L.E. Final Exam
Baker George took orders for his famous Christmas Fruitcake. His ad demanded that orders must be placed two months prior to delivery. However, this year, George received three times his usual number of orders. In mid-October, George knew that he could not make on-time deliveries. Which of the following is true?
George has to notify customers and ask if they still want their fruitcake
On July 1, 2015, Quick, Onyx, and Nash were deeded a piece of land as tenants in common. The deed provided that Quick owned one-half the property and Onyx and Nash owned one-quarter each. If Nash dies, the property will be owned as follows:
Quick ½, Onyx ¼, Nash's heirs ¼
Tying Product
in a tying arrangement, the product offered for sale on the condition that another product be purchased as well
Tied Product
in a tying arrangement, the product that a buyer must purchase as the condition for being allowed to buy another product
Zoe rents a loft space for two years to use as her art studio. One day, Zoe accidentally clogs the sink by washing too much paint down the drain, causing the water to back up and flood into the loft. When the landlord comes to repair the water damage, she notices that there is a leak in the 20-year old windows, and that Zoe has installed extra light fixtures on the walls to better illuminate her work. Zoe assures the landlord that she can easily remove the light fixtures before the end of the lease without damaging the walls. The landlord tells Zoe that she will have to pay for the cost to repair the water damage caused by the flooding and damage to the sink and replacing the windows, and demands that Zoe remove the extra lights immediately. Which of the landlord's demands would a court uphold?
Only the demand to pay for the cost to repair the water damage and plumbing.
patent
Patents give inventors the right to prevent others from making, using, or selling their inventions for a limited time.
Externality
When people do not bear the full cost of their decisions.
Rule of Reason
An action that breaches antitrust laws only if it has an anticompetitive impact
Tracing
An auditor takes an item of original data and tracks it forward to ensure that it has been properly recorded throughout the bookkeeping process
Per Se
An automatic breach of antitrust laws
Paris Accord
An international agreement to prevent climate change by reducing GHGs.
novel
An invention must be new to be patentable
Nonobvious
An invention must be unexpected to be patentable
Utility
An invention must be useful for its stated purpose to be patentable
clean opinion
An unqualified opinion. The company's financial statements fairly present its financial condition in accordance with GAAP.
Fred is engaged to Angela, and has a daughter, Samantha, from a previous marriage. Fred borrows the cost of his upcoming wedding from his friend Ed, and signs a loan agreement with a payback schedule. The week before the wedding, Fred dies in a tragic skiing accident. Who may recover from a life insurance policy on Fred, assuming the policy was taken out prior to his death?
Angela, Samantha, and Ed All of these
Check Cards
Another name for a Debit Card.
Superfund
Another name for the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).
Stationary source
Any building or facility that emits a certain level of pollution
Trademark
Any combination of words and symbols that a business uses to identify its products or services and distinguish them from others
Secondary Offering
Any public sale of securities by a company after the initial public offering.
Security
Any transaction in which the buyer invests money in a common enterprise and expects to earn a profit predominantly from the efforts of others
Accredited investors
Are institutions (such as banks and insurance companies) or wealthy individuals (with a net worth of more than $1 million or an annual income of more than $200,000).
For purposes of the Clean Water Act, Farmer Brown's fields ______ a point source. A canal that collects rainwater and discharges it into the Everglades _________ a point source.
Are not; is
Once you have purchased a CD and copied it onto your iPod, it is legal to give the CD to a friend. T or F?
False
Payday loans are illegal. T or F?
False
The first person to file the application is entitled to a patent over someone else who invented the product first. T or F?
False
Under federal law, accounting firms may not provide any consulting services to companies that they audit. T or F?
False
Under the 1934 Act, accountants are liable for negligent behavior. T or F?
False
To have an illegal monopoly, a company must: I. control the market. II. maintain its control improperly. III. have a market share greater than 90 percent.
I and II
Lucas has bought the following insurance this week: I. A life insurance policy on his brother II. A life insurance policy on the partner in his accounting practice III. A fire insurance policy on the fitness club he belongs to, so that if it burns down, he will receive a large enough payment to enable him to join a different club In which of these policies does he have an insurable interest?
II and III
To prove a violation of copyright law, the plaintiff does not need to prove that the infringer actually copied the work, but she does need to prove: I. the item has a © symbol on it. II. the infringer had access to the original. III. the two works are similar.
II and III
Which of the following policies are you likely to need in your lifetime? I. Service plan on an appliance II. Whole life insurance III. Disability insurance IV. Health insurance
III and IV
Material
Important enough to affect an investor's decision
Material
Important to the insurer's decision to issue a policy or set a premium amount
Which of the following forms of tenancy will be created if a tenant stays in possession of the leased premises without the landlord's consent, after the tenant's one-year written lease expires?
Tenancy at sufferance
Jasmine signs a lease for a residential apartment for 2 years. Jasmine does not renew the lease, but when the lease expires she does not want to move out. Instead, Jasmine remains in the apartment and sends the landlord that month's rent. The landlord returns the rent to Jasmine and tells her to sign a new lease or leave. What kind of tenancy does Jasmine currently have?
Tenancy at sufferance.
Carol is a 30-year-old surgeon with a husband and two young children. Carol receives a generous pension from her employer and diligently puts a portion of every paycheck into a trust fund for her children's education. Carol's husband works part-time as a graphic designer and spends more time taking care of the children to allow Carol to work the long hours her job requires. What type of life insurance should Carol get?
Term insurance
Stephanie purchases an automobile insurance policy that includes collision, comprehensive, and liability coverage. Stephanie lends her car to her brother Daniel. Sally, who is uninsured, crashes into Stephanie's car while Daniel is driving. The car requires $5,000 in repairs, and Daniel pays $3,000 in medical bills to treat his injuries from the accident. How much will Stephanie's insurance cover?
The $5,000 for car repairs, but not the $3,000 in Daniel's medical bills.
Public Company Accounting Oversight Board (PCAOB)
The PCAOB regulates public accounting firms
Go effective
The SEC authorizes a company to begin the public sale of its stock.
GAAP
"Generally accepted accounting principles" are the rules for preparing financial statements
GAAS
"Generally accepted auditing standards" are the rules for conducting audits.
International Financial Reporting Standards (IFRS)
"International financial reporting standards" are an international alternative to GAAP.
Victor purchased $1 million of insurance on his barn even though the barn was worth only $500,000. Victor's barn was struck by lightning and burned down. Under the insurance policy, how much will Victor be able to recover?
$500,000.
Issuer
A company that sells its own stock
Initial Public Offering (IPO)
A company's first public sale of securities
Condemnation
A court order awarding title of real property to the government in exchange for just compensation.
Prospectus
A document that provides potential investors with information about a security.
Partition by kind
A form of partition in which a property is divided among co-owners
trade secret
A formula, device, process, method or compilation other information that, when used in a business, gives the owner an advantage over competitors.
Comment Letter
A letter from the SEC to an issuer listing changes that must be made to the registration statement
Qualified Mortgages (QMs)
A mortgage that, according to the CFPB, complies with TILA.
In 2012, Donny wanted to get a loan to buy a house but was told that his credit scores were bad. Which of the following, if distributed via his credit report, is NOT in violation of the FCRA?
A note claiming that five businesses sought Donny's credit score in 2010.
Tenant
A person given temporary possession of the landlord's property
bait and switch
A practice where sellers advertise products that are not generally available but are being used to draw interested parties in so that they will buy other products
Covenant
A promise or undertaking contained in a lease whose breach does not result in eviction
Condition
A promise or undertaking contained in a lease whose breach may result in eviction
due diligence
A reasonable investigation of a registration statement
Leasehold
A right to possess real property temporarily
Private offering
A sale of securities in which the issuer provides less disclosure in return for selling less stock to fewer investors than in a public offering
binder
A short document acknowledging receipt of an application and premium for an insurance policy. It indicates that a policy is temporarily in effect.
Which of the following terms cannot be trademarked?
A surname
Engagement Letter
A written contract by which a client hires an accountant
Scienter
Acting with the intent to deceive or with deliberate recklessness as to the possibility of misleading investors.
Joint and several
All members of a group are liable. They can be sued as a group, or any of them can be sued individually for the full amount of the damages. But the plaintiff may not recover more than 100 percent of her damages.
Depending on state law, if a lender violates the usury laws, the borrower could possibly be allowed to keep: I. the interest that exceeds the usury limit. II. all the interest. III. all of the loan and the interest.
All of these
Which of the following statements are true of Superfund? I. Anyone who has ever owned a site is liable for cleanup costs. II. Anyone who has ever transported waste to a site is liable for cleanup costs. III. Anyone who has ever disposed of waste at a site is liable for cleanup costs.
All of these
Bob and Marsha co-own a house. In which of the following situations are they tenants in common?
All of these answers are correct.
Adverse Possession
Allows someone to take title to land without paying for it, if she meets four specific standards
Securities Act of 1933
Also referred to as the 1933 Act, this statute regulates the issuance of new securities
Securities Exchange Act of 1934
Also referred to as the 1934 Act, this statute regulates companies with publicly traded securities.
Scienter
An action is done knowingly or recklessly with an intent to deceive, manipulate, or defraud
Road show
As part of the sales process, company executives and investment bankers make presentations to potential investors.
Vouching
Auditors choose a transaction listed in a company's books and check backwards for original data to support it
Which of the following statements about Sarbanes-Oxley is FALSE?
Auditors must report to the CEO of the company they are auditing.
BACT
Best Available Control Technology
Bobby applied for and received a credit card with a $5,000 limit when he graduated from college and started his new job. Bobby's roommate and Bobby agree to split the purchase of a $5,500 large flat-screen 3-D television and sound system for their apartment. Bobby purchases the items using his credit card, and the charge goes through without a problem. When Bobby's roommate does not pay him back, however, Bobby has trouble making the credit card payments. It is not until Bobby receives a loan from a family member several months later that he can pay off the credit card balance. In that time, the credit card company charged Bobby a $50 overlimit fee and $100 in late fees for the two months that Bobby did not pay on time. Must Bobby pay these charges?
Bobby must pay only $60 of the late fees.
Consumer Reporting Agencies
Businesses that collect and sell personal information on consumers to third parties
Lauren has owned her frozen yogurt shop "FroYo2GoGo" for about three years. While running her business, she developed a machine and process that can freeze yogurt and maintain its high quality for up to 12 months. Current methods only maintain the frozen products for 2-3 months with the same quality shown by what Lauren has developed. Her brother Troy is an engineer, so she talks to him about both the machine and her freezing process. Troy thinks a skilled mechanic could "reverse engineer" Lauren's machine and figure out how it operates, but he is stumped regarding her freezing process, which involves a considerable number of steps and precise timing. How should Lauren protect her machine and her yogurt freezing process?
By applying for a utility patent for the machine, and protecting the freezing process as a trade secret.
Before permitting a company to issue new securities, the SEC investigates to ensure that the company has a reasonable business. T or F?
False
Dusty is trying to buy an office building to house his growing consulting firm. When Luke, a landlord, asks to see a set of financials, Dusty asks his accountant, Ellen, to prepare a set for Luke. Dusty shows these financials to a number of landlords, including Carter. Dusty rents from Carter. Ellen has been careless, and the financials are inaccurate. Dusty cannot pay his rent, and Carter files suit against Ellen. Which of the following statements is true?
Carter will win because Ellen was careless and she knew that landlords would see the financials.
Cameron and Mitchell own a commercial office building as joint tenants. Mitchell transfers his interest in the building to his sister Claire. A year later, Claire dies. Who receives Claire's 50 percent interest in the office building?
Claire's heirs receive Claire's interest.
In the movie The Hangover Part 2, Stu, the character played by actor Ed Helms, wakes up with a facial tattoo identical to that boxer Mike Tyson, who also appears in the film. Before the movie was released, the artist who designed and tattooed Mr. Tyson sued Warner Brothers in federal court for infringement. The suit delayed release of the film for several months and prevented the studio from showing the tattooed actor in trailers or clips of the film. The suit was later settled for an undisclosed amount, and the movie was then released intact. What would be the best form of protection for the intellectual property in a tattoo?
Copyright
To be successful in a suit under the Securities Act of 1933, the plaintiff must prove: Important Mistake in the Registration Statement Plaintiff Lost (a)No (b)No (c)Yes (d)Yes Plaintiff Lost Money Yes No No Yes
D: yes; yes
Horizontal price-fixing is legal as long as it does not have an anticompetitive impact. T or F?
False
Samantha buys a DVD and after watching it decides she does not like the movie. Samantha sells the DVD on the internet to Derrick, who burns a copy for his cousin. Have Samantha and Derrick violated the movie's copyright?
Derrick has violated copyright, but not Samantha.
Point Sources
Discharges from a single producer
If the insured makes any false statement in the application process, the insurance policy is voidable. (T or F).
False
On the first of every month, your monthly rent is automatically deducted from your bank account. You are moving out and want to make sure the payments stop. What should you do?
Either A or B.
preauthorized transfer
Electronic fund transfer authorized in advance to recur at regular intervals.
EIS
Environmental impact statement
A consumer reporting agency has the right to keep information in its files secret from the consumer. T or F?
False
A landlord may charge a tenant for normal wear and tear on an apartment, but the charges must be reasonable. T or F?
False
A store is permitted to advertise a product, as long as it can obtain, within seven days, sufficient stock to meet demand. T or F?
False
An annuity is simply a type of life insurance.
False
Any individual, business, or federal agency that significantly affects the quality of the environment must file an EIS. T or F?
False
Auditors are liable under the 1933 Act only if they intentionally misrepresent financial statements. T or F?
False
In 2009, Melissa developed a hydrogen powered engine for a car while working in her garage in her spare time. Melissa installed the engine in a small car that she has been driving around town. In 2012, engineers working for Ford Motor Co. independently developed an identical hydrogen powered engine. After completing tests on the engine for two years, Ford filed a patent for the engine on March 1, 2014. On March 2, 2014, Melissa also filed for a patent for her engine. Assuming the engine satisfies all of the requirements for a patent, who is entitled to the patent?
Ford, because Ford was the first to file for the patent.
Greenhouse gases
Gases that trap heat in the Earth's atmosphere, thereby causing global warming
Health maintenance organizations
Generally, patients can only be treated by doctors who are employees of the organization
Managed care plans
Health insurance plans that limit treatment choices to reduce costs
Jane's Boutique would like to buy some of Holistic Health Co.'s popular nail polish for resale. Holistic Health tells Jane that if she buys less than 100 units, she must also buy a small order of their new vitamin product. Jane has no interest in selling vitamins in her boutique. If Jane wanted to challenge Holistic Health's requirement as an illegal tying arrangement, what additional facts would she have to prove?
Holistic Health has significant power in the nail polish market and is shutting out a significant portion of the vitamin market through the tying arraignment.
Usury Statutes
Laws that limit the maximum interest rate a lender may charge.
Michael signs a lease for an apartment. The lease establishes a periodic tenancy for one year, starting September 1 and ending the following August 31. Rent is $800 per month. As August 31 approaches, Michael decides he would like to stay another year. He phones the landlord to tell him this, but the landlord is on vacation and Michael leaves a message. Michael sends in the September rent, but on September 15, the landlord tells him the rent is going up to $900 per month. He gives Michael the choice of paying the higher rent or leaving. Michael refuses to leave and continues to send checks for $800. The landlord sues. Landlord will:
Lose
In the registration statement filed with the SEC, DrugsUSA stated that it had three different medicines approved by the Food and Drug Administration (FDA). In reality, DrugsUSA had filed applications for approval with the FDA that were still pending. The SEC approved the sale of DrugsUSA stock, and Marilyn purchased $100,000 worth of stock. Two months later, all three of DrugsUSA's applications were denied by the FDA. The stock price plummeted, reducing the value of Marilyn's shares to a total of $2,000. What, if anything, can Marilyn recover?
Marilyn can recover $98,000 from DrugsUSA and the signatories of the registration statement.
Marissa accidentally left her wallet on an airplane. She did not discover the mistake until she unpacked her bags the next day. Marissa called the credit card companies of the two credit cards she owns, a MasterCard and an American Express Card, and reported the loss. Marissa did not think to call her bank and report her debit card stolen for two weeks. By the time Marissa called MasterCard, $200 in charges for purchases Marissa had not made had been placed on the card. After Marissa had notified American Express, the card was used to make a $500 purchase. Marissa's debit card was used the same day she lost it to make a $25 purchase, and then again the following week to make a $1,000 purchase. What charges, if any, is Marissa liable for?
Marissa is liable for $50 worth of charges on the MasterCard, and the first $500 of charges on the debit card (a total of $550).
Dannie Harvey, an architect, worked for O. R. Whitaker & Sons, an architecture firm. After she was fired, Harvey sued Whitaker for employment discrimination and Whitaker sued Harvey for slander. Discrimination and slander are intentional torts. Both Harvey and Whitaker carry professional liability insurance. Will either of them be covered by their professional liability insurance policies if they are found liable at trial?
Neither Harvey nor Whitaker will be covered.
If you are a smart consumer, you will: I. insure against as many different kinds of risks as you can so that no matter what happens, you will be protected. II. select as low a deductible as possible so that no matter what happens, you will not have to pay large sums out of pocket. III. buy flight insurance when you take long airplane flights so that your family will be protected if your plane crashes.
Neither I, II, nor III
Reserve Supply Corp., a cooperative of 379 lumber dealers, charged that Owens-Corning Fiberglass Corp. violated the Robinson-Patman Act by selling at lower prices to Reserve's competitors. It presented proof that these prices had harmed competition. Owens-Corning admitted that it had granted lower prices to a number of Reserve's competitors to meet, but not beat, the prices of other insulation manufacturers. Is Owens-Corning in violation of the RPA?
No because a manufacturer is not liable under the RPA if it charges lower prices to meet competition.
Brother invites Sister to use his second home after Sister's apartment burns down and tells her to stay as long as she would like. If Sister lives in the home continuously for ten years, using it as a true owner would, and no one else uses the property in this time, can she claim adverse possession?
No, because Brother invited Sister to stay at the house and never revoked the invitation.
Dr. Kaminsky was a gynecologist who practiced elective abortions in the state of Texas. In May 1983, the doctor signed a two-year lease for clinic office space from the building's owner, Fidelity Mutual Life Insurance Company. A clause in the lease stated "Lessee, on paying the said Rent, and any Additional Rental, shall and may peaceably and quietly have, hold and enjoy the Leased Premises for the said term." After moving into the building and beginning his practice, abortion protestors discovered the clinic location, and started organizing demonstrations in and around the building. On the days Dr. Kaminsky performed abortion procedures (usually Saturdays), singing and chanting demonstrators picketed in the building's parking lot, inner lobby, atrium area, stairwells, and even the office area waiting room. Protestors approached patients to speak to them, distributed literature, and attempted to block them from entering the building. Despite the doctor's repeated attempts to solicit help from Fidelity Mutual in controlling the demonstrators, there was little or no response. In December 1984, Dr. Kaminsky abandoned the premises, and Fidelity Mutual filed a claim against him for the unpaid rent. Will Fidelity Mutual prevail in their claim?
No, because Dr. Kaminsky was constructively evicted.
Mitchell notices that his neighbor has allowed a large tree to grow close to his house, and that the tree appears to be rotted. Although the tree does not present a danger to Mitchell's house, he suspects that it could break and fall on his neighbor's house during a storm. Looking to make some easy money, Mitchell takes out an insurance policy on his neighbor's house. The following winter, Mitchell's instincts are proven correct when the tree crashes through the neighbor's roof, causing significant damage. May Mitchell recover under the insurance policy?
No, because Mitchell does not have an insurable interest in his neighbor's house.
On March 1, Randy files an application with American Insurance Co. for home insurance on a house he is purchasing on March 15. On March 2, American sends Randy a binder that acknowledges receipt of the application and premium for the insurance policy. A hurricane causes substantial damage to the house on March 10, and on March 11 American denies Randy's application. Can Randy recover any money from American?
No, because Randy does not have an insurable interest in the house.
Roger Schlafly applied for a patent for two prime numbers. (A prime number cannot be evenly divided by any number other than itself and 1—2, 3, 5, 7, 11, 13, for example.) Schlafly's numbers are a bit longer - one is 150 digits, the other is 300. Should the Patent and Trademark Office (PTO) issue this patent?
No, because numbers are not patentable subject matter.
Molly ordered a custom-made plaque online from Master Woodwork, Inc., for her niece's college graduation. Master Woodwork promised that the plaque would ship on or before April 15, which meant it would arrive in plenty of time for the graduation on May 1. On April 1, Master Woodwork notified Molly that the shipment would be delayed until April 22. Molly did not respond because she was sure the plaque would still in arrive in time for the graduation. Master Woodwork sent Molly an e-mail on April 20 stating that the plaque would be shipped on April 30. Frustrated, Molly deleted Master Woodwork's email without responding and bought her niece a gift certificate. When the plaque arrived on May 4, Molly refused to accept it and told Master Woodwork she would not pay. Can Master Woodwork make Molly pay for the plaque?
No, because the order was cancelled when Master Woodwork missed the April 22 shipment date.
Big Drug Company produces a medicine that greatly reduces the risk of a mother transmitting HIV to her child. Big Drug filed for a patent for the medicine in 1990 and was issued a patent in 1992. Big Drug sells the medicine at an extraordinarily high price. In 2011, Zachary begins purchasing the medicine from Big Drug and distributing it in developing countries for free to pregnant women who cannot afford the drug at Big Drug's price. If Big Drug sues Zachary for patent infringement, will Big Drug win?
No, because the patent term has expired.
Pop-Cola is a small, not very successful, company that produces soft drinks and sells them in a small number of stores in Virginia. Heads of Pop-Cola hire a chemist from a successful national soft drink company, Refresco, whose products are known for its "one of a kind" taste. The chemist tells Pop-Cola that the key ingredient to Refresco's secret recipe is a special leaf that grows in the mountains. May Pop-Cola use the secret ingredient in its own soft-drinks?
No, because the recipe is a trade secret.
Sarah owns Fine Cuts hair salon. Hairdressers each rent a chair in the salon where they can style customers' hair, and Sarah provides receptionist services, maintains the space, and sells some hair care products at the front of the salon. The hairdressers must pay 35 percent of their profits to Sarah in return for the chair space and earn a commission for each hair product that they sell. Is Sarah selling the hairdressers a security in Fine Cuts?
No, the hairdressers are not expecting to earn money predominately from Sarah's efforts.
After acquiring the RazRSleek brand name and electric shaver assets, Flyy controlled 55 percent of the electric shaver industry in the United States. Chaser, a competitor, claimed that the acquisition of such a large market share was a violation of the law because the increased competition from Flyy would decrease Chaser's profits. Does Chaser have a valid claim?
No, unless Flyy excluded competitors and controlled prices.
Victoria's Secret, a well-known lingerie company, found out that a man named Victor Mosley is running a small store in Kentucky named "Victor's Little Secret." Mosley's shop sells guns and a variety of other weapons. Does Victoria's Secret have a valid claim?
No, unless Victoria's Secret's reputation was tarnished by association with unwholesome goods sold by Victor.
Fair Use Doctrine
Permits limited use of copyrighted material without permission of the author.
Nonpoint Sources
Pollutants that have no single producer but result from events such as storm-water runoff or rain
eminent domain
Power of a government to take private property for public use.
assignment
Process under which the original tenant transfers all of his rights and duties to a new tenant
Annuities
Provide payment to a beneficiary during his lifetime
liability insurance
Reimburses the insured for any liability she incurs by accidentally harming someone else.
Payday Loans
Small loans with high interest rates made to people who need money to make it to the next paycheck.
Paul's Pen Co. manufacturers and sells an inexpensive ball-point pen. Stacy's Stationery purchases the pens for $.25 each in quantities of 1,000. Stacey's discovered that a national chain, a competitor of Stacey's, buys the pen at $.20 for 1,000. If Stacy's Stationery sues Paul's Pen Co. for price discrimination:
Stacy's Stationery will win unless Paul's Pen Co. can justify the price differential.
Blue Sky Laws
State statutes regulating securities
Registration statement
The document that an issuer files with the SEC to initiate a public offering of securities
mitigate damages
The duty to keep losses at a minimum
Pay for service
The insurer pays for whatever treatments a doctor orders
Reversionary Interest
The landlord's right to occupy the property at the end of the lease.
Resale Price Maintenance (RPM)
The manufacturer sets minimum prices that retailers may charge. In other words, it prevents retailers from discounting.
Pauline wants to develop a line of flatware and pottery. She is experimenting with various names and symbols to develop a trademark. Pauline's three-year-old daughter tells a neighbor that "mommy makes Fatware and Potty." Pauline laughs so hard that she decides to design a trademark of a large, obese, pink pig sitting on a toilet, with the letters FP (initials for the term Fat-Potty) written underneath the pig. What is the best argument that Pauline's trademark is valid?
The mark is arbitrary.
In the documentary movie Expelled: No Intelligence Allowed, there was a 15-second clip of "Imagine," a song by John Lennon. The purpose of the scene was to criticize the song's message. John Lennon's wife and sons, who held the copyright to the song, sued the movie makers to prevent its use. Who won?
The movie makers under the fair use doctrine.
Deferred annuity contract
The owner makes a lump sum payment now, but receives no income until a later date
Landlord
The owner of a freehold estate who allows another person temporarily to live on his property.
Quiet Enjoyment
The right to inhabit the property in peace.
Freehold Estate
The right to possess land for an undefined length of time
Full Warranty
The seller must promise to fix a defective product for a reasonable time without charge.
Tom is renting an apartment from Brady. After Tom fails to pay rent for three months, Brady sends Tom a notice that he is in breach of the lease for nonpayment of rent. The next month, Tom again fails to pay any rent. Brady places Tom's belongings in storage, changes the locks to the apartment, and leases the apartment to a new tenant. If Tom sues Brady for a wrongful eviction, who will win?
Tom, because Brady did not follow the proper eviction procedures.
A landlord could be liable for a constructive eviction even if he never asked the tenant to leave. T or F?
True
If one joint tenant dies, his interest in the property passes to surviving joint tenants, not to his heirs. T or F?
True
In establishing national standards under the Clean Air Act, the EPA need not consider the cost of compliance. T or F?
True
In the case of corporations, copyright protection lasts 120 years from the product's creation. T or F?
True
It is legal for a company to sell its product at a price below cost so long as it does not intend to drive competitors out of business. T or F?
True
Violating the environmental laws can be a criminal offense, punishable by a prison term. T or F?
True
You should primarily buy insurance to protect against harm that you cannot afford. (T or F)
True
Joint Tenancy
Two or more people holding equal interest in a property, with the right of survivorship
Credit Score
Usually called a FICO score, this number is based on your credit report and is supposed to predict your ability to pay your bills.
Through her job as a paralegal at the Attorney General's office, Charlotte learns that MegaCorp has been defrauding its customers. Although the information is highly confidential, Charlotte shares it with her mother and asks her not to tell anyone. Charlotte's mother does not disclose the secret, but she does sell her stock in MegaCorp. Has Charlotte's mother committed a violation of securities law?
Yes, Charlotte's mother has committed insider trading by misappropriation.
James, the CEO of a major restaurant chain, learns that he is about to be fired by the Board of Directors. Furious, he writes a press release calling all of the company's executives "greedy scoundrels," and stating that "whoever has to fill my shoes will have to answer to the shareholders for the financial mess that they have created." James had no actual knowledge of any financial mismanagement by the company. The company's stock drops substantially in the few hours of trading that occur before the markets close after James releases his statement. The next day, James issues an apology, saying (truthfully) that his press release had no factual basis, and the stock recovers over the course of the week. Is James liable for a securities law violation?
Yes, James is liable for making an untrue statement of material fact.
Smalltown has two family-owned hardware stores that have been in business for years. Major Hardware opens one of its superstores in Smalltown, advertising extremely low prices, which are at below cost. Because Major owns stores nationally, it is able to keep prices extremely low until it forces both of the family-owned stores out of business. Once Major is the only hardware store in town, it raises its prices enough to make up for its former losses and to make some additional profit. Has Major violated any antitrust laws?
Yes, Major has engaged in predatory pricing.
David Delta rents an apartment on the second story of a building. The landlord leases space on the first floor below David's apartment to a cleaning company that mixes its cleaning chemicals in the leased space. The fumes from the company's chemical mixing drift up into David's apartment, even when the windows are closed. They cause David to suffer severe nausea and headaches, and he cannot sleep in the apartment. David's girlfriend and friends also refuse to come over due to the strong odors. If David brings a claim for nuisance, is he likely to win?
Yes, and the court will order an abatement.
Bobby works as a janitor for a large office building. One night when emptying the recycling bins in the offices of Big Co., Bobby sees a memo marked "Confidential - Eyes Only" on the top. Curious, Bobby reads the memo and learns that Big Co. is closing half of its juice manufacturing plants in the U.S. and laying off 2,000 employees. At the end of his shift, Bobby tells this to his supervisor and good friend who promptly sells her stock in Big Co. the next day. Is Bobby liable for insider trading?
Yes, as a tipper.
Advertisements for Clean Mouth mouthwash claimed that it was as effective as flossing in preventing tooth plaque and gum disease. This statement was true, but only if the flossing was done incorrectly. In fact, many consumers do floss incorrectly. Is this advertisement deceptive?
Yes, because Clean Mouth omitted important information from its claim.
Company A completes its initial public offering (IPO) and complies with all of the 1933 Act requirements. Must Company A register with the SEC as a reporting company under the 1934 Act?
Yes, because Company A has completed a public offering under the 1933 Act.
In 1985, Susannah Jones purchased a farm and several acres of land. An old wooden fence stood 200 yards south of the actual southern boundary of the plot of land that Jones purchased, but Jones thought that the fence ran along the southern boundary of her land. Jones installed a new, electrified fence, cleared the land on "her" side of the new fence, and began to graze cattle there. In 2000, Sam Kerry purchased the land that bordered the other side of the fence. In 2007, Kerry had the property surveyed and discovered that the true property boundary lay 200 yards north of the fence. The statutory period for adverse possession is 20 years. If Jones files suit the same year seeking a declaration that she now owns the 200 yards between the legal boundary and the fence, will Jones win?
Yes, because Jones has adversely possessed the land.
Joe Kraft writes a series of short stories and one of the stories is published in a magazine. Later, Kraft learns that Robert Rill has copied the story, removed Kraft's name, and is selling it on the internet as his own. Kraft registers the story with the Copyright Office and sues Rill for copyright infringement. Will Kraft win?
Yes, because Kraft's story was copyrighted automatically when he wrote it, and Rill is selling the copyrighted material without Kraft's permission.
Mark leases a house to Julia. When Julia mentions that the bedroom door is difficult to close, Mark comes to the house and fixes the door. Unfortunately, Mark leaves a sharp edge on the door that Julia catches her foot on, making a deep cut requiring multiple stitches. Julia sends Mark her medical bills associated with the injury. Under the common law rules, must Mark pay?
Yes, because Mark negligently performed a repair.
Aaron and his twin brother Erin lived together in an apartment near the college they were both attending. Aaron was working full-time in addition to going to school, while Erin was spending his time sleeping and playing video games between classes. One morning just before 9AM, Aaron's mobile phone rang and he answered, although he didn't recognize the incoming phone number. "Hello, is this Erin?" the caller asked. "Yeeess" Aaron replied tentatively. The caller launched immediately into disclosures about collecting a debt, told Aaron that he owed $4,500 on credit card accounts, and asked how he would like to set up payments. Aaron realized that the collection agent was really calling for his brother, so he hung up the phone. When the debt collector's number appeared again on Aaron's line, he blocked the caller. Has the debt collector violated the Fair Debt Collection Practices Act (FDCPA)?
Yes, because the collector did not verify Aaron's identity.
Mrs. Rosenberry enters into an agreement for the sale of her mansion to Mr. Green. The house has a very large decorative gas fireplace, which Mrs. Rosenberry had specially designed. The fireplace is connected to the gas line in the house; it can be removed and replaced by a professional in a matter of hours, but that may result in damage to the wall and floor surrounding the fireplace. The agreement does not specify whether the fireplace is included in the sale of the mansion. Does Mr. Green's purchase of the mansion include the fireplace?
Yes, because the fireplace is a fixture.
Suzy Tomlinson, died unexpectedly at age 50. Suzy was on the board of directors of a company her long-time friend J.B. Carlson had started. Her family was stunned to find out that she had a $15 million life insurance policy, with the proceeds payable to a company J.B. controlled. J.B. said it was a key man policy and that he wanted to protect the company if she died because she had frequently introduced him to potential investors. Is the life insurance policy valid?
Yes, if J.B can show a true business relationship existed with Suzy and the company.
Alice goes to her local Town Savings Bank and takes out a mortgage loan for $200,000 to purchase a new home. Town Savings Bank discloses the total payments, finance charge, and APR in the loan documents. If, after signing the loan agreement, Alice has an objection to the finance charge, could her claim be protected by the Truth in Lending Act (TILA)?
Yes, if the information was not disclosed clearly.
Jeremy is a doctor who would like to be able to provide low cost medical care to underprivileged families. Jeremy and two nurses form Medicine for All and file a registration statement and prospectus with the SEC. The prospectus states that Medicine for All is looking for funding for the salaries of Jeremy and the nurses and medical supplies and that the organization will earn little profits. Will the SEC allow Medicine for All to sell its securities?
Yes, provided all of the required disclosures are made clearly.
Gerald wants to buy a new digital camera, and he sees an ad for a PicturePerfect Model A digital camera at a 25 percent discount at Bull's Eye—a large department store. Gerald goes to Bull's Eye the following day, but the store clerk tells him that they are out of that particular camera. The clerk suggests that Gerald purchase the PicturePerfect Model B camera instead. Even though the Model B is not on sale, the clerk insists it is worth it because the camera takes much better pictures and "will not break in a year, like the flimsy Model A cameras." Has Bull's Eye committed an FTC violation?
Yes, this is a bait-and-switch scheme.
Walter writes a song celebrating President Obama. Walter then applies for and receives a copyright to the song. If Stephen uses the song at concerts, on his TV show, and puts Walter's song on a CD, has Stephen violated Walter's copyright?
Yes, unless Stephen changed the words enough that it has become a parody.
trying arrangement
an agreement to sell a product on the condition that a buyer also purchase another, usually less desirable, product.
Key person life insurance
companies buy insurance on their officers to help the companies recover if they were to die
To receive a patent, an invention must meet all of the following tests, except:
it has not ever been used anyplace in the world.
Value-based care
payment to medical providers is based on patient outcomes, not quantity and complexity of services performed
Disability Insurance
replaces the insured's income if he becomes unable to work because of illness or injury
The Toxic Substances Control Act
requires the EPA to test new chemicals, or old chemicals being used in a new way, before they can be used in products
Zoning statutes
state laws that permit local communities to regulate building and land use
Under Regulation Crowdfunding:
the issuer may sell only through one online platform.
Regulation D
the most common and important type of private offering
TMDLs
total maximum daily loads of permitted pollution
Tenancy in Common
two or more people holding equal interest in a property, but with no right of survivorship
Concurrent Estates
two or more people owning property at the same time
Roxy applies for a life insurance policy with Young Insurance Company, naming her brother Paul as the beneficiary. When completing the application form about past surgeries, Roxy forgets to disclose that twelve years ago she had corrective laser eye surgery. One year after issuing the policy, Roxy died suddenly in a car accident. Young denies payment under the policy based on misrepresentation. If Roxy's brother, Paul, sues Young, he will:
win, because Roxy's misrepresentation was not a material fact and did not increase Young's risk in insuring Roxy's life.
If you receive a product in the mail that you did not order:
you must return it, but the company must reimburse you for postage.