to buy a number of DC-10 airplanes from
McDonnell Douglas Corporation (MDC). Their contract included a limited warranty in
which MDC undertook certain servicing obligations and an exculpatory clause in which
Continental waived “all other remedies” against MDC. On March 1, 1978, one of these
DC-10s was nearing takeoff at Los Angeles International Airport when the two front
tires of its left-side landing gear blew out. The pilot aborted the takeoff, but the
uncushioned landing gear tore through the tarmac and broke away from the plane. This
ruptured the left wing fuel tank, which burst into flames. The emergency escape slides
failed, apparently due to the heat of the fire. Some passengers evacuated through the
copilot’s window, others jumped from the exits. Four passengers died, and over 70
suffered injuries. The plane was destroyed. It should be noted that the exculpatory
clause did not prevent the passengers from suing Continental and/or MDC. Continental
sued MDC and MDC defended based on the exculpatory clause. Is this type of clause
enforceable? Discuss exculpatory clauses, particularly the one involved here.
A design patent protects the appearance of an item and is valid for 14 years.
In a Chapter 13 bankruptcy, creditors cannot force a debtor into bankruptcy; nor can
they vote to confirm or reject a plan of reorganization.
Many states prohibit a seller from disclaiming implied warranties in the sale of
consumer goods.
Directors have the authority to manage the corporate business.
Barnett was orally hired by Paula to locate desirable real estate that she could use for
rental property. She stated she wanted to find a four-plex that could be purchased for
under $200,000 that could be rented for at least $1,000 per month per unit (which
equates to $4,000 rental per month for the property). Barnett located a four-plex that
could be purchased for $160,000 and was renting for $1,200 per unit. It was such a
good deal that he purchased it for himself. About two months later he found a second
property that was listed for $199,000 and rented for $1,000 per unit. Paula purchased
the property. Afterwards, she learned that Barnett had bought the $160,000 four-plex for
himself without telling her about it. Paula believes that Barnett has acted improperly.
Barnett claims that he did what she asked — he found a property for under $200,000 that
rented for $1,000 per unit. He also claims that since their agreement was oral, he has a
legal defense if she pursues the matter in court. Does Paula have any legal recourse
against Barnett? Explain.
Identify and explain the parts of the following case name: Palsgraf v. Long Island
Railroad Co., 248 N.Y. 339, 162 N.E. 99, New York Court of Appeals.
Palsgraf v. Long Island Railroad Co. addressed the issue of furnishing alcohol to
minors.
Consideration can be a promise or an act.
Because of the concept of stare decisis, the U. S. Supreme Court, in interpreting a
statute in 2009, will necessarily interpret certain statutory language in the same way as
the U. S. Supreme Court interpreted the same statutory language in
Jasmine agrees to purchase 1500 tons of recycled glass from Louie, the price to be
determined at the time of delivery. Is such an agreement enforceable? Compare the
common law with Article 2 of the UCC.
Negotiable instruments are normally issued to fulfill a contract.
Abigail signed a contract to purchase a new car from Wolf’s Auto Sales Company. The
seller breached its agreement by not delivering the car. Abigail went to another car
dealer and purchased the same model of car at the same price. Although she had
experienced a legal injury, Abigail has no actual financial or other damages as a result
of the breach. If Abigail sues and wins, what type of damages will she be awarded?
The landlord’s duty to provide quiet enjoyment of the premises and the landlord’s duty
to deliver and maintain the premises in a habitable condition are one and the same.
Explain what the General Agreement on Tariffs and Trade (GATT) is and give pro and
con arguments concerning this agreement.