BLW 411 Test 3

Who is the presiding officer at an agency's adjudication hearing?

An administrative law judge.

Which of the following is an example of a suggestive trademark?

Netflix

The president's authority to exercise power over administrative agencies is derived from

The constitution

Which of the following unsecured creditors has first priority?

The court, for it's costs

Michelle is driving at night when a policeman pulls her over for a blown taillight. When he approaches the car, he shines his flashlight into the car and sees a bag of white powder on the back seat. The officer orders Michelle out of the car and then reaches in to seize the bag. A quick examination leads him to believe that the bag contains cocaine. He arrests Michelle and takes her to the station. Was the officer's search legal?

The officer conducted a legal search of areas which were openly visible because he may look into the car and may use simple mechanical devices, such as a flashlight, to aid his search without a warrant.

In an LLP, any income is taxed

based on the partners' distributive share.

Trade secrets are protectable

for as long as the company desires.

A trademark can be any of the following except a

formula

Eve is a promoter and has approached Adam with an investment opportunity. Eve anticipates a generous profit and informs Adam that he too can realize a generous profit. This opportunity is not being offered to others. Assuming all other requirements to classify this as a security are in evidence, the commonality of this transaction would be described as a

vertical commonality.

Matt loaned money to Josh and received a signed security agreement from Josh. To make sure he has priority as a creditor, Matt could

take possession of the collateral.

Han wants to start a personal training business. He should choose a sole proprietorship entity if he seeks

the ability to avoid management conflict.

Whether a dividend is paid depends on

the board of directors agreeing to pay the dividend.

Several people have decided to go into business as an LLC. To cover all contingencies, they want to specify what constitutes an act of dissociation and outline the procedures upon dissolution. This information would be included in

the operating agreement.

A corporation comes into existence when

the state accepts the articles of incorporation and issues the charter.

A disadvantage of the sole proprietorship is

the unlimited liability of the principal.

Privately held corporations may issue a ________ in lieu of conducting a formal annual meeting.

unanimous consent resolution

Boris, Carina, and Theo have decided to go into business as a limited partnership importing and selling exotic spices. Boris and Carina will manage the business, and Theo will have no role in the day-to-day operations. Boris and Carina have each invested $500,000, and Theo has contributed the building and land that the business will be operated from. Alina, a customer, contracts a rare disease from a contaminated spice sold by the company and sues. Alina is awarded a judgment for $5 million. After she exhausts the assets of the partnership, having the property and building sold, and seizing all other property, $3 million remains unpaid.

Boris and Carina each owe $3 million jointly and severally, so Alina may sue one or both of them; Theo has no additional liability.

Brenda is the CEO of a large corporation. While presenting a proposal to a commercial bank for a corporate loan, she offered the bank's commercial loan manager a $10,000 "gift" for favorable treatment. Is Brenda guilty of bribery?

Brenda is not guilty of bribery

The reorganization plan is unique to what type of bankruptcy filing?

Chapter 11

Claudia makes $30,000 a year. The median income for her state is $28,000. She owes over $50,000 in various debts and is considering ways to address her situation. Which of the following is not one of her options to fix her debt issues?

Chapter 7 bankruptcy.

Principals generally have no personal liability for the business entity's debts regarding

Corporations

Which of the following is a primary disadvantage of choosing to form corporations as opposed to other forms of business?

Costs and formalities of setup.

A creditor with an interest in real property is called

A mortgagee

Which of the following debts may be discharged in a bankruptcy?

A new auto purchased 90 days before filing.

Stefan has opened a sole proprietorship bicycle shop. The business shows a net income of $100,000. Stefan took a salary of $40,000. The remaining money is left in the bank.

At tax time, Stefan pays taxes on $140,000.

Many corporations choose to incorporate in Delaware. Which of the following is NOT an advantage to incorporating in Delaware?

Delaware's tax structure provides significant tax benefits to out-of-state corporations incorporating in the state of Delaware.

Ben is the manager of a branch of a large bank. He has regularly taken money from customers' accounts for his own use and changed the bank records to cover his actions. Ben is guilty of

Embezzlement

Bankruptcy is primarily governed by

Federal Statues

Giana is the executive secretary to the CEO of a large public corporation. One day her boss takes her into a back room containing numerous cardboard file boxes and three shredding machines, and he tells her to shred every document and file in the room. He then says, "We're under investigation by the SEC, and if they get their hands on anything in this room, we're ruined." She asks what is going on and is told that the company has been perpetrating fraud for years and needs to destroy all the evidence. If Giana then agrees to shred the documents and files, what, if anything, could happen to Giana?

Giana could be imprisoned for up to 20 years if she shreds the documents.

Officer Tom stops Kathy because she looks like a criminal to him, and after a pat down finds marijuana in her pocket. He then uses the drugs to justify obtaining a warrant to search her home for more drugs. The search uncovers 8 kilos of cocaine. What evidence, if any, would be admissible at trial?

Neither the marijuana nor the cocaine would be admissible at trial.

The FTC publishes a rule regulating TVs and Blu-ray DVD players for public comment but revises it to include traditional DVD players also. Should the FTC republish the revision?

No, because the revision is a logical outgrowth of the original rule.

Which of the following is NOT a factor used by courts to determine whether to pierce the corporate veil?

Poor management and decision making by an inadequately trained or educated manager.

The FDA is proposing new rules for over-the-counter pain medication. The agency expects to hear from various pharmaceutical groups in favor of the regulation and from several medical associations on the public health consequences of the proposed change. This is an example of what rulemaking phase?

Public Comment

The Securities Act of 1934 focuses on the

Secondary Market

Wayne is the president and CEO of a corporation. He owns 25 percent of the company's total stock and has been selling large chunks of his holdings over the past three months. If the SEC investigates him for short-swing profits, it would do so under

Section 16 of the 1934 Act.

In 2002, Martha Stewart, the media mogul and CEO of Martha Stewart Living, was prosecuted for insider trading regarding her sale of ImClone stock. Her stockbroker had informed her that Samuel Waksal, the CEO and chairman of ImClone, was selling substantial amounts of his stock in the company, so she then sold her ImClone holdings. What was Martha's fate?

She was found guilty of obstructing justice in a securities investigation and went to jail.

What is the first step in the agency rulemaking process?

Study and research of alternatives.

If an LLP does not have a partnership agreement, which of the following will courts look to in order to resolve internal management disputes?

The Revised Uniform Partnership Act or the Uniform Partnership Act if the RUPA is not adopted.

Mike raped Kathy in the parking lot of Tom's Pub. The attorney general/district attorney's office prosecuted Mike on rape charges. Subsequently, Kathy filed a lawsuit against Mike for money damages. Classify each legal action.

The attorney general/district attorney's case was a criminal case; Jane's lawsuit was a civil case.

Sam is a promoter acting on behalf of a corporation that has not yet been fully incorporated. Under the Revised Model Business Corporation Act, if Sam acts on behalf of the yet-to-be-formed corporation, who is liable in the event of a breach of contract?

The corporation becomes liable once formed, and Sam will be shielded from liability.

Mike has written a novel. When, if ever, would Mike's novel be copyright protected?

The novel is copyrighted automatically after completion.

Happy Hops Brewery, Inc., has found that its business is expanding very quickly. The decision to hire three new delivery drivers would be made by

The officers

Jennifer and Angela are both broke. They have sold most of their possessions, and neither can find a job. One evening they decide to rob a bank. They agree that Jennifer will enter the bank pretending to have a bomb strapped to her chest and Angela will drive the getaway car. The next morning they drive to the bank, and while they are waiting for it to open, they see a church next door. Hoping for divine help while committing the robbery, they step into the church to pray. Suddenly realizing the error of their ways, they abandon their plans and sign up to become nuns.

They are guilty of conspiracy.

Toby was elected to the board of trustees of the Chi-Town Corporation (CTC) four years ago. He loves to brag about his position as a board member, but he cares more about the prestige than doing a good job. As a member of the board at CTC, Toby serves on several committees. However, although the board and all of the committees meet on a regular basis, Toby has never attended any of these meetings and doesn't participate in any board decisions. If the insiders at CTC enter into a series of bad business deals that cause CTC to suffer a financial loss, what is Toby's potential liability?

Toby will be liable because his inattention will likely be considered negligence and a breach of his fiduciary duty of care.

Cynthia hates writing term papers and reports, so when she receives an assignment to write a paper for her law class, she calls her friend Stephanie and agrees to pay Stephanie to write the paper for her. Stephanie, instead of writing the paper, copies a paper from a small, remote law journal that publishes faculty-written papers from throughout the world online. When the plagiarism is discovered, an infringement claim is brought. Cynthia is guilty of

Vicarious infringement

When does an initial public offering (IPO) occur?

When a privately held corporation seeks to become a publicly held corporation.

An ex post facto law is

a law that criminalizes an act that occurred before the law was enacted.

Which of the following require(s) a formal filing to be recognized as a valid business entity?

a limited partnership

A franchise should be thought of as

a method of conducting business.

With regard to taxation of partnerships,

a partnership must file an information return.

Dissolving a limited partnership requires:

a unanimous vote of the general partners and consent of any limited partner who owns a majority of the rights to receive a distribution as a limited partner.

Le Maillot Jaune, Inc., is a sports clothing retailer incorporated in France. If it transacts business in Chicago, Le Maillot Jaune, Inc. would be characterized as

an alien corporation.

The concept that in order to pass judicial muster, the evidence must show that the agency made its final decision based on a consideration of relevant factors without any clear errors of judgment is known as the

arbitrary and capricious standard

Roger is a limited partner in a business. To retain his limited liability protection, he must not

assume management responsibilities.

Chris wanted to get a loan from the bank, but he had bad credit. In order to get the money, he convinced Eric to cosign as a surety. Now Chris has stopped making the payments. When is Eric liable for repayment of the loan?

at any point

In 1997, the IRS made LLCs more attractive by

eliminating strict operating requirements for qualifying as a partnership for tax purposes.

Evidence obtained from an illegal search may not be used against the defendant. This is called

fruit of the poisonous tree.

Under the exclusionary rule

illegally obtained evidence may not be introduced at trial.

The SEC is an independent agency that

is not under the direct control of the president.

Currently, LLPs are often used to protect family businesses as they provide a way to resolve

issues regarding transition from one generation to another.

Typically, day-to-day decision making in a manager-managed LLC is performed by

its managing members.

The safe-harbor exemption from SEC regulations involves

offerings with specified dollar limitations and/or limitations on the number of nonaccredited investors.

The ability to distribute earnings without incurring double-level taxation is an advantage of a

pass-through entity.

A patent holder should mark its product as patented in order to achieve the fullest protections. Each of the following is an acceptable means of marking the product except

placing a P in a circle on the item or its packaging.

The Securities Act of 1933 focuses on the

primary market.

An LLC offers principals the same liability coverage as that of

principals in corporations with pass-through taxation.

Thirteen sorority sisters decide to start a dog-walking business. They incorporate under the name Pro Canine Walkers, Inc., and advertise their services throughout the city in newspapers and on flyers they post. All stock is owned by the 13 principals, and none is offered to anyone outside the 13. This corporation would be classified as a

privately held corporation.

The origins of LLPs were rooted in protection of

professional service firm partnerships.

Cybersquatting describes the practice of

registering multiple domain names and then selling them back to companies at inflated prices.

Penalties for violations of the Securities Act of 1933 may include each of the following except

revocation of the corporate charter for egregious cases.

Professor Patty is very distraught that three students in her class cannot afford to buy the 42-chapter book for the course. The book is used for two semesters, although not all students take the second semester. She finally tells the three students that she will make copies of the first 21 chapters for them, at no charge. Professor Patty makes the copies and gives each chapter to the students prior to her coverage of the relevant chapter in class. If Professor Patty is sued for copyright infringement

she loses because she is copying whole sections and a significant portion of the book.

Fremont is a corporate insider and has made some very large profits through the buying and selling of his corporation's stock during the previous six months. These profits would be called

short-swing profits.

Courts have a clear power to set aside an agency's actions. They tend to use this power

sparingly.

A grand jury will issue a[n] ________ if its investigation indicates that a defendant should be held over for trial.

Indictment

In Miranda v. Arizona, Miranda's voluntary confession was suppressed because

Miranda was questioned in a police interrogation room and the Court deemed the setting too coercive, particularly since he did not know his rights, and even though he was not forced to talk by the police, his confession was therefore not truly voluntary.

The Supreme Court established guidelines for lower courts on applying the arbitrary and capricious standard in which case?

Motor Vehicle Manufacturing Association v. State Farm Mutual Automobile

A design patent will last for

14 years from the date of the filing of the application with the U.S. Patent and Trademark Office.

McDonald has invented a machine that harvests corn in the field, automatically shucks the corn from the husk, and peels the kernels from the cob, separating everything for easy disposal or further use. Assuming that all requirements are met for a patent, the length of his patent protection will be

14 years from the filing of the application with the U.S. Patent and Trade Office.

A utility or business method patent will last for

20 years from the date of the filing of the application with the U.S. Patent and Trademark Office.

Mike has been hired by a publishing company to write a companion book for a particular text sold to college students. In 2010, Mike completes the companion book, and he signs over his copyright to the publisher. The publisher actually publishes the book in 2013. When will the publisher's copyright run out and expire?

2108

Mary Beth has written a novel. Copyright protection regarding her work will be for

70 years after her death

Martin is an intern working for Tennessee Fried Chicken (TFC), an international company with over 1,000 franchised restaurants throughout the United States and in 21 other countries. TFC heavily advertises on television and in various print media that its chicken is superior due to its blend of "42 secret herbs and spices." Many have tried to duplicate the recipe unsuccessfully, and burglars have even been caught trying to steal it. One day Martin is called into the president's office for an assignment, and during their conversation, the president leaves the room, leaving Martin alone. Martin notices that the wall safe is open and looks inside, where he sees an envelope labeled "THE RECIPE." He opens it and finds that it is the list of the 42 secret herbs and spices, along with quantities and order of use. He quickly makes a copy of the recipe and returns the envelope to the safe. That afternoon, he calls Bluto's Fried Chicken, a TFC competitor, and informs Bluto's of the information he possesses, and they arrange a meeting. If Martin sells the recipe to Bluto's, who, if anyone, would be guilty of misappropriation?

If Martin sells the recipe to Bluto's, both Martin and Bluto's are guilty of misappropriation

Chapter 13 bankruptcy filings are limited to

Individuals

Jan is on trial for arson. For Jan to be found guilty, her guilt must be proved

Jan is on trial for arson. For Jan to be found guilty, her guilt must be proved

In Lieberman v. Wyoming.com, LLC, Lieberman dissociated from the LLC and demanded cash for his share of the company. The remaining members voted to continue the company, and the operating agreement discussed distribution in the case of dissolution but not simple dissociation. The court decided that

Lieberman had rightfully dissociated from the company but since the operating agreement was silent as to distribution and state LLC law was also silent regarding the issue, Lieberman was not entitled to distribution for dissociation but would retain his interest in the company until dissolution occurs.

Franco and Jesse are operating as a general partnership. A question has arisen that is not covered under their partnership agreement nor addressed by the Revised Uniform Partnership Act. What will the courts do to resolve the situation?

Look to common law

Morton lends money as a business loan to Luisa, who is capitalizing her start-up sole proprietorship named Luisa's Things. If Morton must sue for repayment, he would sue

Luisa

Mariel owns a toy store, which is a sole proprietorship. She wants to retire. What is the best way for Mariel to transfer the ownership of her business?

Mariel can sell the assets of the business to another party.