Legal Environment of Business

Quaff Café buys twenty-five crates of apples from Reynaldo Produce, Inc. The parties agree to ship the apples "F.O.B. Quaff" via Swift Trucking Company. The apples rot in transit. The loss is suffered by a. F.O.B. b. Swift. c. Reynaldo. d. Quaff.

Reynaldo

Brie buys a subscription to music provided by Concerto, an online streaming service. Before gaining access, Brie must agree to a provision stating that she will not make and sell copies of the music. This provision is a. a shrink-wrap agreement. b. a click-on agreement. c. a partnering agreement. d. a browse-wrap term.

a click-on agreement.

Sam, driving under the influence, causes a car accident that results in the death of Tanya. Sam is arrested and charged with a crime punishable by imprisonment for more than a year. This crime is a. a civil wrong. b. a tort. c. a misdemeanor. d. a felony.

a felony.

Seacoast Transport Company pays Trucks & Trailers Inc. a stated price for the use of seven tractor-trailer rigs for a year. Under the UCC, this is a. a lease. b. a contract for services. c. a sublease. d. a sale.

a lease

Architect LLC enters into a contract with Barn & Silo Inc. to provide designs for a certain number of farm buildings. Architect provides fewer than half of the designs by the time specified in the contract because the firm is busy with other projects. Architect's performance is most likely a. a minor breach. b. no breach. c. a reasonable breach. d. a material breach.

a material breach.

Embers Corporation orders twelve fire extinguishers from Firefighting Inc., which delivers the equipment. This is most likely a. a sale of goods. b. a gift. c. a lease of goods. d. a contract for services.

a sale of goods

Wendy works as a weather announcer for a TV station under the character name Weather Wendy. Wendy can register her name as a. none of the choices. b. a service mark. c. a trade secret. d. a trade name.

a service mark.

Carl starts up, and assumes the financial risk of, Data Works, a new marketing enterprise. As a sole proprietorship, the enterprise must meet legal requirements relating to a. none of the choices. b. intellectual property laws. c. all of the choices. d. licensing and registration.

all of the choices

Chase, the owner of Data Master, a sole proprietorship, wants to obtain additional business capital. This opportunity is most likely limited to a. bringing in partners. b. issuing stock. c. borrowing funds. d. selling the business.

borrowing funds.

The Racketeer Influenced and Corrupt Organizations Act is an effective tool in attacking a. defenses that excuse criminal behavior. b. businesspersons who use bribery to secure foreign contracts. c. criminal activities occurring online. d. certain white-collar crimes.

certain white-collar crimes.

Marketing Inc. offers to create a campaign to increase N'Ice Cream Inc.'s online business. N'Ice agrees to pay for the service. These parties have a. no contract. b. an implied contract. c. a formal contract. d. an express contract.

an express contract.

Lon says to Misty, "I would like to sell you my sofa." This statement is a. an invitation to negotiate, not an offer. b. a request, not an offer. c. an offer. d. an ad, not an offer.

an invitation to negotiate, not an offer.

Juice Inc. offers entrepreneurs the opportunity to operate a franchise under the Juice trade name as a member of a group of dealers that engage in retail beverage sales. To prospective franchisees, Juice must disclose a. the estimated profitability of the franchise. b. the range of goods and services included. c. all of the choices. d. the value of the franchise.

all of the choices

Sean buys a franchise from Taco Mission Inc. This relationship, like all other franchise relationships, is governed by a. the federal Franchise Rule. b. contract law. c. all of the choices. d. applicable state law.

all of the choices

Hometown Bank posts on its website an offer of a reward for information leading to the apprehension of a certain criminal. This offer could normally be terminated by a. payment of the reward. b. apprehension of the criminal. c. a post on the website. d. any of the choices.

any of the choices

Nature's Eggs Inc. agrees to supply Omelet Express with five hundred eggs. Nature's Eggs can reasonably ask Omelet Express to pick up the eggs at a. no time—as a seller, Nature's Eggs must deliver the goods. b. any reasonable hour. c. no specific time—only a buyer can set the time. d. any hour.

any reasonable hour

Stig creates unique graphic works that feature characters of his own imagination. Copyright protection for Stig's work is a. not possible. b. available only on registration with the U.S. Copyright Office. c. enforceable only if Stig places a circled "c" on the work. d. automatic.

automatic.

Obtaining a court order to close down the domain name of a website is an effective tool that U.S. officials use to combat online sales of a. competing products. b. licenses. c. trademarks. d. counterfeit goods.

counterfeit goods.

Kohl receives from Lily a camera stolen from Mark. Kohl knows that the camera is stolen, and he intends to keep it. Kohl is a. contractually liable. b. tortiously liable. c. criminally liable. d. civilly liable.

criminally liable.

Home Furnishing Store's contract for a sale of its appliances provides that the only remedy for breach is replacement, repair, or refund of the purchase price. With respect to this provision, on a customer's suit for breach, a court is most likely to a. reallocate the risk expressed in it. b. refuse to enforce it. c. reform it. d. enforce it.

enforce it.

Megan contracts to sell Nonny her horse for $4,000. This contract will be fully discharged when Megan and Nonny a. execute a bill of sale. b. exchange the horse for the money. c. sign a receipt. d. agree that the deal is fair.

exchange the horse for the money.

Holiday Corporation sells Idyll-brand campers and trailers. Under most circumstances, Holiday will be presumed to have warranted that its title to the goods is a. none of the choices—a warranty of title is not presumed. b. only such as the seller has acquired in the goods. c. the same as every other merchant who deals in goods of the kind. d. good and valid.

good and valid

Riley commits an act via e-mail against State Bank, a business in Texas, where the act is a cyber crime. Riley resides in Utah where the act is not a crime. Prosecution of Riley in Texas involves questions of a. "maximum contacts." b. the immunity of Internet service providers. c. encryption. d. jurisdiction.

jurisdiction

Bud works at a Cheap Stuff Store from which, without authorization, he takes merchandise that he has not paid for home for his own use. This is a. no crime. b. robbery. c. larceny. d. embezzlement.

larceny.

Esau works for Family Dwellings Inc., an investment firm that buys, renovates, and rents foreclosed houses. Esau steals his employer's digital files to start his own competing business, Good Homes LLC. This is a. wire fraud. b. robbery. c. no crime. d. larceny.

larceny.

Bike Shop sells a trail bike to Ciena. When Ciena rides the bike, the frame breaks apart. The cause is something that Bike Shop did not know about and could not have discovered. This is a breach of a. the implied warranty of merchantability. b. an express warranty. c. a warranty of title. d. puffery.

the implied warranty of merchantability.

Prognosis Inc. owns a brain-computer interface that enables physicians to diagnose and treat some diseases quickly and accurately. Federal copyright protection extends to a. all of the choices. b. the parts of the app that can be read by computers. c. the command structure of the app. d. the general appearance of the app.

the parts of the app that can be read by computers.

Minh owns a beach house that she rents to vacationers. Minh gives her son Ngo a trip to Omaha on his graduation from community college. Minh sells her car to her neighbor Phan for $4,500. UCC Article 2 covers a. the sale to Phan. b. the beach house rentals. c. none of the choices. d. the gift to Ngo.

the sale to Phan.

United Inc., a U.S. film production company, files a suit against Video Ltd., a Mexican production firm, for infringement of intellectual property rights under Mexico's national laws. Both the U.S. and Mexico are signatories of the TRIPS agreement, under which United is entitled to a. fewer rights under Mexican law than Video. b. the same rights and protection under Mexican law as Video. c. more protection under Mexican law than Video. d. none of the choices.

the same rights and protection under Mexican law as Video

Olin is a partner in Precision Plumbing. When the partners decide to dissolve the firm, Olin collects and distributes the assets. This results in a. the termination of the firm's legal existence. b. the temporary suspension of the firm's business. c. the continuation of the firm's business. d. nothing with respect to the firm's existence.

the termination of the firm's legal existence.

Dona offers to sell her used sofa, chair, coffee table, end table, and lamp to Etta for $700. Etta responds that she will pay that price if Dona's TV set is included. Neither party is a merchant. Their contract is formed according to a. the new terms of the acceptance. b. the terms of the original offer. c. none of the terms. d. whatever is reasonable.

the terms of the original offer

Eugene, an accountant, convinces his client Faye to enter into a contract to invest her savings in Gather, a non-existent social media site. There is clear and convincing evidence that Faye did not act out of her free will. This is a. undue influence. b. mistake. c. duress. d. fraudulent misrepresentation

undue influence.

Analytics LLC processes misinterpreted data furnished by Botch Services to propose a marketing plan for Clientele Inc. Analytics and Clientele are both ignorant of the mistaken data. Their contract can be rescinded on the basis of a. a bilateral mistake. b. none of the choices. c. a unilateral mistake. d. a mistake of quality.

a bilateral mistake.

Gilda, marketing manager for Home Stuff LLC, is responsible for branding the company's products. Aspects of branding that can be trademarked include a. the shape of a container, even if it does not aid in product identification. b. a catchy phrase, such as "Stuff your home with Home Stuff!" c. use of another party's established trademark, with or without permission. d. none of the choices

a catchy phrase, such as "Stuff your home with Home Stuff!"

Like most successful companies, Phones Inc. has trade secrets. The law protects those secrets if the information is a. not revealed to outside parties. b. unique and has value to a competitor. c. cataloged by the company as "confidential." d. useful and is in fact used by the company.

unique and has value to a competitor.

Anton enters into an agreement with Burgers Inc. to operate a franchise in Centre City. Later, the franchisor grants franchises to others within the same territory, causing Anton to suffer a significant loss in profits. In Anton's suit against the franchisor, his best argument is that Burgers a. violated the antitrust laws. b. violated the Federal Trade Commission's Franchise Rule. c. granted Anton the first Burgers franchise in Centre City. d. violated the implied covenant of good faith and fair dealing.

violated the implied covenant of good faith and fair dealing.

Beau devises a scheme to send fraudulent e-mails—claiming that an arrest warrant has been issued for non-payment of taxes—to individual taxpayers. By these false pretenses, Beau intends to obtain money and personal data. This is a. wire fraud. b. robbery. c. no crime. d. larceny.

wire fraud.

Pay-Most Convenience Stores, Inc., is a franchisor. Randy operates a Pay-Most franchise. Seth is one of Randy's employees. As a franchisor, if Pay-Most controls the day-to-day operations of the business to a significant degree, it may be liable for tortious acts by a. Pay-Most, Randy, or Seth. b. any person on the franchise premises. c. no one. d. only persons with legitimate reasons to be on the franchise premises.

Pay-Most, Randy, or Seth

Jamal and Keri enter into a contract for Jamal to renovate Keri's house by a certain date. Jamal never performs. After the applicable limitations period has passed, Keri decides to bring a suit against Jamal for breach. This suit a. must be filed within ten to twenty years, depending on state law. b. must be filed between four and five years after Keri decides to sue. c. can be filed within four years of notice to Jamal that Keri decided to sue. d. can no longer be brought.

can no longer be brought

Midtown Holdings Inc. contracts to sell a commercial parking garage to Nuevo Property LLC. The contract provides that if Midtown does not close the deal by a certain date, it must pay the buyer one-half of the value of the property. This provision is not enforceable if it is a. designed to penalize Midtown. b. intended to quickly provide cash to Nuevo. c. meant to pay for additional work in the event of damage. d. a reasonable estimate of the loss on the breach.

designed to penalize Midtown.

Sea Coast Café uses the trademark of Tacos del Mar without permission. This use of the mark is actionable as trademark infringement a. all of the choices. b. only if the two companies' products are similar. c. if consumers are confused. d. if the use diminishes the distinctive quality of the mark.

if consumers are confused.

Raj agrees to work as a freight broker for Shipping Inc. In determining whether a contract has been formed, an element of prime importance is the parties' a. subjective beliefs. b. motives. c. objectives. d. intent.

intent.

Mesa County contracts with New Construct Inc. to build a courthouse. New Construct hires Odell to excavate the site. Odell's work damages adjacent properties. Mesa files a suit against the excavator, who argues that the county is not named in his contract with New Construct. Most likely, the court will hold that Odell is a. liable on the ground that Mesa is an incidental third-party beneficiary. b. not liable because Odell's contract was with New Construct, not Mesa. c. liable on the ground that Mesa is an intended third-party beneficiary. d. not liable because Mesa is not named in Odell's contract.

liable on the ground that Mesa is an intended third-party beneficiary.

Raul uses social media to post links that, when clicked, secretly install software on others' computers without the owners' knowledge Raul's software is designed to harm or disrupt the computers. This program is a. malware. b. entrapment. c. larceny. d. a phish.

malware.

Ruby invents a new type of pillow and obtains a patent for it. Sleep-Time Inc. believes that Ruby's pillow infringes on one of Sleep-Time's previously patented products. Sleep-Time must file a challenge to Ruby's patent within a. the life of the inventor plus seventy years. b. no specific time. c. nine months. d. twenty years.

nine months.

Beth and Connie do business as Dig Excavators. In acting on the firm's behalf, Beth makes an honest error in underestimating the cost of a certain project. In this situation, to her firm, Beth is liable for a breach of the duty of a. none of the choices. b. accounting. c. care. d. loyalty.

none of the choices

Deb and Eve are partners in Foundations, a construction outfit. Deb manages the business. For this service, unless the partnership agreement states otherwise, she is entitled to pay in proportion to her a. capital contribution. b. effect on the business. c. none of the choices. d. effort.

none of the choices

Bianca, a minor, enters into a contract to buy two all-season passes from Chalet Ski Park. The contract will be made enforceable if, after reaching the age of majority, Bianca a. disaffirms it. b. voids it. c. nullifies it. d. ratifies it.

ratifies it.

Cass agrees to sell her Daily Donut shop to Ernie. In the agreement, there is a covenant not to compete that prohibits Cass from operating a donut shop within a certain distance. If the restriction is unreasonable, a court will most likely a. award Cass damages. b. order Ernie to stop doing business. c. prohibit both parties from operating donut shops. d. reform the covenant.

reform the covenant.

Steel Mill Inc. agrees to deliver a certain quantity of steel to T-Bar Framing Corporation. The agreement states that delivery is to be within "9" days, although the parties intend "90" days. The seller cannot convince the buyer to amend the contract. The most appropriate remedy is most likely a. specific performance. b. rescission. c. reformation. d. a quasi contract.

reformation.

Beca, a computer operator for Cloud Corporation, is arrested in her employer's parking lot on suspicion of larceny. Beca must be informed of her right to a. remain silent. b. punishment. c. a trial by jury. d. question witnesses.

remain silent

Steel Buildings Inc. agrees to sell four portable garages to Truck Service Center. Five days later, Truck refuses delivery and cancels the contract. Steel is entitled to a. resell the garages and recover any damages from Truck. b. force Truck to accept the garages. c. recover any damages from Truck but not resell the garages. d. resell the garages but not recover any damages from Truck.

resell the garages and recover any damages from Truck.

At an auction, Ben bids on a 1957 Chevy coupe, believing that it is worth more than the price asked. When the car proves to need more repairs than Ben estimated, and thus is worth less as is, Ben is a. not liable on the bid because the auctioneer misrepresented the value. b. not liable on the bid because he underestimated the cost of repairs. c. not liable on the bid because the need for repair is not a material fact. d. still liable on the bid

still liable on the bid.

A speedy trial, a trial by jury, a public trial, and the right to confront witnesses are guaranteed by a. the Fifth Amendment. b. state law, not the U.S. Constitution c. the Fourth Amendment. d. the Sixth Amendment.

the Sixth Amendment.

In a sale of oranges from Citrus Grove Farms to Donuts & Juice Inc. to be delivered after the harvest, a fire destroys the fruit before it is picked. Under the UCC, the rights and liabilities of Citrus and Donuts in this circumstance are generally determined by a. the right of ownership. b. all of the choices. c. the concepts of identification and risk of loss. d. who has title.

the concepts of identification and risk of loss.

Faiz enters into a contract to buy 350 acres from Grain Farm to cultivate hops and open a brewery. Faiz fails to make the purchase. Grain Farm's remedy is most likely a. the amount that Faiz expected to invest in the brewery. b. nothing—Grain Farm still owns the land. c. a percentage of Faiz's unrealized profit. d. the difference between the contract and market prices of the land.

the difference between the contract and market prices of the land

Ben makes an appointment for a $50 haircut, buys a bike for $250, and agrees to work for Coding Associates for one year for $5,000 per month, starting at the beginning of next month. To be enforceable, a writing is required for a. the appointment. b. the employment agreement. c. the purchase. d. all of the choices.

the employment agreement.

Van starts Wind Systems to make and sell turbines. Later, Van contracts with Xi to invest additional capital in the firm in exchange for 25 percent of the profits. Vaughn and Xi are not partners in Wind Systems because a. Van started the firm before Xi agreed to invest additional capital. b. they do not have joint control over the business. c. their agreement does not provide for the sharing of losses. d. they do not share the profits equally.

they do not have joint control over the business

Organos Ltd. traffics in nutritional supplements that are marketed as genuine, trademark-branded products when in fact they are counterfeit. This is a crime a. only if the counterfeits present serious public health risks. b. only if the counterfeits have negative effects on legitimate businesses. c. under no circumstances. d. under all circumstances.

under all circumstances.

National Trucking Company begins transporting crude for Oil Inc. under a contract for a stated amount per load. After six months, National demands an increase in the stated amount because ordinary business expenses have increased. Oil's agreement to pay the increased amount is a. enforceable due to unforeseen difficulties. b. enforceable as the consideration is past. c. unenforceable as an illusory promise. d. unenforceable due to the preexisting duty rule.

unenforceable due to the preexisting duty rule.