Business Enterprise Company agrees to sell a commercial office building and parking
garage to City Investments, Inc., which assigns the rights to the realty to Downtown
Properties, LLC. Downtown Properties does not yet exist, but once it is created and
comes into existence, the contract on novation will most likely be
a. quasi.
b. voidable.
c. void.
d. enforceable.
Answer:
Trucks & Trailers, Inc. (T&T), and United Delivery Service enter into a contract for a
lease of trucks. T&T is a merchant who deals in goods of the kind leased. Under the
UCC, an implied warranty of merchantability arises
a. automatically.
b. only if the lessee asks for such a warranty.
c. only if the lessor expresses such a warranty.
d. only in conjunction with sales contracts, not lease contracts.
Answer:
Sara believes that she was rejected for a position at Trek n’ Travel Agency on the basis
of her race. Sara files a suit against Trek n’ Travel under the Civil Rights Act of 1964.
To esÂtablish a prima facie case of employment discrimiÂnation, Sara must show all of
the following except that
a. she is a member of a protected class.
b. she applied and was qualified for the job in question.
c. she was rejected for a position by Trek n’ Travel.
d. other persons of her race hold similar positions with other similar employers.
Answer:
The government of Korea sets a limit on the amount of rice that can be imported from
the United States. This is
a. a dumping duty.
b. an antidumping duty.
c. a quota.
d. a tariff.
Answer:
Paradise Footwear buys a franchise from Quadrangle Athletic Shoes Inc. This relaÂ-
tionship, like all other franchise relationships, is governed by
a. contract law.
b. no law.
c. the Franchise Disclosure Document, or FDD.
d. Article 2 of the Uniform Commercial Code.
Answer:
Sweet Selections is a general partnership that sells candy, cards and flowers. Sweet
Selections has ten partners. Jill and Amy each have a 25 percent interest in the
partnership. All the other members have a 10 percent interest. To pass a management
decision
a. a majority of the partners must agree to the decision.
b. both Jill and Amy must agree to the decision.
c. Jill or Amy must agree to the decision.
d. 30 percent of the partners must agree to the decision.
Answer:
City Manufacturing Corporation conditions shipments of its products to Exurb Stores,
Inc., on Exurb’s agreement not to buy products from Regional Works Company, City’s
competitor. This is
a. an exclusive-dealing contract.
b. a tying arrangement.
c. none of the choices.
d. a price-fixing agreement.
Answer:
Orsa is a shareholder in Pickles & Preserves Corporation. In some states, Orsa may be
liable to the firm’s creditors for unpaid corporate debts if she
a. accepts a dividend knowing that it was paid from retained earnÂings.
b. receives shares issued by the firm for less than fair-market value.
c. fails to fulfill her fiduciary duty to the majority shareholders.
d. sells her shares.
Answer:
Ajay sells ‘Bulk Up’ steroids over the Internet. He is arrested and charged with the sale
of a controlled substance. This is cyber crime, which is
a. a new category of crime that is not related to older types of crime.
b. a crime that occurs in the virtual community of the Internet.
c. a crime that is less real than the same crime in the physical world.
d. no crime.
Answer:
Lucille files a suit against Murray. They meet, and each party’s atÂtorney arÂgues the
party’s case before a judge and jury. The jury presents an adÂviÂsory verdict, after
which the judge meets with the parties to enÂcourage them to settle their dispute. This
is
a. a mini-trial.
b. a summary jury trial.
c. early neutral case evaluation.
d. not a legitimate form of dispute resolution.
Answer:
Roadbuilders, Inc., uses dynamite in its operations. Sky-Hi Fireworx, Inc., stores
explosives in its warehouses. Most likely liable under the doctrine of strict liability for
any injury caused by an abnormally dangerous activÂity will be
a. none of the choices.
b. Roadbuilders and Sky-Hi.
c. Roadbuilders only.
d. Sky-Hi only.
Answer:
Transnational Corporation and United Shipping, Inc., agree to a contract that includes
an arbitration clause. If a dispute arises, a court having juÂrisÂdicÂtion may
a. monitor any arbitration until it concludes.
b. order an arbitrator to rule in a particular way.
c. order a party to bring the dispute to court.
d. order a party to submit to arbitration.
Answer:
Fact Pattern 28-1
Dhani, an accountant for Eureka! Inc. learns of undisclosed comÂpany planÂs to
market a new laptop. Dhani buys 1,000 shares of Eureka stock. He reÂveals the
company plans to Fay, who tells Geoff. Both Fay and Geoff buy 100 shares. Geoff
knows that Fay got her informaÂtion from Dhani. When Eureka! publicly anÂnounces
its new laptop, Dhani, Fay, and Geoff sell their stock for a profit.Refer to Fact Pattern
28-1. Under the Securities ExÂchange Act of 1934, Fay is most likely
a. liable for insider trading.
b. not liable because Fay did not prevent others from profiting.
c. not liable because Fay did not misappropriate any information.
d. not liable because Fay does not work for Eureka!
Answer:
Following negotiations, Office Park, Inc., enters into an informal contract with Quality
Janitorial Company for custodial services for Office Park’s buildings. This means that
the parties’ contract
a. requires no special form.
b. is freely open to either party’s interpretation.
c. is subject to change by either party, within reason.
d. is not yet completely formed.
Answer:
Hiway Trucking Company believes that International Truckers Union (ITU) has
violated a federal labor law. The appropriate step is for Hiway to
a. file an unfair labor practice complaint with the National Labor Relations Board.
b. file a suit in the appropriate federal court.
c. lock out the ITU employees.
d. petition the president of the United States, who has eighty days to make a decision.
Answer:
Fleet Feet Corporation makes athletic shoes. Gloria, a marathoner, files a product
liabilÂity suit against Fleet Feet, alleging a design defect. In deciding whether to hold
Fleet Feet liable, the court may consider an alternative design’s
a. popularity among industrial designers and consumers.
b. weight and heft.
c. aesthetics.
d. advantages and disadvantages.
Answer:
The Occupational Safety and Health Administration (OSHA) discovers that Petro
Refinery, Inc., is violating an OSHAS regulation. If this situation is resolved like most
such disputes, the outcome will be
a. a negotiated settlement.
b. a trial and a fine.
c. a trial and an appeal to a higher authority.
d. a trial and the dissolution of the business.
Answer:
Bayou Development Corporation hires Coastal Brokerage Associates to sell the
condominiums in a building at Bayou Development’s resort. The agency will terminate
a. after the condos have been sold.
b. if the prices of the condos must be reduced to sell them.
c. once Bayou Development obtains insurance to cover the property.
d. when Bayou Development pays Coastal Brokerage its first commission.
Answer:
Location! Realty LLC is a limited liability company. Like other LLCs, for federal
jurisdictional purposes, Location! Realty is most likely a citizen of
a. all states.
b. every state in which its members are citizens.
c. no state.
d. only the state in which it was formed.
Answer:
A company takes a risk by electronically storing their online customers’ credit-card
numbers.
Answer:
Litigation is the process of resolving a dispute through the court system.
Answer:
In the event of a RICO violation, the government can seek the divestiture of a
defendant’s interest in a business.
Answer:
The courts, in interpreting statutory law, often rely on the common law as a guide to
what the legislators intended.
Answer:
Expropriation occurs when a government seizes a privately owned business or privately
owned goods for a proper public purpose and awards just compensation.
Answer:
The most common exception to the employment-at-will doctrine is made on the basis
that the employer’s reason for firing the employee violates fundamental common sense.
Answer:
In contract law, the term consideration refers to the serious thought that underlies a
party’s intent to enter into a contract.
Answer:
Each member of the World Trade Organization is obligated to treat other members at
least as well as it treats the country that receives its most favorable treatment with
regard to imports or exports.
Answer: