Legal Environment of Business Chapters 8-10,13,16,18,20

Clarice pays Damien $10,000 to design an ad campaign for her Sweetwater Coffee Stand chain. The next day, Damien tells Clarice that he has accepted a job in New York and cannot design her campaign. She files a suit against Damien. As compensatory damages, she can recover:

$10,000.

Dixie May enters into a contract to buy one hundred pounds of pecans from Margaret. The contract must be in writing if the pecans cost:

$500.

George is the founder of Excellent Exotics Corporation. Wilson is a shareholder and director and Bill is an officer. The daily business operations of Excellent Exotics are overseen by

Bill

Wilson wants to file an ordinary, or straight, bankruptcy. Wilson should file using:

Chapter 7.

Creditworthy Loan Company extends credit in the ordinary course of its business. Under the Truth-in-Lending Act, Creditworthy must inform potential borrowers of

Creditworthy's credit terms.

Eagle Financial Corporation merges with First Bank Corporation, with Eagle Financial absorbing First Bank. After the merger

Eagle Financial is the surviving corporation.

A creditor must exhaust all legal remedies against the principal debtor before holding the surety responsible for payment.

False

A material breach occurs when the performance is substantial, but not complete.

False

A whistleblower is an employee who reveals confidential information about a fellow employee to an employer.

False

An insurance policy is an example of a right that can be assigned.

False

Drugs can be test-marketed to the public before they are ensured to be safe and effective.

False

Employees are entitled to overtime pay only at their employer's discretion.

False

Liens usually do not take priority over other claims against the same property.

False

Ordinarily, the remedy for a seller's breach of a contract for a sale of real estate is damages.

False

The Fair Debt Collection Practices Act attempts to ensure that creditors are always paid by debtors.

False

The measurement of compensatory damage for a breach of contract is the same for all types of contracts.

False

When an advertising claim has the appearance of authenticity, it does not create problems.

False

A security interest cannot be perfected without the filing of a financing statement.

False.

Juan and Isidro enter into a contract to buy, restore, and reopen the Coastal Park Carousel. Before either party begins to perform, they agree to cancel their deal. This is:

Mutual rescission

Lily is a farmer. When bad weather destroys her crop, her obligation to deliver it under an outstanding contract with Macro Food Corporation is:

discharged.

Olivia, a minor, signs a contract to buy a bike from Phil, the owner of SuperCycles Bike Store. Olivia's right to disaffirm the contract:

does not change the fact that Phil is bound by the contract.

Valley View Farms enters into a contract to sell Sarah's Corner Shop a truckload of eggs from free-range chickens. If Valley View fails to deliver the eggs, Sarah's:

does not have to pay for the eggs and can sue Valley View for breach.

Ruby Red Corporation is incorporated in South Carolina. In that state, Ruby Red is

domestic corporation.

Will owes Jenny $1,000. Brad owes Will $1,000. Will unconditionally assigns his rights to Jenny. Will's right to the $1,000 is then:

extinguished.

Painless Dental Equipment Company is incorporated in Colorado. In Wyoming, Painless is

foreign corporation.

Andy knows nothing about horses. Peter, an expert horse trainer, knows that a certain horse has no talent and is not likely to win any competitions. Peter convinces Andy to buy the horse for $500,000 by assuring him that it has great talent. The horse turns out to have no talent and never wins any competitions. Andy can most likely recover damages based on:

fraud.

Beau sells a car to Cody without disclosing that the odometer, which reads 40,000 miles, was disconnected 80,000 miles ago. Beau is liable for:

fraud.

Phil enters into a contract to hire Bob's Building Business to build a warehouse for Phil. The contract specifies that the warehouse should be built with HighQual Bricks. When construction starts, HighQual Bricks cannot provide enough bricks for the warehouse. Bob's Building Business substitutes Big Red Bricks, which are comparable in quality and price to HighQual Bricks. This deviation from the contract:

has no effect on the contract.

Clive works for Digby Excavation Corporation. While operating a backhoe, Clive suffers an injury. Clive will be compensated under state workers' compensation laws only if:

his injury was accidental.

Ruthie, a minor, charges the cost of an expensive leather jacket at a Girl's Trend store. Two nights later, Ruthie loses the jacket at Minors Only Club. She disaffirms the jacket's purchase. Ruthie owes Girl's Trend the reasonable value of the jacket:

if it is deemed a "necessary".

Dave's uncle tells Dave that if "he feels that Dave deserves it," he will give Dave $1,000 when Dave graduates from college. Dave's uncle's promise is:

illusory

Nina is a director of Omega, Inc. Under the standard of due care owed by directors of a corporation, Nina's decisions must be

informed and reasonable.

Kingston promises to pay Melina $500 to install a sump pump in his warehouse. Melina completes the installation. The act of installing the pump:

is the consideration that creates Kingston's obligation to pay Melina.

Jen files a suit against Kopper Kettle Company. While the suit is pending, Kopper Kettle merges with Luminous Pans, Inc., with Luminous absorbing Kopper Kettle. Now, liability in the suit, if any, rests with

luminous.

Phil has a credit card from Credible Cards, Inc. Credible Cards decides to make changes to Phil's credit-card terms. Credible Cards​

must give Phil at least forty-five days' notice before changing the terms.

Louise is a director for Icy Ices, Inc. Louise is also a director for Creamy Creams, Inc. When Icy Ices enters into a contract with Creamy Creams, Louise

must make a full disclosure of any conflicts of interest and abstain from voting on the proposed transaction.

Jolie signs a contract with Keaton, an unlicensed physician, to perform a medical procedure. This contract is enforceable by:

no one.

Dylan enters into a contract to manage the operations of Cash's accounting office for one year, renewable for subsequent one-year terms. If this contract is discharged like most contracts, it will be:

performed.

Rite Contractors, Inc., agrees to build a motel for Sleep Inn Corporation. The project proceeds according to plan, but before it is done, Sleep tells Rite to quit. Rite may recover:

profit plus the costs incurred up to the time of the breach.

Pat, a world famous musician and composer, agrees to give ten piano lessons to Quinn in exchange for $1,000. Pat's attempt to delegate his contract to Ruth, an inexperienced pianist, will probably be:

prohibited because Pat and Ruth have very different skill levels.

Katie buys a car when she is seventeen. When she is twenty-five, Katie tries to disaffirm the contract and recover all her car payments. A court will likely find that the contract was:

ratified and Katie cannot recover her payments.

Quality Sales Corporation enters into contracts over the Internet. Quality can protect itself against disputes involving these contracts by making important terms:

reasonably clear

Sweet Tarts, Inc. wants to market a new snack food. On the product's label, standard nutrition facts are:

required

DeFazio's Italian Restaurants, Inc., holds a shareholders' meeting. Corporate business matters are presented at the meeting in the form of

resolutions

Dakota believes that Credit Services Corporation (CSC) has discriminated against her on the basis of gender. She files a suit against CSC under the Civil Rights Act of 1964. To establish a prima facie case of employment discrimination, Dakota must show that

she is a member of a protected class.

Kristen buys several pair of designer shoes online from Luxury Footwear, Inc. Under the Federal Trade Commission's Mail or Telephone Order Merchandise Rule, Luxury is required to​

ship the order within the time promised in Luxury's ad.

Great Gates, Inc. has a board of ten directors. Great Gates' bylaws do not state any quorum requirements. In most states, a quorum for Great Gates will be defined as

six directors

Mythic Games Company employs two hundred workers full-time. If Mythic Games plans to have a mass layoff, it must provide its employees with notice of at least

sixty days of notice

Skyla and Terry want to form and do business as Unique Boutique Corporation. Its existence depends generally on

state law.

Denise, Ervin, and Flem occupy the positions of directors on the board of Gallery Corporation. As directors, they may not

subordinate the corporation's welfare to their personal interests.

The credit department of Mega-Mart often calls Nora at work about an overdue bill. Nora's employer objects. This is a violation of

the Fair Debt Collection Practices Act

Quinn is an employee of Regional Industries, Inc. Quinn is threatened with a discharge when he refuses a transfer to a Regional department in which several employees suffered serious injuries from exposure to hazardous chemicals. Quinn may be entitled to protection from discharge under:

the Occupational Safety and Health Act.

Teri borrows $10,000 from USA National Bank to remodel a room in her home. This transaction is subject to

the Truth-in-Lending Act

Inez and Jason are the shareholders and directors of Kleen Kustodial Corporation. Lily and Moe are Kleen's officers. As in other corporations, the responsibility for the overall management of Kleen rests with

the board of directors.

Handy Hardware Store agrees to hire Ilsa for one year at a salary of $500 per week. When Handy cancels the contract, Ilsa spends $100 to obtain a similar job that pays $450 per week for a year. Ilsa is entitled to recover:

the difference between the wages at the two jobs plus $100.

Network Industries, Inc., wants to monitor its employees' electronic communications. To avoid liability under laws related to employee monitoring, Network should announce the monitoring to

the employees.

Hu, Ivan, and Juana apply to work for King Meatpacking Company. These individuals' identities and eligibility to work must be verified by

the employer.

Rolf is an emergency medical technician. Medical personnel such as Rolf are prohibited by state statute from working more than a certain number of consecutive hours. One month, Rolf works more than the legal limit. Rolf can recover for:

the hours up to the statutory maximum and the extra hours.

Myron and Norah would like to form Originals, Inc., to do business in the art market. Generally, the articles of incorporation for a corporation do not include

the minutes of the first organizational meeting.

Bobbie claims that Carly breached their contract. Carly responds that she never intended to enter into a contract with Bobbie. The intent to enter into a contract is determined with reference to:

the objective theory of contracts

Valley Tack Shop signs a contract with Gary's Boots and Saddles for delivery of five saddles that cost $200 each. To be enforceable under the Statute of Frauds, the written contract must designate:

the quantity of saddles.

Wilson buys a lottery ticket at his local gas station. Wilson has accepted an offer for a:

unilateral contract.

Betty is selling her used clothing shop on Main Street. In the sale agreement, there is a covenant not to compete that prohibits Betty from opening another used clothing shop within 300 miles of the shop she is selling. A court will most likely conclude that this restriction on competition is:

unreasonable and may reform the covenant.

Fresh Fast Service, Inc., offers to deliver produce to Growers' Market's customers for a certain price. Fresh's intent to extend a serious offer to Growers' Market is determined by reference to:

what a reasonable person in Growers' position would conclude Fresh's words and actions meant.

Michael contracts with Jill to fix the brakes on her Honda Civic. Jill leaves her car with Michael, but refuses to pay when the work is done. Michael refuses to return the car until she pays. Michael's lien on Jill's car will end:

when Michael voluntarily surrenders possession of the car.

Portia owes Bon $500 on their contract, but refuses to pay. To collect, Bon files a mechanic's lien, under which security for the debt is represented by:

Portia's real estate.

Corner Market sells groceries. Delite Food & Drug Store sells groceries and fills prescriptions. The chief responsibility to prevent unsafe food and drugs from being sold rests with

The Food and Drug Administration

A guarantor is secondarily liable on an obligation.

True

A key employee is defined as an employee whose pay falls within the top 10 percent of the firm's workforce.

True

A mechanic's lien can be enforced to obtain payment for work that adds value to real property.

True

All unemployed workers who are willing and able to work are not eligible for unemployment compensation.

True

An artisan's lien is a security device created at statutory law through which a creditor can recover payment for labor and materials used to increase the value of real property.

True

An employee who is fired outside of the terms of an implied employment contact may succeed in an action for breach of contract.

True

Both employers and employees contribute to help pay for benefits that will partially make up for the employees' loss of income on retirement.

True

Concealing assets from a bankruptcy court is a crime.

True

Creditors can agree with a debtor to discharge the debtor's debts on payment of a sum less than that owed.

True

For a creditor to have an enforceable security interest, the creditor must give something of value to the debtor.

True

In a contract for a sale of goods, the usual measure of compensatory damages is the difference between the contract price and the market price.

True

In a contract for a sale of goods, the usual measure of compensatory damages is the difference the contract price and the market price.

True

Merchants must ship orders within the time promised in their ads.

True

One of the most important federal consumer protection laws is directed at deceptive trade practices.

True

Package labels must use words that the ordinary consumer understands

True

The Federal Trade Commission is charged with preventing unfair and deceptive trade practices.

True

The Food and Drug Administration must ensure the safety of new drugs.

True

Under the employment-at-will doctrine, an employer can end an em-ployment relationship at any time.

True

Whistleblower statutes protect employees from retaliatory discharge.

True

An artisan's lien is effective only if a creditor has possession of the property.

True.

Hi-Lite Manufacturing, Inc., orders supplies online from Indigo Parts Company. To complete the order, the buyer is required to click on a button that says, in reference to certain terms, "I agree". This is:

a click-on agreement

Deb buys a song through eSongs, an online music vendor. Before completing the purchase and downloading the song, Deb must review a provision stating that she will not make and sell copies of the song and is required to click "I agree." This provision is:

a click-on agreement.

Eye Appliance Company and Fresh Views, Inc., wish to combine all of their assets, stock, and personnel into a new firm to be called Goggles Corporation. This is

a consolidation

Muffins-2-Go buys a truck from Street Vehicles, Inc., under a contract signed by Riley, Muffins-2-Go's president, making him personally liable if Muffins-2-Go does not pay the loan. Riley is:

a guarantor.

A firm named Scientific Discovery Corporation (SDC) makes an attempt to incorporate for a purpose other than making a profit. SDC is

a nonprofit corporation

Wiley incorporates his business as Wiley Wire Corporation in Texas. He and his group of shareholders intend to make a profit from their sales of fencing wire. Wiley Wire Corporation is

a private corporation.

Cynthia tells Darryl that she will deliver his boxes of Paradise Cookies as he directs. A declaration that one will do something in the future is part of the definition of:

a promise.

A court awards a judgment to Alice, who is the creditor, against Ada, who is the debtor. After the judgment, Alice requests a court order to seize Ada's property to ensure that the judgment will be collectible. This is:

a writ of execution.

Clear Lake Credit Corporation lends funds to Donny, a consumer, to apply to the cost of a boat, which is the collateral for the loan. An enforceable security interest requires:

a written agreement or Clear Lake's possession of the boat.

Wilma, who lives in New York, enters into a contract to buy a painting from Fred, who lives in France. The contract includes all the costs of insuring and shipping the painting from France to New York. The agent that made the shipping estimate makes a mistake when adding up the costs and, as a result, the shipping cost listed in the contract is $1,000 less than the shipping actually costs. A court will most likely:

allow the parties to rescind the contract.

Thor Power Products Corporation permits its directors to be elected by cumulative voting. This

allows minority shareholders to be represented on the board.

Jean and Olivia want to form and do business as Cake Cups Corporation. A corporation is

an artificial legal person.

Stephanie's sale of rights she has under a contract with Runway Retail, Inc., to buy the retailer's clothing overstock is:

an assignment.

Thelma is an employee at Foreign Food Mart. Thelma is called for jury duty and as a result cannot work her scheduled shift at Foreign Food Mart. Foreign Food Mart fires Thelma. This is a violation of

an exception based on public policy.

SuperBumperCars, Inc. requires all customers to sign a release that contains a clause that releases SuperBumperCars from all liability in the event of an injury occurring during a bumper car ride, no matter who is at fault. This is an example of:

an exculpatory clause.

Holiday Sales Company and Global Distributors, Inc., enter into a contract for the delivery of imported specialty goods. Until the goods are delivered and paid for, these parties have:

an executory contract

Livewire Company and McCoy's Candy, Inc., sign a document that states Livewire agrees to design a Web page for McCoy's, which agrees to pay for the service. This is:

an express contract.

Jo works for Tall Tales Publishing, Inc. The basis for Jo's contribution under the Federal Insurance Contribution Act (FICA) is based on her:

annual wage base.

Roland files for Chapter 7 bankruptcy. After all his assets have been sold and the proceeds distributed among his creditors, Roland's remaining debts:

are discharged.

Hearth & Home Furniture store advertises bedroom suites at a "Special Low Price of $599." When Ilene tries to buy one of the suites, Jill, the salesperson, tells her that they are all sold and no more are obtainable. Jill adds that Hearth & Home has other bedroom suites available for as low as $2,599. This is

bait-and-switch advertising

Norma Jean files for Chapter 7 bankruptcy. She turns her assets over to Addie, who sells the assets and then distributes the proceeds to Norma Jean's creditors. Addie is a:

bankruptcy trustee.

Yellowbox, a DVD rental company, would like to change its corporate status to that of an S corporation to avoid income taxes at the corporate level. To qualify, Yellowbox must

be located in the United States.

Jonathan promises to pay child support and alimony to his ex-wife every month after their divorce. Jonathan has:

both a legal and a moral obligation to keep the promise.

Jared downloads some video games from the Internet. There is a page indicating the terms of use, but nothing that requires Jared to affirmatively indicate his consent before downloading the games. These terms are:

browse-wrap items.

Samson is a government employee. Samson is limited in drug testing by the:

Fourth Amendment

Leonardo contracts to install automatic watering troughs in Kendall's dairy barn. Leonardo then becomes seriously ill and contracts with Jake to install the troughs. Jake is unreliable and never shows up to install the troughs. Kendall can sue:

Jake or Leonardo

Beth is a minor. She buys a set of sessions with a personal trainer, and a water bottle and some weights from a fitness store. Later, Beth decides that she does not want the water bottle or weights. In most states, Beth:

can only disaffirm the contract if she returns all the goods.

Richard is an adult. He enters into a contract to sell sixteen-year-old Jane his car for $3,000. The next day Richard receives an offer of $4,000 for his car from twenty-year-old Bill. Richard:

cannot disaffirm his contract with Jane because he is an adult.

Gerald files a bankruptcy petition. The resulting automatic stay will apply to Gerald's:

car payment debts.

Jacqi tells Kenneth, who does not know how to perform comedy, that she will tutor him in the subject for $500. As an offer, this is:

effective.

Bryon agrees to sell to Charity, for $1500, a remote parcel of land. They believe the land to be worthless, but beneath it is a gold mine. A court would:

enforce the contract.

Kathleen sells Richard a racehorse for $1,000. Both Kathleen and Richard think that the horse is too slow to win any races. Richard then enters the horse in a race, and it wins easily. He enters it in more races, and the horse soon wins more than $1 million. Kathleen tries to rescind the contract to sell the horse, claiming that it was worth more than $1,000. A court will:

enforce the contract.

Colleen is intoxicated, but still mentally capable of understanding the consequences of her actions when she signs a contract to sell the rights to her latest phone app design to Addie. The contract is:

enforceable even if Colleen attempts to disaffirm it.

The state of Illinois enacts a usury statute. The purpose is to:

establish a maximum rate of interest that may be charged for loans.

Peter and Ray are riding their horses together. Peter jokingly tells Ray that Ray's horse is too slow. Ray laughs and jokingly responds, "Yes, he is too slow! I would sell him for $5!" Peter hands Ray $5. This is:

not a valid acceptance because Ray's offer was mad in jest.

Brasilia, a real estate broker licensed only in Connecticut, concludes a land sale in Delaware. She can:

not collect the commission, keep it, or foreclose on the property.

Genovese Contracting, Inc., agrees to build a warehouse for Hawthorne Wholesale Distributors. When Genovese runs into the types of difficulties that contractors ordinarily confront, Hawthorne agrees to pay extra compensation to overcome them. Regarding the agreement to pay more, a court would likely:

not enforce it

Doug agrees with Elinor to sell methamphetamine to patrons of Elinor's nightclub Garden of Eden for 25 percent of the take. Doug sells the drugs but keeps all of the money. Elinor can:

not enforce the deal.

Lyla is a common shareholder in Norman's Nutty Nuts Corporation. As a common shareholder, Lyla is

not guaranteed any payments of dividends

Beth goes to Dr. Carlton for surgery. Carlton says that Beth should be fully healed within a week. Beth is not healed within a week. With respect to breach of contract, Carlton is:

not liable, because the statement was an opinion.

Sparky offers Teodora $1,000 for her collection of rare coins. She accepts. If a dispute arises, a court would likely:

not question the adequacy of the consideration.