Legal Environment exam 4

Oil Industries Inc. and Petro Corporation are competing refineries situated on the Gulf coast. The two firms cooperate to obtain federal funds to build a levee that could protect their facilities from rising sea levels. With respect to antitrust law, this effort is

exempt from antitrust enforcement.

The Financial Stability Oversight Council was created in response to a financial crisis to

identify and respond to emerging risks in the financial system.

To notify the public of a proposed rule, the Federal Emergency Management Agency, like other federal agencies, publishes the proposal

in the Federal Register.

Mountain Crest Inc. makes and distributes its branded products to authorized dealers. To prevent price-cutting by dealers in direct competition, the firm imposes limits on where each dealer can sell the products. This is

a territorial restriction.

A ship owned by Ocean Cruises Inc. discharges some of the oil used in its engines into Puget Sound and onto the shore. Under the Oil Pollution Act, this is most likely

a violation.

Congress enacts a new air quality statute. The enforcement of this and other federal environmental legislation relies on

all levels of government and private citizens.

Closed meetings of the U.S. Bureau of Land Management, a federal administrative agency, are permitted when

all of the choices.

Riverside Glass Company operates a manufacturing plant on Spawn River. Discharging pollutants from the plant into the river can result in

civil penalties and criminal penalties.

A constant tension between the desire for profits and productivity and the desire to protect the environment exists because

the costs of complying with environmental regulations are high.

Chris, a coder for Drones Inc., learns of undisclosed company plans to market a new, smart drone. Chris buys 10,000 shares of the firm's stock. If Chris is liable under the Securities Exchange Act of 1934, it will be because the information on which he based his purchase of the stock was

not yet public.

The Food and Drug Administration (FDA) wants Pharma Inc. to produce certain records for review. Pharma need not reveal

trade secrets.

The Environmental Protection Agency (EPA) wants Waste Disposal Company to produce certain records for review. The EPA can gain access to the records through

a subpoena.

Dan bought a vacation home in the mountains of North Carolina. One day as he was sitting on the porch of his vacation home, Dan saw a stream of gray liquid bubbling up from an opening in his front yard. Dan immediately notified the EPA, which, after extensive examination, informed him that hazardous substances (within the meaning of CERCLA) had been previously buried deep beneath his house and a shift in the rock formation underlying his house caused a barrel to rupture, releasing its contents. Under CERCLA, Dan

Will not be liable, despite the act's broad liability, if he is able to avail himself of the so-called innocent landowner's defense.

Market Data Corporation is required to file a registration statement with the Securities and Exchange Commission. This statement must contain

a description of securities being offered for sale.

A person who violates the Clean Water Act may be subject to

Civil and criminal liability.

With respect to antitrust violations, the Federal Trade Commission does not enforce

the Sherman Act.

Space Flight Inc. files a registration statement with the SEC before making an offering to the general public. The registration contains false, immaterial statements of which the investors are unaware. The firm is charged with violating the Securities Act of 1933. Its best defense is

the untrue statements were not material.

The National Park Service hires Outdoor Play Inc. to replace outdated playground equipment in a handful of national parks. For this action, an environmental impact statement is most likely

unnecessary because the action is not "major."

Federal and state laws are aimed at protecting consumers from all of the following except

unwise purchases.

Pratt Co. manufactures and sells clocks. Its best-selling item is a grandfather clock. Taylor Co. purchased 100 of the clocks from Pratt at $99 each. Taylor discovered that Stewart, one of its competitors, had purchased the same clock from Pratt at $94 per clock. In the event the issue is litigated,

Taylor has a presumption in its favor that it has been harmed by price discrimination.

Interests in real property include certain subsurface rights. Which of the following is true?

The usual rule regarding oil and gas is that the landowner does not have a specific right in any such materials beneath the surface

In Year 1, Rae Rogers, owner of Blackacre and Whiteacre, executed and delivered separate deeds by which she conveyed the two tracts of land. Blackacre was conveyed "to Allan and his heirs as long as it is used exclusively for residential purposes, but, if it is ever used for other than residential purposes, then to the American Heart Association." Whiteacre was conveyed "to Bobbi and her heirs as long as it is used exclusively for residential purposes, but, if it is used for other than residential purposes prior to Year 21, then to the American Cancer Society." Rogers died in Year 6, leaving a valid will by which she devised all of her interests in real estate to her brother, John. The will had no residuary clause. Rogers was survived by John and her son, Tony, who received the balance of her estate. In Year 2, the interest of the American Heart Association in Blackacre could be best described as a

Void executory interest

Components Inc., a maker of vehicle parts, refuses to sell to DIY Repair Inc., a national vehicle service firm. The maker convinces Engine Parts Company, a competitor, to do the same. This is

a group boycott.

Power Inc. and QualGas Corporation refine and sell natural gas. To limit the supply on the market and thereby raise prices, Power and QualGas agree to buy "excess" supplies from dealers and "dispose" of it. This is

a per se violation of the Sherman Act.

Without a permit from the U.S. Army Corps of Engineers, Condos Corporation fills a wetlands area that it owns in preparation for the construction of a housing complex. Under the Clean Water Act, this is most likely

a violation.

A proceeding in which an administrative law judge hears and decides issues that arise when an agency charges a person or a firm with an agency violation is

adjudication

The chief executive officers of the major U.S. steel makers would most likely be prosecuted under the antitrust laws if they

agreed to work together to control the price of domestic steel.

Hearth & Home Furniture store advertises bedroom suites at a "Special Low Price of $599." When Ilene tries to buy one of the suites, Jill, the salesperson, tells her that they are all sold and no more are obtainable. Jill adds that Hearth & Home has other bedroom suites available for as low as $2,599. This is

bait-and-switch advertising.

Bev is the chief executive officer of Chef Cafés Inc., which is required to file certain financial reports with the Securities and Exchange Commission (SEC). Under the Sarbanes-Oxley Act of 2002, Bev must

certify that the reports are complete and accurate.

Delta Water Company is subject to a decision by the Environmental Protection Agency. Delta appeals the decision, arguing that it is arbitrary and capricious. This could mean that the decision

changed the agency's prior policy without justification.

Value Loan Company extends credit to consumers. Value Loan applies a variety of requirements to determine applicants' qualifications for credit, the amount, the interest rate, and other terms. Under the Equal Credit Opportunity Act, the lender cannot base its credit decisions on an applicant's

gender

Under a contract, Oil Shale Corporation forbids Petro Inc., a wholesale buyer of Oil Shale's products, to purchase products from the seller's competitors. This is prohibited

if its effect is to substantially lessen competition.

Leo's application to Metro Bank for a credit card is denied on the basis of what Leo believes is an inaccurate credit report. Leo should

obtain his credit report and notify the reporting agency of inaccuracies.

BioChem Corporation operates a hazardous waste storage facility. ChemCo Inc. buys BioChem before it is discovered that the firm's disposal practices violated CERCLA. With respect to these violations, Superfund is likely to impose on ChemCo

strict liability.

The credit department of Mega-Mart often calls Nora at work about an overdue bill over the objection of Nora's employer. This is a violation of

the Fair Debt Collection Practices Act.

Quik Mart sells groceries. Rite Price sells groceries and fills prescriptions. The party with the chief responsibility to prevent unsafe food and drugs from being sold is

the Food and Drug Administration.

Bee borrows funds from Credit Union to repair her home and to buy a car. She buys a laptop from Discount Store in a transaction financed by the seller. If these parties are subject to the Truth-in-Lending Act, Regulation Z applies to

the car loan, the home repair loan, and the retail installment sale.

The Food and Drug Administration (FDA) is an executive agency. As an executive agency, the FDA is subject to the authority of

the president.

Battery Corporation's production, distribution, and marketing methods are unique. Its capital value and size are greater than its competitors. A suit is filed against the firm, alleging the offense of monopolization. To determine whether Battery has monopoly power requires looking at

the relevant market.

Industrial Solvents Inc. averages $15,000 profit per day before deciding to ignore air pollution standards, after which the average is $30,000. Industrial Solvents is subject to a fine of

$30,000 per day.

Taso Limited Partnership intends to offer $400,000 of its limited partnership interests under Rule 504 of Regulation D of the Securities Act of 1933. These interests are registered under state law. Which of the following statements is true?

The resale of the limited partnership interests by a purchaser generally will not be restricted.

In Year 1, Rae Rogers, owner of Blackacre and Whiteacre, executed and delivered separate deeds by which she conveyed the two tracts of land. Blackacre was conveyed "to Allan and his heirs as long as it is used exclusively for residential purposes, but, if it is ever used for other than residential purposes, then to the American Heart Association." Whiteacre was conveyed "to Bobbi and her heirs as long as it is used exclusively for residential purposes, but, if it is used for other than residential purposes prior to Year 21, then to the American Cancer Society." Rogers died in Year 6, leaving a valid will by which she devised all of her interests in real estate to her brother, John. The will had no residuary clause. Rogers was survived by John and her son, Tony, who received the balance of her estate. In Year 7, the interest of John in Blackacre could best be described as

A possibility of reverter

Persons who favor the creation of a federal agency to regulate the production of genetically modified agricultural products should concentrate their lobbying efforts on

Congress

Basil read an advertisement in the newspaper for a sale of "Major" stereos (a very well-known and reputable brand) by Hoodwink Discounters, a large chain distributor of electronics. Basil bought a stereo, but when he got home, he discovered it was a "Magor" brand, which looked just like the "Major" brand. Basil returned to Hoodwink but was told that the store had no more "Majors" and that "Magor" was essentially the same. It turned out that "Magor" was manufactured by Hoodwink. Basil could not obtain a refund. Which of the following is not a remedy available to Basil?

File a lawsuit seeking criminal penalties against Hoodwink.

Abram owned a fee simple absolute interest in certain real property. Abram conveyed it to Fox for Fox's lifetime with the remainder interest upon Fox's death to Charlie. What are the rights of Fox and Charlie in the real property?

Fox has a possessory interest in the land and Charlie has a future interest

Fresh Fruit Company has assets of less than $10 million and fewer than fifty shareholders. Gourmand Pastries Inc. has assets of more than $50 million and more than five hundred shareholders. The Securities Exchange Act of 1934 applies to

Gourmand Pastries only.

In reviewing agency action, courts practice considerable self-restraint except for which of the following reasons?

Lack of jurisdiction.

A life estate is the right of a person to use property for the rest of his or her life. This person is a life tenant. Certain duties and limitations are imposed on the life tenant to safeguard the remainderman's rights. The life tenant

May exploit natural resources of the land in reasonable amounts if the land was so used when the life estate was granted.

Interests in real property include the airspace above the surface of the land. Which of the following is true?

No trespass occurs if an aircraft flies 1,000 feet above land in a populated area

Government Business Machines (GBM) has greater than an 80% share of the sales of computers to local and state governments. GBM requires all purchasers of its computers also to purchase its proprietary operating system, called GOS. Furthermore, GBM government contracts require all application software and peripherals to be purchased from GBM. Which of the following is a true statement about this tying arrangement?

The test of whether a tying arrangement is illegal is essentially the same under the Sherman Act and the Clayton Act.

Components Assembly Corporation is a public company that is poised to issue securities that do not qualify for an exemption from registration. This means that the company must

file a registration statement with the SEC.

To raise $120 million to expand operations, Primo Inc. makes a stock offering directly to sixty accredited investors and twenty sophisticated, but unaccredited investors. The firm plans to notify the SEC of sales. Under the Securities Act of 1933, this issue may qualify as an exempt transaction

if all of the investors are also given material information about the firm.

Two Chinese firms, Wong Ltd. and Xiang Ltd., engage in a conspiracy to control the distribution of certain goods in global markets. This may violate U.S. antitrust laws

if the conspiracy has a substantial effect on U.S. commerce only.

Disposal Company operates a hazardous waste storage facility. Concerned that there may be a release of chemicals from the site, the company sells the property to Eager Developers Inc. If there is a release, the seller is most likely

liable

Kip opens an account at Lotsa Goodies, and buys a digital music player and other items, but makes no payments on the account. To collect the debt, a Lotsa Goodies representative contacts Kip's parents. This violates

no federal law.

An ad for Running Shoes Inc. states that its footwear is "The Winner's Choice." Because of this ad, the Federal Trade Commission is most likely to issue

none of the choices.

The goal of securities regulation is to

prohibit deceptive and manipulative practices in the securities markets.

Media Report seeks information about well-known businesspersons under the Freedom of Information Act. To obtain the information, Media Report must

reasonably describe the information.

Solar Power Company wants to erect an array of solar panels on private land, for which a federal permit is required. For this action, an environmental impact statement is

required

Direct Sales Corporation sells products to consumers over the phone, through the mail, and online. Under the Federal Trade Commission's Mail or Telephone Order Merchandise Rule, the firm may be liable for failing to

ship orders within the time promised in its ads.

Debt Equity Inc., and its officers, directors, and employees, buy and sell securities based on financial research and analysis. Section 16(b) of the Securities Exchange Act of 1934 covers purchases and sales of securities involving

short-swing profits.

Spectrum Paints Inc. is a public company whose shares are traded in the public securities markets. Under the Sarbanes-Oxley Act of 2002, the firm is subject to the direct corporate governance requirements of

the federal government.

Four grocery stores account for 80 percent of the retail food sales in Metro City. Two of the stores want to merge. In determining whether the merger violates the Clayton Act, the most crucial factor is

the market shares of the firms in their market.