Bus law Final Exam
As of December 2014, ____ states plus the District of Columbia and the Virgin Islands have adopted the RUPA.
37
Which of the following is an example of an unsecured debt?
A bar sells alcohol to a customer on credit (a "tab") that the customer promises to pay off at the end of each month.
Which of the following is true of a corporation?
A corporation has the ability to attract capital, more than the limited partnership.
Which of the following is most likely to be considered a sale of goods to which the UCC applies?
A department store sells a car battery.
Which of the following types of items would not be covered by the Magnuson-Moss Act? Multiple Choice
A factory lighting system costing $1,500.
Which of the following is true about a limited partnership?
A limited partnership can be created only by complying with a state statute permitting limited partnerships.
QT, Inc. is incorporated in Alabama, has offices in Nebraska, has a manufacturing plant in Delaware, and conducts most of its sales from Virginia. Regulation of its internal affairs will be exercised only by:
Alabama.
The following characteristic(s) distinguish(es) an S Corporation from other corporations:
An S Corporation may only be owned by individuals and trusts. All of the above. Correct An S Corporation may have only one class of shares. An S Corporation must elect S Corporation status under the Internal Revenue Code. An S Corporation may have no more than 100 shareholders.
Which of the following is an example of an unsecured debt?
An employee provides babysitting services for a daycare service that promises to pay her at the end of each week.
Which of the following is least likely to be considered a sale of goods to which the UCC applies?
An optometrist gives a contact case to a patient.
Which of the following statements about sale on approval is false?
Any use of the goods constitutes acceptance.
A benefit of the sole proprietorship form of business is that
As the only owner, the sole proprietor makes all decisions and keeps all profits.
The only difference between C & F and CIF shipping contracts is:
C & F shipping contracts do not require the seller to insure the goods
In MP Nexlevel of Cal., Inc. v. CVIN, the case in the text, the court held that:
CVIN and CENIC were not in a legal partnership.
All states, except ___, permit professionals to organize as a limited liability company:
California
Jackson is a pension fund manager for several large corporation's pension funds. Which of the following imposes certain fiduciary duties on Jason regarding the pensions funds? Multiple Choice Wagner Act Age Discrimination in Employment Act Fair Labor Standards Act Employee Retirement Income Security Act Correct Family and Medical Leave Act
Constructor Co., a commercial construction company, must comply with which of the following to provide its employees with a workplace and jobs free from recognized hazards that may cause death or serious physical harm? Multiple Choice Occupational Safety and Health Act Correct Safe Workplace and Employee Protection Act Workers' compensation Family and Medical Leave Act Norris-LaGuardia Act of 1932
This business form is unique from many other business forms because ownership and management are completely separate:
Corporation.
Which of the following security instruments, if any, does not allow the debtor the right of redemption upon default?
Debtors have a right to redeem property under all of these security instruments.
Which security instrument requires a creditor to file a separate lawsuit for the sole purpose of recovering a deficiency from a defaulting debtor?
Deed of trust
Cleanify Corp., a corporate housekeeping and janitorial services company, requires all applicants to take a rather challenging English language vocabulary test. Any applicant who fails the vocabulary test—whether or not English is that applicant's native language—is not considered for employment at Cleanify. Cleanify has 200 employees. Housekeeping is an industry affecting interstate commerce. Cleanify is located in New Hanoi, a small Midwestern town where 50% of the population consists of recent Vietnamese immigrants. While roughly half of Cleanify's applicants are Vietnamese immigrants or of Vietnamese ancestry, only about 10% of its workforce is Vietnamese. Cleanify's managers and owners actually have had uniformly positive experiences with their employees who are from the local Vietnamese community and would be happy to hire more of them but for the difficulty a majority of the Vietnamese applicants seem to have with the English language vocabulary test. Hao is a Vietnamese immigrant who fails the English test. He wants to sue Cleanify for national origin discrimination under Title VII of the Civil Rights Act of 1964. What theory would Hao most likely use to support his Title VII claim on these facts?
Disparate impact
Ima Restauranteur owns Burrito Chime, a fast food Mexican restaurant. Ima has a rule—due to the physical layout of the restaurant, including the relatively low level of the stove and of the countertops and prep areas on which the cooking occurs—that she only hires cooks who are shorter than six feet tall (to avoid requiring the cooks to spend too much time being bent over). Ima is willing to hire anyone who is shorter than six feet tall and who is otherwise qualified for the job. Burr Nowt, an applicant for a cook position at Burrito Chime, is six feet and two inches tall, so he does not get the job. Burr believes he is a victim of sex discrimination as prohibited by Title VII of the Civil Rights Act of 1964 (assume that Burrito Chime is a covered entity under Title VII). What theory would Burr most likely use to support his Title VII claim on these facts?
Disparate impact
Petite Enterprises has a maximum weight requirement for all of its employees. No one can be hired if he or she is over 135 pounds; however, anyone who is 135 pounds or less is considered for hiring regardless of that person's race, color, sex, national origin, religion, age, or disability status. Nevertheless, the weight limit results in far fewer male applicants being hired than female applicants. In fact, while males and females apply to Petite Enterprises in roughly equal numbers, Petite Enterprises employs three times as many females as males. Ernie applies to Petite Enterprises, but is not hired because he weighs 170 pounds. If Ernie sues Petite Enterprises for sex discrimination under Title VII, what mode of proof best suits Ernie's case?
Disparate impact
A bankruptcy by this party would cause a termination in the agency relationship: Multiple Choice
Either principal or agent
Which of the following is NOT an improper use of a dominated corporation, which can lead to the corporate veil being pierced?
Engaging in isolated transactions outside the state of incorporation
Throgmartin works as a clerical employee at Cheapskate Industries. He is paid only $1.50/hour. Which of the following federal laws provides him with a remedy for being paid less than a mandatory nationwide minimum wage?
Fair Labor Standards Act
Which security instrument requires a creditor to file a separate lawsuit solely for the purpose of recovering a deficiency from a defaulting debtor?
Foreclosure of a mortgage by "power of sale"
In a traditional partnership, the partners
Have the right to make all the management decisions for the business. May deduct any business losses on their individual tax returns. Share all the profits of the business equally unless there is an agreement otherwise. Assume personal liability for all obligations of the business. All of the above. Correct
Which of the following statements about recording certain security interests with the appropriate government office is correct?
If it is not recorded, the security interest will not be effective against subsequent purchasers or creditors who have no notice of the security interest.
Under privity statutes adopted by some states, which of the following is not considered when determining whether a plaintiff can recover outside privity in warranty cases? Multiple Choice
If the plaintiff can meet the reasonable-to-expect test
Bill has a mortgage on a rental property and he defaulted on his payments. Which of the following statements is correct if the bank were to pursue foreclosure by power of sale on Bill's mortgage?
If the property is sold for less than Bill owes, the bank must file a lawsuit to recover the deficiency
Bill has a mortgage on a rental property and he defaulted on his payments. Which of the following statements is correct if the bank were to pursue foreclosure by an action and sale of Bill's mortgage?
If the property is sold for less than Bill owes, the court will enter a deficiency judgment for the bank.
Which of the following is an advantage of a limited partnership?
It has the ability to attract large amounts of capital.
Which of the following is NOT a requirement for a state tax on foreign corporations to comply with the Commerce Clause?
It must treat intrastate transactions more favorably than interstate transactions.
Suppose that Local, a small town bookseller, contacts Kangaroo Press, a publisher, requesting Kangaroo to send 1,000 copies of the new thriller, "White Out," to three of its stores in Indianapolis, Indiana with the understanding that unsold copies could be returned to the publisher. The books arrive, but severe thunderstorms are forecast and Local decides to shut down and ship its books back to avoid liability. Local requests that Kangaroo pay the price of the return. It refuses. Under this scenario, which company is correct, and under what doctrine?
Kangaroo; Sale or Return.
Wei was an employee at private company, LMNOP, Inc. He was terminated from his job because he refused to submit to a polygraph test. LMNOP was losing inventory due to theft (often referred to as "shrinkage") and began a polygraph program in which employees working in the relevant sections were all tested. When Wei said the test was stupid and refused to take it, he was terminated. Which of the following is true?
LMNOP may use the polygraph test in this situation only if it meets an exception for theft investigations in the Employee Polygraph Protection Act.
A business form designed to combine the nontax advantages of corporations with the favorable tax treatment of partnerships is a(n):
Limited liability company.
The business form that is identical to the limited partnership, except that both limited partners and general partners have no liability for most obligations is called a(n):
Limited liability limited partnership.
A business form that is managed by partners who all share the same rights and liabilities, limits partners' liability to only their individual torts, and is formed by agreement of the owners in compliance with the relevant statute is a(n):
Limited liability partnership.
Which of the following business forms is an especially good form of business for professionals such as consultants and auditors, allowing them management flexibility while insulating them mostly from personal liability?
Limited liability partnership.
For a business needing millions of dollars of capital, wanting only a few owners to manage the business, and expecting to lose money in its early years, what business form would be particularly attractive?
Limited partnership or limited liability limited partnership.
Rewrite the question to read "Chestnut Electronics, Inc. transfers many of its major assets to its shareholders for far less than the fair market value. Chestnut is engaged in ________________, which can lead to corporate veil piercing because it _______________________________."
Looting; defrauds creditors of the corporation
Anderson incorporated his new company, Pearl, Inc., in the business of manufacturing rubber. After some years, he opened his own subsidiary rubber manufacturing company. The new subsidiary company is a success. Meanwhile, the workers of Pearl, Inc. claimed that payment of bonus is due and they are demanding the same from the subsidiary company. In this case, are both Pearl, Inc. and its subsidiary liable?
No, they are not liable because a subsidiary is not liable for parent's debts as provided under the law.
Which of the following is not an example of consequential damages?
Nominal damages
In which of the following business forms are all of the partners liable for the torts that are committed in the course of business by their partners?
Partnership.
Which of the following business forms includes unlimited liability, allows for the partners to be taxed individually, and can be formed automatically when there are people acting in concert and do not select an alternative business form?
Partnership.
A liability inherent in a sole proprietorship is that the sole proprietor is:
Personally liable for costs associated with poor business decisions.
If a foreign corporation has to qualify to do business in a specific state, all of the following except which of these is required?
Reincorporate in that state
Assume Will signed a guaranty for rent that Jack owes to Karen. Which of the following gives Will the ability to require Jack to pay the rent if Jack is able to do so and does not have a valid defense against paying the rent?
Right of exoneration
Assume Will, acting as surety for Jack, pays Jack's debts to Karen. Which of the following gives Will all of the rights that Karen had against Jack?
Right of subrogation
Assume Will and Grace sign an agreement making them equal sureties for rent that Jack owes to Karen. If Will is forced to pay the entire rent as surety for Jack, which of the following gives Will the ability to require Grace to pay him for her share of the rent as co-surety?
Right to contribution
Ben leases an apartment from Caren. Aaron agrees to act as a surety for Ben on the lease. If Aaron has the pay the rent because of the surety agreement, which of the following allows Aaron to recover the amount that he paid from Ben?
Right to reimbursement
A business form owned by shareholders who elect a board of directors to manage the business, but enjoy tax status similar to that of a partnership is called a(n):
S Corporation
Which Act deals with monopolies and restraints on trade?
Sherman Act
Assume that the Oklahoma Wholesale Lumber Suppliers' Association, a trade association formed by all lumber wholesalers in the state, adopts a "fair competition" plan that divides the state into exclusive territories for member wholesalers. Each member wholesaler is forbidden by the plan to sell to retailers in another wholesaler's territory. Under these circumstances, which of the following is true?
Since this is a case of "naked" horizontal restraint, the courts would apply the per se rule to determine whether it is lawful.
A business form in which there is only one owner is called a
Sole proprietorship.
Which of the following is not a remedy for misappropriation of a trade secret?
Specific performance
In the United States agency law is primarily governed by what type of law?
State law
Under the Restatement (Third) of Agency, which of the following is true of termination of agency by operation of law?
Termination by the death of the principal is effective only when the agent has notice of the principal's death.
The limited liability partnership is a business form that was created first in the state of __, in __.
Texas, 1991
In the case of Burrito Chime described in the previous question, what would Burrito Chime have to prove to avoid liability if he sues for sex discrimination under Title VII?
That the maximum height requirement is job related and consistent with business necessity.
In the case of Petite Enterprises described in the previous question, what would Petite Enterprises have to prove to avoid liability if Ernie sues for sex discrimination under Title VII?
That the maximum weight requirement is job related and consistent with business necessity.
Which of the following statements about the Defend Trade Secrets Act (DTSA) is false?
The DTSA preempts state trade secrets law.
Which of the following is most important in determining who bears the risk of loss in a sale of goods contract?
The agreement of the parties
Which of the following is true of a deed of trust?
The debtor buys and takes title to property on credit, and makes periodic payments on the debt to the creditor.
Which of the following is true of a mortgage?
The debtor buys and takes title to property on credit, and makes periodic payments on the debt to the creditor.
Which of the following is true of a land contract?
The debtor makes periodic payments of the purchase price to the creditor, and the creditor retains title to the property and does not convey it to the debtor until the full purchase price is paid.
In the case in the text, Branham v. Ford Motor Co., the court stated that the plaintiff was required to prove three things at trial for his product liability design defect action. Which of the following is not one of the three requirements?
The defendant knew the product was dangerous
Samwise works as a diamond buyer for Frodo, owner of the jewelry store Rings, Etc. Without Frodo's knowledge or consent, Samwise has also been working as a diamond sales agent for Sauron Mines. On several occasions he has sold Sauron Mines's diamonds to Frodo for inflated prices and then pocketed the difference. Also, because of his position with Sauron Mines, Samwise has become aware that a supposedly impending strike by diamond workers in Sauron Mines, which has been driving up diamond prices, has been avoided. This information would be relevant to Frodo and material to decisions Frodo will be making about Rings, Etc. Samwise does not tell Frodo that the strike has been averted. Which of the following fiduciary duties to Frodo has Samwise not breached in this situation? Multiple Choice
The duty not to disclose confidential information.
Which of the following is least likely to be covered for work leave under the Family and Medical Leave Act (FMLA)?
The employee needs to care for a grandparent with a serious health condition.
Which of the following statements about criminal prosecutions pursuant to the Sherman Act is false?
The government must only prove an unlawful purpose to sustain a criminal conviction.
The primary difference between a limited partnership and a limited liability limited partnership is:
The limited partners and the general partners in a limited partnership will have no liability for most obligations of the limited liability limited partnership.
Which of the following is an advantage of a sole proprietorship?
The owner of a sole proprietorship has complete control over the business.
Which of the following is not a legal formality required for a mortgage
The signature of the creditor-mortgagee
Which of the following state tax scenarios violates the commerce clause?
The tax is slightly related to the services provided by the state.
Which of the following statements about the employment-at-will rule is false?
The termination of the employee-employer relationship can occur without notice.
Which of the following statements about a transfer of a partner's transferable interest is true? Multiple Choice
The transferee can ask a court to dissolve and wind up the partnership, but only if the partnership is at will.
________________, which results from providing insufficient contributions of money and other property in relation to the nature and risks of the business, can lead to corporate veil piercing because it _______________________________. Multiple Choice
Thin capitalization; defrauds creditors of the corporation
Jack has been Will's personal assistant for 10 years. Jack's duties have always included arranging for one room in Will's house to be re-decorated every year while Will is on his annual vacation in Greece. For the last five years, Jack has hired Grace as the interior designer in charge of the re-decoration project. This year, two weeks before Will left for Greece, he and Jack had a major disagreement about how to decorate the spare bedroom. Will wanted to go with a French-toille inspired theme. Jack insisted on a Hello Kitty theme. The snit escalated into an all-out fight and Will abruptly fired Jack. Without Will's knowledge, Jack went ahead and hired Grace to decorate the spare bedroom in a Hello Kitty theme. He paid Grace's usual 50% up-front fee with Will's credit card, which Will forgot to take away from Jack. When Will returns from Greece he is livid. He refuses to pay Grace for the balance of the bill, because he claims that Jack acted without authority. Is Will liable to Grace for the balance of the bill?
Yes, because, even though the agency was terminated, Jack retained apparent authority to bind Will to contracts with Grace until Will actually notified Grace of the termination.
If required to qualify to do intrastate business in a state, a foreign corporation must file _______________________.
a certificate of authority
In Green v. Ford Motor Co., the case in the text, the Indiana Supreme Court held that in crashworthiness cases alleging enhanced injuries:
a finder of fact shall apportion fault to the person suffering physical harm when that alleged fault relates to the cause of the underlying accident.
Anne worked as Amanda's assistant. Amanda told Anne to buy Amanda coffee every morning (using Anne's own money) and to buy Amanda the latest fashion accessory (scarf, purse, hat, watch, etc.) from Nordstrom on Friday of each week (using Amanda's store account with Nordstrom). Anne has done so for the past year. This past Friday, Anne bought Amanda coffee using Anne's own money, and bought a scarf for Amanda and a purse for herself from Nordstrom (both of which she charged to Amanda's store account). A court is most likely to find that Anne had _______ authority to buy the coffee and scarf; that Anne had _______ authority to buy the purse; and that Amanda has a duty to _______ Anne for the coffee.
actual; apparent; reimburse
Partners of a partnership:
are entitled to income of the partnership, which must be reported on their individual federal income tax returns.
Government-owned corporations:
are owned by governments and perform governmental and business functions.
In a limited partnership, limited partners:
are passive investors.
Incorporation of a nonprofit corporation under state law requires delivering its ______ to the secretary of state.
certificate of nonprofit
Ice Blue Dressmakers, Inc. owns 70 retail outlets throughout the United States. To limit liability, Ice Blue Dressmakers operates as a holding company and owns each of the retail outlets as separate subsidiary corporations. Each of the subsidiaries owns and conducts the business of a separate retail outlet. As the parent corporation, Ice Blue Dressmakers wholly owns each subsidiary. To prevent piercing of the corporate veils between the subsidiaries and/or between the parent company and its subsidiaries, the companies should do all the following except:
collect subsidiaries' profits in an account held by the parent, which is used to timely pay the subsidiaries' debts.
A _________________________________, is known as a pseudo-foreign corporation.
corporation that conducts most of its business in a state other than the one in which it is incorporated
A pseudo-foreign corporation is a:
corporation that conducts most of its business in a state other than the one in which it is incorporated.
A joint venture is a(n):
enterprise engaged in a single project.
Jack is the sole proprietor of his sewing business, Jack's Custom Tailoring. Jack is required to
file the trade name under a state statute requiring the registration of fictitious business names.
In a limited partnership, general partners:
have the right to manage the business.
When one party to a contract claims that the defendant's meddling with the other party's performance of the contract wrongly caused the plaintiff to lose the benefit of that performance, the plaintiff has a cause of action for: Multiple Choice
interference with contractual relations.
Not-for-profit corporations:
issue no stock and expect no profit, but rather provide services to their members without a profit motive.
For-profit corporations:
issue stock to their shareholders, who invest in the corporation with the expectation that they will earn a profit.
A _____ is a partnership whose partners have elected limited liability status.
limited liability partnership
A _____ has one or more general partners and one or more limited partners.
limited partnership
An S corporation:
may have only one class of shares.
The case in the text, Riegel v. Medtronic, Inc., is an example of the concept of:
preemption.
As demonstrated in the case in the text, Finch v. Raymer, the presumption is very strong that:
property purchased with partnership funds and used in the partnership belongs to the partnership.
A corporation that conducts most of its business in a state other than the one in which it is incorporated is called a(n) _______________________________ in the state in which it conducts most of its business.
pseudo-foreign corporation
Susan was hired by Teddy & Co. as a sales woman. However, management, upon seeing her intelligence and capabilities allowed her to use the office library and research facility to create an inventive product. Susan now wants to patent the product in her own name. This is not permissible under the:
shop right doctrine.
In the case in the text, Janke v. Brooks, the court concluded that:
the UCC did apply because the services rendered were incidental.
In the case in the text, Wilke v. Woodhouse Ford, Inc., the court held that:
the implied warranty disclaimer did not violate public policy.
In Coleman v. Retina Consultants, P.C., the case in the text, the court held that:
the plain language of the injunction exceeded the scope required of Coleman pursuant to the terms of the Software Agreement.
For antitrust purposes, monopoly power is usually described as _________________.
the power to fix prices or exclude competitors from a given market
In the case in the text, United States v. Hsiung, the court held that:
the price-fixing scheme as alleged and proven was subject to per se analysis under the Sherman Act.
A pastor of a church (a nonprofit corporation) believes that his salary is too small to cover his meager expenses. When repeated requests to superiors do not lead to a salary increase, he starts supplementing his salary with church donations. What risk is he running?
the veil between the pastor and the church will be pierced because the pastor's act is defrauding church members.
As demonstrated by the case in the text, Holiday Motor Corp. v. Walters, not all courts recognize the crashworthiness doctrine. However, courts that do recognize this doctrine must determine whether a manufacturer:
took relevant and reasonable steps in anticipation of foreseeable harm-causing scenarios.
To comply with the commerce clause, a state tax that is applied to a foreign corporation must do all of the following, except:
treat intrastate transactions more favorably than interstate transactions.
Under the UCC, _____ means that a buyer has given any consideration sufficient to support a simple contract.
value