Econ 3305 Final

What is the maximum penalty a corporation can receive for a violation of the Sherman Act? a. three years' imprisonment b. $350,000 c. $100 million d. both $350,000 and three years' imprisonment

$100 Million

The elements of a common law cause of action for fraud are:

(1) a representation of fact; (2) its falsity; (3) its materiality; (4) the representer's knowledge of its falsity or ignorance of its truth; (5) the representer's intent that it should be acted upon by the person in the manner reasonably contemplated; (6) the injured party's ignorance of its falsity; (7) the injured party's reliance on its truth; (8) the injured party's right to rely thereon; and (9) the injured party's consequent and proximate injury.

Ronald H. Coase

(1910-2013): Wrote "The Nature of the Firm," and "The Problem of Social Cost," property rights Coase, who believed economists should study real markets and not theoretical ones, established the case for the corporation as a means to pay the costs of operating a marketplace. states that when conflicting property rights occur, bargaining between the parties involved will lead to an efficient outcome regardless of which party is ultimately awarded the property rights, as long as the transaction costs associated with bargaining are negligible.

Which of the following contract subject matters must be evidenced by a writing to be enforceable under the statute of frauds? a. A contract for consulting for 6 months @ $10,000 per month plus expenses b. A contract for the sale of an easement for $75 c. All of the answers must be in writing. d. A contract for the sale of a computer monitor for $220

A contract for the sale of an easement for $75

The language "I offer to sell you my 1974 White Ford Torino" is: a. not a valid offer because there are no terms for payment. b. a valid offer. c. not a valid offer because it is oral. d. not a valid offer because it lacks a definite price.

A valid offer

Which of the following is not an exemption to the Robinson-Patman Act? a. Sales to local governments b. All of the answers are exemptions. c. Sales to the federal government d. Sales to nonprofit institutions

All of the answers are exemptions

Steve Martin is negotiating with Bill Murray to buy Bill's mountain bicycle. The following conversation has taken place: Steve: "I will buy your mountain bike for $325.00. Bill: "I couldn't sell it for less than $375.00." Steve: "I'll take it for $375.00." Which of the following statements is true? a. none of the answers b. Bill and Steve have a contract for the sale of the bike at $325.00. c. Bill and Steve have a contract for the sale of the bike at $375.00. d. Bill and Steve do not have a contract.

Bill and Steve do not have a contract.

Maximum price requirements: a. only affect the amount sold and not the competition; and there is no antitrust violation. b. constitute resale price maintenance. c. none of the answers d. do not constitute antitrust violations because of the benefits to consumers.

Constitute resale price maintenance.

Walter E Williams

Economist, Social scientist; An American economist, commentator, and academic. He is the John M. Olin Distinguished Professor of Economics at George Mason University, as well as a syndicated columnist and author known for his libertarian views.

Which one of the following is not an element of a security? a. A common enterprise b. Investment of money c. Expectation of profits d. Equal amount of risk

Equal amount of risk

Vosberg v Putney

Facts: 11 year old (Pl) and 14 year old (Def) in classroom, Def tripped Pl, who had an injury to his leg 6 weeks prior that def didn't know about, Pl didn't feel pain at first, months later had sharp pain. Got sick and needed two surgeries, lost his leg. Defendant was found liable for damage and loss of limb. Importance: Previous injury (susceptibility to damage) doesn't mitigate def liability.

Bird v Holbrook

Facts: Def was robbed so he set a spring gun in his valuable tulip garden. Def didn't leave notice of gun, as he intended to injure any robbers. Instead, he shot Pl in the knee when he went to grab a peacock who had wandered into the garden. Ruling: Def was liable as he gave no warning to someone who only trespassed, an offence that does not call for being shot.

Summers v Tice

Facts: Pl injured by birdshot (based on his own negligence and defs), Def 1 & 2 both shot in same direction at same time, claim they are not both joint tort feasers because they were not acting together and can't both have caused injury Ruling: Both were liable and are joint tort feasors because they both had wrongdoing. Impossible to determine which was more likely to be liable = both liable Importance: Shifts burden of proof to Def in regards to proving lack of liability

US v Carroll Towing Co

Facts: The Anna C (barge leased by US/Pl), was untied along with other barges from a pier by Def agent in the process of removing another barge. The barges broke free and the Anna C sunk. Pl sued Def for negligence Ruling: Carroll was towing, as there was a high enough probability of this happening that they should've had a worker on the untied barges. Importance: created calculus of negligence (If Burden < Cost of Care * Probability, then accused didn't meet burden of care)

In a gambling contract in Tex, where gambling is not legal, you can sue only to recover your original bet, not the winning amount. True or false

False

Hadley v Baxendale

Importance: It sets the basic rule to determine consequential damages from a breach of contract. Facts: Pl needed maintenance on a machine for his business, and made a contract with Def to deliver machine to repair people on a date. Def did not deliver on time, causing Pl to lose profit. Pl sued for loss of profit. Ruling: a breaching party is liable for all losses that the contracting parties should have foreseen, but is not liable for any losses that the breaching party could not have foreseen on the information available to him. Baxendale was not liable as he did not know the damages he would cause by this breach.

Ploof v Putnam

Issue: Does the privilege to invade another's land by reason of private necessity supersede the privilege of the possessor of the land to use reasonable force to prevent the invasion? Answer: Yes, private emergency supersedes reasonable expectation of right to privacy in case of pl. loss of life AKA private necessity must be greater than private property interests being risked Facts: Def owned dock on lake, Pl tried to dock boat during storm, Def worker threw off boat ties during storm, Pl boat crashed. Pl sues saying def worker trespassed the boat mooring equip., violation of duty to help.

Madsen v East Jordan Irrigation Co

Issue: Is strict liability appropriate if the damages are only indirectly caused by blasting operations? Answer: No, intervening act of animal broke chain of causation. Minks abnormally sensitive, its disposition couldn't be anticipated. Facts: Pl owned mink farm near Def blasting on property, blasting scared mother minks and they ate a bunch of kittens. Pl sued for loss of kittens

Sindell v Abbott Labs

Issue: May Pl recover from drug manufacturers that produced a drug identical to the one that injure Pl without identifying the manufacturer of the precise product that caused the injury? Answer: Yes, this case created market share liability. Since all the manufacturers created the drug that caused cancer and the drug was fungible (Tylenol = generic acetaminophen) they were all liable, at the percentage of market share at time of use. Facts: Pl developed cancer as result of her mother's use of drug DES during pregnancy. Many manufacturers produced DES and Pl did not know which one.

Vincent v Lake Erie Transportation Co

Issue: May one who is forced by necessity to use the property of another do so without liability for injury to the property caused by his use? Answer: No, he is liable for damages to dock. Used ordinary prudence to stay docked during storm, protected boat (more valuable) instead of dock, but still liable for damages to dock Facts: Def docked during storm, damages to dock were $500. Pl sues for recovery of damages, claims negligence to dock during storm. Witness (not there during storm, just familiar with area): there were other places to dock. Defendant claims necessity as defense to any liability

The first state to have securities laws was: a. Maine. b. New York. c. Kansas. d. Ohio.

Kansas

Orange Company makes computers. The company's ad states that "if you aren't eatin' an Orange, you aren't gettin' any 'C.' " The Federal Trade Commission would consider this ad: a. none of the answers b. a deceptive half-truth. c. false and misleading. d. impermissibly vague and general.

None of the answers

Arthur Cecil Pigou

Pioneered the idea that negative externalities (such as pollution) can be solved if taxes are levied equal to the damages from the externality. (1877-1959)- Externalities.- Taxes to correct the market outcome back to efficiency and avoid over production or over consumption of the good creating a negative externality.- The role of the State be essential through the theory of market failures.- To create perfect competition conditions a state and laws are needed!

Permission by a shareholder to someone else to vote his shares as he wishes is called: a. tombstone. b. proxy. c. red herring. d. registration.

Proxy

What are Red Flag rules? a. Rules that require all businesses to have protective measures in place to protect from identity theft b. Rules prohibiting the discrimination based on race in determining creditworthiness c. Rules prohibiting collection agencies from garnishing wages d. Rules that give consumers the right to see information reported about them that plays a role in credit being denied

Rules that require all businesses to have protective measures in place to protect from identity theft

"Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal. Every person who shall make any contract or engage in any combination or conspiracy hereby declared to be illegal shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine not exceeding $10,000,000 if a corporation, or, if any other person, $350,000, or by imprisonment not exceeding three years, or by both said punishments, in the discretion of the court."

Section 1 of Sherman Act

"Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine not exceeding $10,000,000 if a corporation, or, if any other person, $350,000, or by imprisonment not exceeding three years, or by both said punishments, in the discretion of the court."

Section 2 of Sherman Act

"No person engaged in commerce or in any activity affecting commerce shall acquire, directly or indirectly, the whole or any part of the stock or other share capital and no person subject to the jurisdiction of the Federal Trade Commission shall acquire the whole or any part of the assets of another person engaged also in commerce or in any activity affecting commerce, where in any line of commerce or in any activity affecting commerce in any section of the country, the effect of such acquisition may be substantially to lessen competition, or to tend to create a monopoly."

Section 7 of Clayton Act

Which of the following statutes was the first federal antitrust statute? a. Sherman Act b. Federal Trade Commission Act c. none of the answers d. Clayton Act

Sherman Act

he first antitrust statute enacted by Congress (in 1890) was:

Sherman Act

The first pleading to initiate a lawsuit is commonly called: a. the complaint or petition b. the answer c. the affirmative defense d. the res judicata e. none of the above

The complaint or petition

A horizontal merger is a merger between two like firms competing in the same market. True or false?

True

The per se rule means if the activity exists, it is a violation. There is no possible defense. True or false?

True

The screening process used to select jury members is called: a. adverse selection b. voir dire c. summary selection d. venue e. sequestering

Voir Dire

Thomas Sowell

Wrote "A Conflict of Visions" - constrained vs. unconstrained vision. black economist of the late 20th century... careless welfare programs hurt ethnic minorities by destroying the family and the work ethic in the inner cities

Davis Enterprises manufactures a cotton candy machine. It will not sell its machine unless the buyer purchases at least five-dozen paper cones for holding the cotton candy. Davis Enterprise's requirement is: a. a tying arrangement. b. none of the answers c. a requirements contract. d. an example of an exclusive dealing contract.

a tying arrangement.

Suggested retail prices sent to retailers by the manufacturer constitute: a. a violation of the antitrust laws if the suggested prices are enforced. b. price fixing. c. resale price maintenance. d. none of the answers

a violation of the antitrust laws if the suggested prices are enforced.

Regarding contracts, which of the following is effective upon mailing or dispatch? a. Acceptance b. Rejections c. Offers d. Revocation

acceptance

Following service of plaintiff's complaint or petition, defendant: a. must file a responsive pleading (or suffer default) b. may file a motion to dismiss c. may file an answer with an affirmative defense d. must file any counterclaims e. all of the above are possible

all of the above are possible

If a party refuses to comply with a court order to produce documents or answer written interrogatories, the court may: a. enter judgment in favor of the other party b. impose sanctions on the party refusing to answer c. impose fines on the party refusing to answer d. send the party refusing to answer to jail e. all of the above are possible

all of the above are possible

Tyler, age 16 purchases a car on credit from the used car lot down from his house. He makes all of the payments on the note until his 17th birthday when he wrecks the car. What are his options? a. Tyler can fix the car and keep it past his 18th birthday but he would have to pay off the note. b. Tyler can return the wrecked car to the used car dealership with no further liability on the car note. c. all of the answers d. Tyler can fix the car and drive it until his 18th birthday and then return the car with no further liability on the car note.

all of the answers

Which of the following arrangements is subject to the rule of reason test? a. Resale price maintenance b. all of the answers c. Tying arrangements d. Exclusive distributorships

all of the answers

When a court orders someone not to do something, this is known as: a. a reformation b. an injunction c. restitution d. specific compulsion e. nominal performance

an injunction

Information such as medical bills are given to the opposing party as a result of: a. an interrogatory b. a request for admission c. a request for the production of documents d. a deposition e. any of the above

an order for the production of documents

State securities laws are called: a. blue sky laws. b. none of the answers c. gold sky laws. d. red sky laws.

blue sky laws.

In a civil trial the parties must prove their contentions: a. beyond a reasonable doubt b. with all due certainty c. to the satisfaction of the plaintiff d. by a preponderance of the evidence e. unanimously

by a preponderance of the evidence

Territorial restrictions are: a. the same as tying sales. b. can be analyzed using the rule of reason if there is not price fixing. c. illegal per se. d. none of the answers

can be analyzed using the rule of reason if there is not price fixing.

Vertical restraint of trade: a. concerns mergers between manufacturers and wholesalers. b. is regulated by the Sherman Act. c. all of the answers d. is illegal per se.

concerns mergers between manufacturers and wholesalers.

Super Skinny Products, Inc. engages in deceptive advertising when it markets its product Weight-Be-Gone as able to help consumers lose weight in their sleep. Super Skinny is ordered to include in all future advertising of Weight-Be-Gone the statement, "This product will not cause anyone to lose weight while sleeping." This is a: a. corrective advertising order. b. multiple product order. c. "cooling-off" law. d. validation notice.

corrective advertising order.

If, in response to a plaintiff's assertions, a defendant asserts that the plaintiff owes the defendant money, the defendant has made a: a. demurrer b. summons c. affirmative defense d. counterclaim e. motion for judgement n.o.v.

counterclaim

Sworn testimony, outside of the courtroom, of a witness that is recorded by a court official is a: a. request for admission b. production of testimony c. discovery testimonial d. deposition e. demurrer of oath

deposition

To begin the litigation process, the plaintiff must first: a. give notice to the defendant by service of process b. determine in which court to bring the action c. serve the defendant with the complaint d. make a motion for a pleading e. request a pre-trial hearing before a judge

determine in which court to bring the action

Another word for promissory estoppel is: a. bilateral contract. b. unilateral contract. c. detrimental reliance. d. consideration.

detrimental reliance.

Terminating a corporation requires: a. both of the answers b. none of the answers c. winding up. d. dissolution.

dissolution and winding up both of the answers

An example of an injunctions is a court order directing someone to stop doing something. This is a part of: a. nominal damages that courts may award b. exemplary damages that courts may award c. compensatory damages that courts may award d. equitable powers that courts may use e. none of the above

equitable powers that courts may use

The raising of funds through the sale of company stock is called: a. passive financing. b. none of the answers c. national exchange. d. equity financing.

equity financing.

The business judgment rule holds directors liable for: a. none of the answers b. errors in business judgment. c. their mistakes. d. failure to obtain necessary information according to an industry standard for making decisions.

failure to obtain necessary information according to an industry standard for making decisions.

Ringo Star faxes to Donnie's Drum Stors: "I'll take 10 drums @ $175 each." Donnie's Drums returns fax: "Ok. Will deliver tomorrow AM." Ringo and Donnie: a. had a contract when Donnie's fax was received. b. do not have a contract because of the mirror image rule. c. do not have a contract because the faxes will not satisfy the statute of frauds. d. had a contract when Donnie's fax was sent.

had a contract when Donnie's fax was sent.

A director who takes advantage of a corporate opportunity for himself: a. will not owe the profits to the corporation so long as the venture was disclosed in advance. b. will owe his/her corporation the profits from the opportunity. c. has violated his fiduciary duty. d. none of the answers

has violated his fiduciary duty.

The following series of events occurred between Herb's Herbal Sausage Supply and the Restaurant: May 1 - The Restaurant faxes Herb's and offers to buy 200 lbs. of spicy sausage at $3.29 per lb. May 2 - Herb's faxes back: "Price is okay. Payment prior to delivery." Herb's and The Restaurant: a. do not have a contract. b. have a contract on May 2 with the payment term. c. have a contract on May 2 without the payment term. d. none of the answers

have a contract on May 2 with the payment term.

Resale price maintenance occurs when: . a. minimum or maximum prices are enforced. b. all of the answers c. consignment arrangements control prices. d. the manufacturer suggests retail price.

minimum or maximum prices are enforced.

Precise GPS Company's ad states that its product is "the finest that money can buy." Because of this ad, the Federal Trade Commission is most likely to issue a: a. none of the answers b. counteradvertising order. c. cease-and-desist order. d. multiple product order.

none of the answers

Paychex Loan Company extends credit in the ordinary course of its business. Under the Truth-in-Lending Act, Paychex must inform potential borrowers of: a. credit terms offered by other lenders and its own credit terms. b. only the credit terms that will convince borrowers to "close the deal." c. only its own credit terms. d. no credit terms.

only its own credit terms.

A limited partner cannot: a. own the partnership property in his/her name. b. none of the answers c. participate in management. d. receive profits until after the general partner does.

participate in management.

Which is the correct order of stages for a typical lawsuit: a. pleadings, discovery, pretrial, trial, appeals b. pleadings, pretrial, discovery, trial, appeals c. pretrial, pleadings, discovery, trial, appeals d. discovery, pretrial, trial, pleadings, appeals e. discovery, pleadings, pretrial, trial, appeals

pleadings, discovery, pretrial, trial, appeals

Parties present their arguments to appellate courts by: a. holding a new trial with a new jury b. holding a new trial with the same jury used before c. holding a new trial without a jury d. presenting written briefs and oral arguments e. reading the trial transcript to the court

presenting written briefs and oral arguments

Predatory pricing is: a. price discrimination. b. per se illegal. c. pricing below cost. d. none of the answers

pricing below cost.

Transfer of a partner's interest: a. makes the transferee a partner. b. relieves the partner of liability. c. is void. d. results in dissolution of the partnership.

results in dissolution of the partnership.

Resale price maintenance is: a. an attempt by a retailer to control prices. b. regulated by the Clayton Act. c. subject to the rule of reason test. d. a per se violation.

subject to the rule of reason test.

the Clayton Act prevents a corporation from acquiring another corporation if:

the effect would substantially lessen competition and tend to create a monopoly.

After completion of the discovery process the case is ready: a. to go to trial b. to go to the jury for deliberation c. to go to the judge for determination d. for final arguments e. none of the above

to go to trial

Treble damages are: a. the same as punitive damages. b. triple actual damages. c. none of the answers d. consequential damages.

triple actual damages.

Which of the following is not true about expert witnesses and their testimony: a. the testimony may not be contrary to prevailing scientific opinion b. if the evidence is not credible it will be rejected by the court c. the experts may not be questioned by the opposition before trial d. when experts conflict, the testimony of both sides will be stricken e. all of the above are true

when experts conflict, the testimony of both sides will be stricken

Abel and Cain entered into a contract for Abel to furnish landscaping services for Cain's office complex. The contract provides the fee will be $75 per month. At the time Cain signs the agreement, the two discuss the fact that the services required in the winter will be less and the fee will be reduced to $50 per month. Abel adds as Cain is signing, "I just forgot to put that sliding scale in this contract. Don't worry - I'll take care of it because we understand each other." Cain: a. none of the answers b. will only need to pay $50 during the winter months. c. will be permitted to introduce evidence about the winter fee reduction. d. will pay $75 per month every month because of parol evidence.

will pay $75 per month every month because of parol evidence.

Which of the following is not a typical tool of the discovery process in civil litigation: a. interrogatories b. wiretaps c. orders for production of documents and requests for admissions d. orders for a mental or physical examination e. all of the above are tools used

wiretaps