Business Law Clep (1)

If the shareholders of a corporation object to the way the corporation is being run, which of the following actions can they legally take? (I) Sue the corporation (II) Vote to replace the directors of the corporation (III) Vote to replace the officers of the corporation

(I) and (II) only Shareholders are entitled to vote for directors of a corporation, but not officers. Shareholders are also entitled to file either direct or derivative lawsuits.

In a common-law system, rules governing behavior can be developed by

A. legislatures B. administrative agencies C. judges Legislatures enact laws, administrative agencies enact regulations that govern behavior, and in a common-law system, judges also can create legal rules over time on a case-by-case basis.

Which of the following is not true of administrative agencies?

Adjudications before administrative law judges must follow the Federal Rules of Evidence. Administrative law judge proceedings tend to be more free-wheeling than federal court proceedings and need not follow the Federal Rules of Evidence.

Ann goes to the bakery and buys cookies labelled "nut-free." However, it turns out the cookies were made with walnuts, and Ann's child, who has a nut allergy, eats the cookies, becomes very sick, and must be hospitalized. If Ann sues the bakery on behalf of her child, under what legal theory might she recover? A. Strict Liability for Breach of Implied Warranty of Merchantability B. Strict Liability for Breach of Implied Warranty of Fitness for a Particular Purpose C. Strict Liability for a Defective Product D. negligence E. battery

B. Strict Liability for Breach of Implied Warranty of Fitness for a Particular Purpose By labeling the cookies "nut-free," the bakery is creating an Implied Warranty of Fitness for a Particular Purpose.

In interpreting a written contract, a court could look at all of the following except A. the words of the contract B. evidence from a witness regarding what the parties intended when drafting the contract C. the course of dealing between the parties as they negotiated the contract D. the course of action of the parties in performing the contract E. general trade custom

B. evidence from a witness regarding what the parties intended when drafting the contract When parties formalize the terms of their agreement in a written contract, evidence about what the parties might have intended is irrelevant to the extent that such evidence goes beyond the four corners of the contract. However, when interpreting ambiguities in the contract itself, courts can look not only at the words of the contract but also at the parties' behavior and general trade custom.

Which of the following contractual agreements would not be required to be in writing? A. an agreement to guarantee the debts of another B. a promise in consideration of marriage C. a contract for goods worth $300 D. a contract for the sale of land E. a promise by an executor of an estate to pay the estate's debts

C. a contract for goods worth $300 The Statute of Frauds requires contracts for goods to be in writing only if the cost of goods is $500 or more. All of the other options are covered by the Statute of Frauds.

Francisco, who lives in Georgia, wants to file a negligence suit against Machine, Inc., a company incorporated in Delaware with its corporate headquarters in Kentucky. Can Francisco file this suit in federal court? A. No, because negligence is a matter of state law. B. No, because negligence is a common-law doctrine. C. No, because of the Tenth Amendment. D. Yes, because the parties are from different states. E. Yes, because negligence is a matter of federal law.

D. Yes, because the parties are from different states. Under Article III of the U.S. Constitution, federal courts have jurisdiction to hear cases between parties who are citizens of two different states, even in matters involving state law or common law. (C) is incorrect because Article III explicitly confers this power on federal courts; therefore it is not a power reserved to the states.

In a case to be tried before a jury, the judge may perform all of the following duties except A. rule on evidentiary motions B. instruct the jury on the law relevant to the case C. dismiss the case before trial D. resolve disputed factual issues E. set aside the jury verdict after the trial

D. resolve disputed factual issues In a jury trial, factual disputes must be left to the jury to decide. All of the other options are potentially roles a judge may play.

Daniel is driving 30 miles above the speed limit and accidentally veers off the road, hitting a tree. The tree falls on Elaine's house, damaging a priceless work of art. If Elaine sues Daniel, a court will likely rule that

Daniel is liable to Elaine because the damage to the artwork was a sufficiently foreseeable consequence of Daniel's actions. Daniel is liable to Elaine for any harm proximately caused by his negligence. It is probably sufficiently foreseeable that running into a tree might cause it to fall on a house and cause injury such that it could be said the negligence proximately caused the harm.

Ellen is angry with Sheila and grabs a stick to hit her. As she swings, Ellen misses Sheila entirely, but hits Benjamin instead, causing him injury. Which of the following is true?

Ellen can be held liable to Benjamin for an intentional tort and negligence. Although Ellen did not intend to hit Benjamin, her intent to hit Sheila is transferred to Benjamin, and he can therefore maintain causes of action for both battery and negligence. In addition, Sheila might also be able to sue Ellen for assault.

Aidan, who owns a clothing store, sees Evan handling merchandise at the back of the store and then sees him reach into a bag. As a result, Aidan thinks Evan has stolen an item of clothing. As Evan leaves the store, Aidan asks his security guard to detain Evan, take him into a back room of the store and lock the door. The security guard does so. Aidan immediately calls the police. An officer arrives ten minutes later, searches Evan, and finds no clothing. Evan then leaves the store. If Evan subsequently files suit for false imprisonment against Aidan, how is a court likely to rule?

For Aidan, because he was entitled to detain Evan for ten minutes. The shopkeeper's privilege provides an affirmative defense to a tort claim for false imprisonment if the shopkeeper reasonably believes that the plaintiff was attempting to steal. But this affirmative defense is only viable if the shopkeeper holds the plaintiff in a reasonable manner for a reasonable length of time. In this case, Aidan called the police immediately and only detained Evan for ten minutes.

Maggie and David reach an oral agreement, under which Maggie will sell some land to David in return for $250. Before she conveys the land to David, Maggie and Julien sign a written contract whereby Maggie agrees to sell the same land to Julien for $3,000. David sues for breach of contract, and at trial Maggie agrees that she and David had an oral agreement but says that she broke that agreement because Julien offered her more money. How is a court likely to rule?

For David, because Maggie breached a valid contract. A contract to convey land falls within the Statute of Frauds, which requires the contract to be in writing. However, the Statute of Frauds is based on the idea that certain types of contracts may engender disputes about whether a contract was formed and so those contracts must be in writing. Accordingly, if a party admits that a contract was formed, then the concerns animating the Statute of Frauds do not apply, and the contract will then be enforceable against that party even if it is oral. Here, because Maggie admitted that there was an oral contract, it is enforceable against her.

Gina and Bobby, both eight years old, get into a fight at school, and Gina hits Bobby in the face, causing injury. If Bobby sues Gina, which of the following is true?

Gina can be held liable for an intentional tort and negligence. Minors can be liable for both intentional torts and negligence, although the reasonableness inquiry may be adjusted to account for the age of the defendant.

Which federal statute does NOT relate to antitrust law?

Gramm-Leach-Bliley Act The Gramm-Leach-Bliley Act regulates the private financial information of consumers and is not connected to antitrust law.

Joy is a model employee with flawless performance evaluations. However, the company where she works fires her anyway. Which of the following is true?

Joy is entitled to compensation under her state's unemployment compensation program An at-will employee is not entitled to keep a job so long as the firing is not the product of unlawful discrimination. However, if Joy is not fired for cause, she is entitled to unemployment compensation.

If Emmanuel sues Chondra in a state with which Chondra has no contact, Chondra is likely to raise which of these challenges?

Lack of personal jurisdiction under the Fourteenth Amendment to the United States Constitution A state cannot assert personal jurisdiction over a defendant unless that defendant has sufficient contact with the state to satisfy the Due Process Clause of the Fourteenth Amendment to the U.S. Constitution.

Leon agrees to purchase lumber from Shelly. The lumber arrives a week before the date specified in the contract, but the wood is rotted. Leon tells Shelly that the lumber is unacceptable and that he no longer wants to buy lumber from her. Shelly tells Leon she is sending new lumber anyway, which arrives on the originally agreed-upon delivery date. Which of the following is true?

Leon must pay Shelly the contracted price, as long as the new shipment of wood is in good condition. Under the Uniform Commercial Code provisions relevant to sales, the seller has the right to cure by sending conforming goods within the time provided under the contract. Thus, Leon must pay the full price.

Patrick tells Cynthia, who is a compulsive shop-lifter, that he will give her $500 if she refrains from stealing anything from any stores for a full month. Cynthia successfully refrains from shoplifting for a month, but Patrick refuses to pay. If Cynthia sues Patrick, a court is likely to rule that

Patrick is not liable because of the pre-existing legal duty rule Because it is illegal to shoplift, Cynthia was already under a legal duty not to shoplift. Therefore, pursuant to the pre-existing legal duty rule, her refraining from shop-lifting cannot provide adequate consideration for a contract to have been formed.

Florence contracts with Paul to build her a coffee table with 25 in-laid gems built into the surface. When Paul delivers the table, Florence finds that Paul has only put 24 gems into the surface. It would cost twice the amount of the original construction to pull off the lacquer and in-lay the 25th gem. If Florence sues Paul, a court is likely to hold that

Paul is liable to Florence for the difference between the value of the table as built and the value of the table as constructed. Paul has substantially performed the contract; accordingly, Florence cannot sue for breach, but she can receive the difference in value between the contract as performed and the contract as written. Thus, Paul may have some liability.

Which of the following is never a valid defense to a lawsuit alleging negligence?

The defendant's action was unintentional. Negligence suits do not require proof of the defendant's intent. All of the other options are at least sometimes defenses to negligence suits.

If an injured worker receives workers compensation, which of the following is not true?

The worker can receive punitive damages if the worker's injury was caused by the employer's gross negligence. Workers compensation is a form of insurance whereby injured workers can receive compensation for job-related injuries without going to court and without any inquiry as to fault. However, punitive damages are not permitted.

All of the following necessarily terminate an offer except

changed circumstances Changed circumstances can sometimes excuse a party from performing under a contract, but only if the changes render performance impossible, impracticable, or frustrate the contract's purpose. However, not all changes in circumstance excuse a party from performing, and in any event changed circumstances do not terminate an offer.

A court will give heightened scrutiny to all of the following state statutes except a statute that makes distinctions on the basis of

economic class Under the Fourteenth Amendment to the U.S. Constitution, courts give heightened scrutiny to statutes that differentiate on the basis of race, gender, religion, and national origin. Economic legislation receives only rational basis review.

After a plaintiff files a complaint to begin a civil lawsuit in federal district court, which of the following is not an action the defendant may take immediately?

file an appeal The defendant cannot file an appeal until there has been a final judgment rendered in district court. Each of the others is a permissible action as soon as a complaint has been filed.

Construction Corp. contracts with Demolition Inc. for Demolition Inc. to demolish an old building owned by Construction Corp. no later than June 30 so that a new building can be constructed in its place. If June 30 passes and Demolition Inc. has not yet demolished the building, all of the following are remedies that Construction Corp. is entitled by law to pursue, except

punitive damages for Demolition Inc.'s wrongful conduct Punitive damages are generally unavailable in breach of contract lawsuits. All of the other remedies are potentially available.

If the directors of a corporation vote to make the well being of its employees one of the core priorities of the company, the directors are adopting what theory of the firm?

stakeholder theory Under a stakeholder theory of the firm, corporations do not only seek to maximize shareholder value, but also consider other stakeholders, including employees, when making decisions.

If Joan contracts with Danny to paint her house, and the next day, before Danny can do the painting, a hurricane destroys Joan's house, what clause of their contract is implicated?

the Force Majeure Clause A Force Majeure Clause in a contract addresses so-called "Acts of God" that completely change the relevant circumstances of the contract. None of the other answers apply.