D216 Business Law For Accountants
A floral company is currently hiring a new employee. After interviewing a great candidate, the HR coordinator looked up the candidate on social media. The HR coordinator found too many pictures of cocktails and beers on the candidate's profile. The perspective candidate worked part-time as a bartender. The HR coordinator called the candidate and told him that she found a better fit even when she had not hired anyone for the position. Are the HR coordinator's actions legal and ethical?
The actions are legal but unethical
Partners 1 and 2 decide to form a partnership, drafting and executing an agreement that memorializes their intents. What is the result if the Uniform Partnership Act (UPA) contradicts Partners 1 and 2's partnership agreement?
The agreement will control
What is the doctrine of agency by estoppel?
The conduct of a principal leading a third party to believe to its detriment that an agent has authority to act, thereby the principal is prevented from denying that the agent had authority.
A corporation that meets certain qualifying requirements specified in Subchapter 5 of the Internal Revenue Code can choose to operate as an S corporation. What is one of the qualifying requirements to operate as an S corporation?
The corporation must have only one class of stock
A debtor owes $5,000 on a home mortgage, $2,000 on a car note, and $500 on a credit card. The debtor is having financial difficulties and is late by 60 days in making payments on the debt as it becomes due. Which bankruptcy filing is appropriate for the debtor?
The debtor is eligible to declare bankruptcy because the debtor is obligated to creditors
A creditor files suit against the debtor and the guarantor for the debtor's unpaid debt. The debtor believes the creditor's time to collect the debt has expired. Which defense can the debtor and guarantor assert against the creditor?
The debtor, but not the guarantor, can assert the statute of limitations defense
A manufacturing company is deeply concerned about its new expansion. While it is true that its main operations are located in a poor country, where it is the biggest employer, this new expansion will generate more pollutants. The CEO has advised continuing the expansion because it will create more jobs than it will generate pollutants. Which doctrine is this CEO's analysis approaching?
The doctrine that maximizes benefits and minimizes harm
Generally, the agent owes the principal five duties: performance, notification, loyalty, obedience, and accounting. Which statement describes obedience?
The duty to follow all lawful and clearly stated instructions of the principal
Generally, the agent owes the principal the following five duties: performance, notification, loyalty, obedience, and accounting. Which statement describes notification?
The duty to inform the principal of all matters that come to their attention concerning the subject matter of the agency
Generally, the agent owes the principal the five follow duties: performance, notification, loyalty, obedience, and accounting. Which statement describes accounting?
The duty to keep and make available to the principal an account of all property and funds received and paid out on the principal's behalf.
What happens when a state law is in conflict with a federal law?
The federal law displaces state law
What happens when a state law is in conflict with a federal law?
The federal law displaces state law.
Express warranties arise when a seller or lessor indicates which, under UCC 2-313 and 2A-210?
The goods conform to an affirmation of fact
A software company created a new computer program. Which part of the computer program is copyrightable?
The high-level language of a source code of the program.
The doctrine of substantial performance states that a party, who in good faith, performs substantially all the terms of a contract can enforce the contract against the other party. What is a basic requirement for performance to qualify as substantial?
There is a minor emission that can be remedied by monetary damages
The children of a restaurant owner wish to take over the family restaurant and take it in a new direction. The children hire a company to completely remodel the restaurant and their recently purchased food trucks. If the children fail to pay the remodeling company as promised, how could the company recover payment for the improvement done to the restaurant and food trucks?
Through a mechanic's lien for the restaurant and an artisan lien for the food trucks.
What is the duty of the principal to the agent in order to terminate an agency at will?
To give the agent reasonable notice of the termination of the agency.
What is the purpose of the means test?
To keep upper-income people from abusing the bankruptcy process of Chapter 7
What is the Sarbanes-Oxley Act certification requirement for systems of internal control by the CEO and CFO?
To maintain an internal control system and disclose any deficiencies in the system to the independent auditors
Which intellectual property protection protects ideas?
Trade secret
Criminal statutes proscribe what?
Wrongs committed against society for which society demands redress.
An internal auditor is concerned with the results of performance reviews. The internal auditor believes this is happening because the company has not adopted a written code of conduct. The chief audit executive (CAE) differs and believes that the reason for this is that the company does not hold employees accountable for their actions. Does this CAE's expressions have merit?
Yes, because an important part of leadership setting the tone is holding employees accountable for their actions
Due to booming business, a manufacturing company hired two new employees for a rate of $15 per hour. Previous hires were paid a rate of $26 per hour. After analyzing the reduction on labor costs, the accountant recommended replacing the existing workers by less expensive workers. Is this accountants recommendation legal?
Yes, because firing employees and hiring new ones for a lower wage is not illegal.
An accountant works as an agent for different companies. However, the accountant has found that it is more efficient to manage one account and keep detailed documentation about each separate account. The account consists of the principal's funds and the accountant's personal funds. The accountant has not had any problems with this system, but the state board of accountancy took disciplinary actions against the accountant for this practice. Do the state board's actions have merits?
Yes, because the state board of accountancy may subject to disciplinary action a member that violates the accounting duty
A company contracts to make improvements to a family home. The total price, including labor and materials, is $150,000. The family home was on an installment payment agreement but did not make all payments under the agreement. The family paid the company a total of $50,000. Two years later, the family put the house on the market to be sold. Can the company take action to collect the debt?
Yes, they can recover payment when the family home is sold because it is entitled to a mechanic's lien against the home.
Nina, the owner of Organic Farm, a sole proprietorship, wants to obtain additional capital to operate. This can be accomplished by
a Small Business Administration loan
In additional to financial statements, each voluntary petition in bankruptcy must include
a certificate proving the receipt of credit counseling
All of a certain corporation's small number of shareholders agree that the firm can operate without directors, bylaws, shareholder meetings, stock certificates, and formal records of shareholders' decisions. This firm is most likely
a close corporation
Lawnscape Company and Mowers Inc. make yard tools. Both companies use only steel produced in the US. Lawnscape's ad claims, "We only use US steel, while our competitor uses inferior foreign steel!" Under the advertising standards of the Federal Trade Commission Act, this statement is most likely
a false claim about a competitor's product
Sweetwater Corporation is incorporated in Texas. Outside that state, within the United States, the firm is
a foreign corporation
Seacoast Transport Company pays Trucks and Trailers Inc a stated price for the use of seven tractor-trailer rigs for a year. Under the UCC, this is
a lease
O-Ring Corporation allows Piston Company to incorporate O-Ring's patented fuel-injection system into Piston's product. This is
a license
To open and operate Boo! City, a Halloween costume and paraphernalia shop, Dwayne and Erica form a business organization that combines the limited liability aspects of a corporation with the tax advantages of a partnership. Their form of business organization is
a limited liability company
Resort Gift Shop is operated as a partnership, with five partners. Shan has a 1/3 interest in the firm. Each of the other partners has a 1/6 interest. Thieu is the senior partner. With respect to management decisions
a majority of the partners must agree
A limited liability company wants to distribute profits to its members could avoid "double taxation" by electing to be taxed as
a partnership
Serena invents a new, unique, long-life battery. A grant from the government gives Serena the exclusive right to make and sell the battery for a certain period of time is
a patent
Because the homestead exemption interacts with other areas of the law that relate to creditors' rights and remedies, it can sometimes operate to cancel out
a portion of a lien on a debtor's real property
Aiden hires Buck to manage Aiden's Cattle Ranch, Buck agrees to act on Aiden's behalf, subject to Aiden's control, and Aiden trusts Buck to so act. Their relationship is
a principal and an agent
Household Products Corporation wants to make an offering of securities to the public. The offering is not exempt from registration under the Securities Act of 1933. Before the firm sells its securities, it must provide investors with
a prospectus
Mining Corporation purchases the business assets of Open Pit Inc., including its equipment and supplies, for an agreed to price, payable in installments. Under the UCC, this transaction is
a sale
Embers Corporation orders 12 fire extinguishers from Firefighting Inc., which delivers the equipment. This is most likely
a sale of goods
Sofia purchases a new vehicle from a neighborhood car dealer. The vehicle warranty specifically states that there is a bumper to bumper warranty for the first 30,000 and an engine and drivetrain warrant for 100,000 miles. The warranty documentation supplied with the car specifies that wear items such as brake pads, belts, wipers, bulbs, and engine oil changes are excluded. After 25,000 miles, Sofia's car needs new brake pads. She is told that this is not covered by the warranty. This exclusion is an example of
a warranty disclaimer
Watercraft, Inc., employs Vladimir as a sales agent for a trial period. At the end of the period, Watercraft and Vladimir disagree on the amount of the commissions Vladimir is due for sales that he made. Vladimir may demand
an accounting
Rosa introduces Sal to her friend Trey as "my associate." Sal purports to act as Rosa's agent in a business transaction with Trey. If Rosa is liable for Sal's actions, it will be because their relationship is
an agency estoppel
Bhat and Cho do business as Data Security, a partnership. In most states, for the purposes of collecting judgments and having accounting performed, this firm would be treated as
an independent entity
Masonry Inc.'s stated purpose to perform the stonework on buildings and other structures. Masonry contracts with New Contracting to pour the pilings for a bridge's foundation despite lacking the skill and license to do the work. This is most likely
an ultra vires act
Luis hires Mieko to act as his agent to buy Ngoc's Southeast Asian Cafe. Luis tells Mieko to reveal only that she is buying the restaurant on behalf of a third party, without telling Ngoc's seller who that third party is. When Mieko negotiates with Ngoc, she does not say anything about Luis or any third party. Luis is
an undisclosed principal
Chair Company contracts to deliver a dozen suites of dining room tables and chairs to Furniture Store on May 1. On April 15, Chair tells Furniture that delivery will be delayed until June 1. Furniture may
await performance, sue Chair, or suspend its own performance
Beryl enters into a contract with Clay for a guided tour of Deep Canyon. Clay represents that he is an experienced, knowledgeable guide, when in reality he has never been in the canyon. Most likely, Beryl
can rescind the deal based on fraudulent misrepresentation
Deb and Eve are partners in Foundations, a construction outfit. Deb manages the business. For this service, unless the partnership agreement states otherwise, she is entitled to pay in proportion to her
capital contribution
Dez is the chief financial officer of Elements Corporation, which is required to file certain financial statements with the SEC. Under SOX-2002, Dez must personally
certify that the statements are accurate
The classification of law that concerns the rights and duties that exist between persons and between citizens and their government is
civil law
Curly Fries Inc. grants its agent Dian an exclusive territory in which to sell its products. The company cannot compete with Dian in that territory under the duty of
cooperation
Information that may be protected as trade secrets includes
customer lists
Dom enters into a contract to buy Ezra's office building for a certain price subject to an appraiser's evaluation of the structure's condition. If the appraiser deems the condition to be substandard, the parties' obligations will be
discharged
Ling owns and operates Metro Delivery Service as a sole proprietorship. When she dies, the business will automatically
dissolve
Cloud Source LLC sells to Distribution Inc. a promising idea for a technological innovation that looks promising but that is still being developed. This sale is
ethical and legal
Instead of issuing securities, Artificial Intelligence Inc. pursues other sources of funds. To obtain venture capital financing, the firm will most likely
give up a share of its ownership
Consumer Staples Inc. includes in its advertising claims that the product is guaranteed to regrow a full head of hair (accompanied by before and after pictures), obvious exaggerations, vague generalities, and puffery about its products. The firm may be subject to sanctions for
guaranteeing that it will regrow hair
Without permission, Race Runners Inc. uses a trademark that is similar to the registered mark of Swiftfoot, Inc. This use of the mark constitutes trademark dilution
if the use diminishes the distinctive quality of the work
Bon, an agent for City Motors Inc., e-mails Dale on May 1 that the dealer will sell to her a 2018 Ford pick-up truck for $25,000 between May 1 and July 1. Bon's offer to Dale is
irrevocable for the stated period
In a case the court may rule contrary to a precedent if the court decides that the precedent
is incorrect or inapplicable
In most situations, with respect to a limited liability company's debts, the firm's members are shielded from
liability in excess of their capital investment
Phoenix Inc. is a publisher. Phoenix uses a logo featuring a bird rising from a flame to identify its publications. The publications are printed in a unique process that includes a 3-D printer. Phoenix could most likely obtain trademark protection for its
logo
Elegant Carpet Inc. agrees to sell a certain quantity of carpeting to Fabulous Floor stores under a shipment contract. Elegant must
place the goods in the hands of a carrier
Jamal, a law enforcement agent, monitors Kaya's internet activities--email and websites visited--to gain access to her personal financial data and student information. this may violate Kaya's right to
privacy
In a criminal case, the object is to
punish a wrongdoer to deter others from similar actions
United Delivery Corporation is a public company whose shares are traded in the public securities markets. Under the Securities Act of 1933, United Delivery is required to
register its securities transactions unless they qualify for an exemption
Office Express orders 100 smartphones from Electronic Supply for $500 per phone. Electronic supply sends 100 flip phones instead. Office Express has the right to
reject the shipment
Steel Buildings, Inc., agrees to sell four portable garages to Truck Service Center. Five days later, the buyer refuses delivery and cancels the contract. The seller is entitled to
resell the garages and recover any damages from Truck.
Lazlo owns and operates Market Place, a venue for growers, crafters, and others to sell their goods, without creating a separate business organization. He receives all the profits from the vendor's fees and concession sales. This is most likely a
sole proprietorship
Erma enters into a contract to buy a tract of riverfront property from Forest Acres to build and sell a residential development. Forest Acres fails to close the sale. Erma's remedy is most likely
specific performance
Laws enacted by legislative bodies at any level of government make up the body of law generally referred to as
statutory law
At an auction, Ben bids on a 1957 Chevy coupe, believing that it is worth more than the price asked. When the car proves to need more repairs than Ben estimated, and thus is worth less as is, Ben is
still liable on the bid
Company managers are most likely to find that unethical behavior in the workplace can be deterred by
taking immediate action in response to unethical conduct
Ahmad starts up, and assumes the financial risk, of Data Works, a new marketing enterprise. As a sole proprietorship, the enterprise must meet legal requirements relating to
taxes
Auto and Life Insurance Company fails to notify its new customers when they are charged higher premium rates as a result of their credit scores. This is a willful violation of
the Fair Credit Reporting Act.
Real Stones Inc and Sparkling Jewelry stores enter into a contract for a sale of gemstones. The seller fails to deliver. Sparkling can recover as damages the difference between
the contract price and the market price
Under any chapter of the Bankruptcy Code, failing to file the necessary documents with the debtor's petition for relief can result in
the dismissal of the petition
Energy Company employs Fred to negotiate the purchase of mineral rights for future mining projects. Fred secretly buys some of the property and sells it to Energy at a profit. Fred has breached
the duty of loyalty
Perez, an artist, is about to negotiate a contract to sell a series of paintings to Barber's Art Gallery for $25,000. Perez's agent learns that Barber is insolvent and will be unable to pay for the paintings. The agent owes Perez
the duty of notification
Larry is an agent for Mary. She gives him clear instructions to enter into contracts on her behalf only on Mondays, Wednesdays, or Fridays. He enters into a contract on her behalf on Tuesday. Larry has breached
the duty of obedience
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
Bike Shop sells a trail bike to Ciena. When Ciena rides the bike, the frame breaks part. The cause is something that Bike Shop did not know about and could not have discovered. This is a breach of
the implied warranty of merchatability
Renew Inc. contracts to resurface the pools at Swim Park by June 1. Renew knows that if performance is not timely, Swim Park will have to delay its seasonal opening. Renew finishes the job on June 15. In a suit for breach, Swim Park can recover
the loss of profit from the delayed opening
Petro Refinery asks Quality Bank for a loan to increase its inventory. Quality requires Roma, Petro's president, to sign a personal guaranty to pay the debt if Petro defaults. The guaranty is required to be in writing because
the main purpose rules does not apply
Builder Inc. and Concrete Supply Company enter into a contract for a sale of cement. Concrete delivers, but Builder does not pay. Concrete can recover as damages
the market price at the place at which Concrete delivered the goods plus incidental damages
Singh, a member of Trucking LLC, ceases to be associated in the carrying on of the business of the firm. Despite the dissociation
the member's duty of care continues with respect to prior events
Prognosis Inc. owns a brain-computer interface that enables physicians to diagnose and treat some diseases quickly and accurately. Federal copyright protection extends to
the parts of the app that can be read by computers
Predictive Data LLC. makes and sells software that enables a business to target its advertising precisely. The company could successfully bring an action for copyright infringement against a competitor who copies
the parts of the software that can be ready by humans
Maria, the manager of Soy Farm, Inc., must decide whether to plant genetically modified seed that could spread to the crop of an adjacent farm, whose owner opposes its use. Not using the seed could cut Soy's production and profitability, impacting its owners, employees, creditors, and others. If Maria considers all these factors in making her decision, she is likely applying
the principle of rights theory
Orbital Flights, Inc., is required to register its securities under Section 12 of the Securities Exchange Act of 1934. Section 16(b) of the act covers
the short-swing activities of Orbital's insiders
Bach borrows funds from City Bank to pay his tuition. Dvorak co-signs the credit application. After the loan agreement is signed, Bach agrees to a higher rate of interest without telling Dvorak, who is
thereby discharged from the agreement
Under the doctrine of respondeat superior, a corporation can be held liable for
torts committed by its agents or officers
The marketing process for "Price & Profit", an app that businesses can use to track their revenue, profit, and payroll, is protected by
trade secret law
Brewed Beans Inc makes and sells "CoCoCafe", a chocolate-flavored coffee. Darkroast Inc. later markets a similar drink under the name "KoKoKafe". This is most likely
trademark infringement
Keisha contracts to buy appliances from Crazy Carlos Appliances. Keisha agrees to pay half within 5 days of the order and the remainder upon delivery. Keisha fails to pay the first 50%. Carlos can
withhold delivery
Home Stuff Corporation is poised to issue securities that, under the Securities Act of 1933, are exempt. This means that the securities can be sold
without being registered
Fiesta LLC contracts to buy 1,000 balloons from Gas Bags Inc. for $1 per item. When the market price decreases to 50 cents per balloon, Fiesta refuses to go through with the deal. Gas Bags can recover
$500
Which firm would qualify as a well-known seasoned issuer (WKSI)?
A firm that has $1 billion stock outstanding
Which type of law applies when partners are charged with knowledge of acts executed under the partnership relationship?
Agency law
Which kind of mark is "Cheesy" in connection with a spa company?
Arbitrary
A debtor owes $124,000 on a home mortgage, $4,300 on a credit card, $11,500 in medical debt, and $6,100 domestic-support to the debtor's former spouse. Which debt is an exception to the automatic stay?
Domestic-support debt
A motivational speaker agrees to fly to another country to train a new group of employees. The flight home is delayed due to a labor union strike, and the speaker must pay to stay in a hotel overnight. Which duty does the company who requested this training owe to the motivational speaker?
Duty to reimburse
A principal-agent relationship is fiduciary. What does fiduciary mean in this context?
Each party owes the other the duty to act with the utmost faith
What must an owner retain in order to operate as a sole proprietorship?
Full liability
Which type of trademarks never receive protection?
Generic marks
Glen is a partner in Home Builders, a construction firm. Glen's assignment of his interest in the partnership to Investment Consultants results in
Glen's wrongful dissociation and liability for any damages
In January, a national company issued a memo informing employees that employees who successfully complete the accounting certification by the end of the year will receive a $500 bonus. One employee who enrolled in the certification review course in the summer passed the exams in November. When is the national company liable to this employee?
In November, when the employee passed the exams
A property owner hired a building contractor to develop a property. The property owner has no control over the details of the work performed. What is the agency status between the property owner and the building contractor?
Independent contractor, non-agency relationship
An individual owes $30,400 in student loans to the Department of Education, $16,000 in back taxes to the IRS, and $5,200 in spousal maintenance to a partner. Who is the debtor?
Individual
Corporate executives are required to file reports with the SEC concerning their ownership and transactions. Which violation is this filing meant to discourage?
Insider trading
What is the standard for violating the Securities Act of 1933?
Intentionally defrauding investors by misrepresenting facts in a prospectus
A seller wishes to sell his old sedan for $10,000. The buyer, who was in desperate need of a car, saw the ad and called the seller to ask questions about the car. The buyer seemed very interested in the car and agreed to buy it. However, nothing was said about the time of delivery. Three days passed and the seller started to fear that the buyer will not buy the car. The seller called the buyer at 3:00 am and demanded that she pick up the car within 25 minutes and also threatened to sue her for breach of contract. What can this buyer claim against this seller's demand?
It was an unreasonable hour and manner
Andrea wrote a book with a common storyline of revenge. Three years later, James wrote a book with the same storyline of revenge, but there were no other similarities between the books. What is the likely outcome if Andrea sues James for copyright infringement?
James will win because the storyline is common.
A buyer enters a contract to buy a new house. The seller breaches the agreement after the buyer made a deposit. The buyer now wants the deposit back. Which type of remedy will the buyer seek?
Legal
How do liquidated damages differ from penalties?
Liquidated damages are for damages difficult to estimate
What is an ordinary or straight bankruptcy?
Liquidation under Chapter 7 of the Bankruptcy Code
Which intellectual property is protected with a copyright?
Lyrics to a song
For which reason may the agent be liable in a gratuitous principal-agent relationship?
Negligence
What constitutes fair use?
News reporting
A collector agreed to sell a rare collection of baseball cards to a buyer for $2,000 after several weeks of negotiation and discussion. After the sale, the buyer and collector do additional independent research and both learn that the baseball cards are worth only $20. What is the court's decision if this buyer sues this collector?
No damages
An individual applies for a loan from a bank to purchase a used car. The bank called the individual at home to say it will not lend the funds without a cosigner because the individual is still in school. Over the phone, the individual's mother agrees to cosign the note but never went to the bank to sign the documents. The next day, the individual purchases a car. Two years later, the bank files suit against the mother because the individual defaults on the car payments. Is the mother liable to the bank?
No, because a suretyship does not exist, and the mother did not execute anything in writing.
A CPA works as an independent contractor for different companies. During tax season, the CPA was so busy it was almost impossible to keep track of the different accounts. The CPA decided it would be easier to use a personal account and once tax season was over, they would separate and organize each account appropriately. After tax season, the CPA organized each separate account. Were the CPA's actions acceptable?
No, because an agent must not intermingle principal's and personal funds
A chef owns a restaurant with two brick and mortar locations and 4 food trucks in various areas around town. The chef hired a truck company to repaint all four food trucks with the restaurant's new logo and remodel the inside of the food trucks to maximize space. They agreed on a total price of $6,400, or $1,600 for each truck. The chef paid a $1,600 deposit and agreed to pay installments of $1,200 after each truck was completed. The truck company agreed to do the work in the chef's garage where the food trucks were housed. After the truck company completed the first two trucks, the chef refused to continue the contract, claiming the paint job was bad and the logo was not accurate. Can the truck company recover payment through an artisan's lien?
No, because it did not have possession of the trucks.
A public company's CEO and CFO certified the 10-K pursuant to the Sarbanes-Oxley Act of 2002 (SOX). However, only the CEO certified the public company's 10-Q. Has this public company complied with SOX?
No, because the CFO did not certify the quarterly filing
The AR manager of a manufacturing company loves to travel and is planning a once-in-a-lifetime trip to a beach. The AR manager usually receives a performance bonus at year-end and is planning on using the money to pay for the trip. The AR manager thought it would be a good idea to extend terms to the customers without asking for approval. This would improve the metrics in the evaluation. Thanks to the extended terms, the AR manager received a nice bonus and was able to go on the trip. Were the AR managers actions ethical?
No, because the manager manipulated policy to improve performance
A landlord had some properties available, and a friend who is a real estate agent offered to help find new tenants. The real estate agent did not ask for payment nor was a contract formed. Months later, the landlord did not hear from the real estate agent. The landlord's financial condition was deteriorating, and the landlord decided to sue the real estate agent for breach of contract. Does the landlord's suit have merits?
No, because the real estate agent offered to act gratuitiously
A creditor agrees to loan a debtor $250,000 to start a business. The guarantor agreed to be responsible for the debtor's obligation under the agreement. Without the guarantor knowing, the creditor and debtor increased the amount of the loan to $500,000. Is the guarantor liable to the creditor?
No, because they made a material change to the agreement without the guarantor's knowledge.
A company overheard a competitor discussing its plans to start selling a new line of widgets. The company found a new business with a name similar to the competitors. The company wants to register a trademark name for the new business name in connection with widgets. It is unlikely the company will sell widgets, but it wants to prevent the competitor from obtaining a trademark. Can the company file an application with the US Patent and Trademark office?
No, the company cannot file an application with the US Patent and Trademark Office because it does not have an intent to sell widgets.
Judgment was entered against a customer in the amount of $15,000 for unpaid debt. The customer does not have assets to pay the judgment in full. The customer owns a house with approximately $3,000 of equity, owns a car worth $12,000, and has approximately $7,000 in a bank account. Which type of relief would allow the creditor to seize the month in the customer's bank account?
Order for garnishment
Partners A and B form a bakery as a valid partnership, contributing a mixer and a blender, respectively. Which actions may each take in connection with the baking equipment?
Partner B may use the mixer to prepare cakes for the partnership
What is the preferential transfer under Chapter 7 Bankruptcy?
Payment or transfer of property by a debtor favoring one creditor over others
A public company has established sound internal controls. The internal audit department is always on the lookout for fraud, collusion, and the possibility of management override of controls. Which behavior may contribute to unethical behavior among employees?
Performance bonuses are solely based on products sold
When certain actions by the parties to a contract in an agency relationship are outside the scope of authority, such actions should be ratified for the contract to be enforceable. Who has the authority to ratify the contract in these situations?
Principal
A third party was grateful to the principal company for all its hard work. An agent has taken care of the third party's account and has helped it accomplish all its goals. As a token of appreciation, the agent received a material gift on the principal company's behalf. Who gets to keep the gift?
Principal company
A homeowner hires a real estate broker to sell the homeowner's vacation home. What is the agency status between the homeowner and the real estate broker?
Principal-independent contractor, agency relationship
An apartment complex owner contracted with a management company for the maintenance of the building. A maintenance worker that was attending to a repair call in one of the apartment units in the building gets into a physical fight with the tenant and causes severe injuries to the tenant. The tenant sues the owner of the apartment complex for damages. Which agency relationship should exist between the owner and the management company for the courts to rule in the tenant's favor?
Principal-independent contractor, agency relationship
Under which type of exemption must an issuer believe that each unaccredited investor has sufficient knowledge to be capable of evaluating the investment's potential return and risk?
Private placement
A landlord offers a 12-month lease to a tenant for the third floor of the landlord's three-story home. The landlord provides the tenant only with the final page of the lease to sign, stating that the rest of the contract is all legalese and boilerplate. The lease provided that the tenant would have to submit to arbitration. Which claim could this tenant bring to set aside the lease?
Procedural unconscionability
What is a purpose of the Uniform Commercial Code?
Reduce difficulties for businesses conducting trade and commerce.
A father and son wat to formalize their family cattle ranching operations into a legal business entity. They want the business entity to offer liability protection and perpetual existence as well as have a flow through status for tax purposes. Which business entity is appropriate for this situation?
S Corporation
Which corporation avoids the imposition of income taxes at the corporate level?
S corporation
Which securities law or act governs when the Securities and Exchange Commission attempts to prohibit the use of manipulative practices in violation of its rules and regulations?
Securities Exchange Act of 1934
Unless elected otherwise, which kind of entity is a single-member limited liability company (LLC) treated for federal income tax purposes?
Sole proprietorship
Which form of business organization should someone have if flexibility in decision-making is valued over asset protection?
Sole proprietorship
When Lara and Mick cannot resolve their dispute amicably, Lara initiates a lawsuit against Mick. Lara is
the plaintiff
Administrative law includes
the rules, orders, and decisions of a government agency
Jo owns a condominium that she leases to Kia. Jo employs Maria to manage the condominium. Jo gives her daughter Liu $450 on her sixteenth birthday. Jo sells her car to her neighbor Steve for $1,500. Article 2 of the UCC covers
the sale of Steve
Joe files his income tax return showing a refund due of $5,000. The IRS audits his return and finds several unjustified deductions, a missing W2, and several arithmetical errors. As a result, Joe has no refund coming, but instead owes $3,500. When Joe fails to pay, the IRS issues a
writ of garnishment to Joe's employer to take a portion of his wages each week
Len contracts to work for Media Corporation during May for $4,500. On April 30, Media cancels the contract. Len then accepts a similar job with News Ads Inc, which pays $3,500. Len files a suit against Media. As compensatory damages, Len can recover
$1,000
Bee is an employee at Credit Agency Inc. On the termination of Bee's position, Credit pays Bee $10,000 to agree not to disclose the employer's confidential information. Later, Bee sells the information to Debt Records LLC for $100,000. In a suit for breach, Credit is most likely to recover
$10,000 from Bee
A customer enters into a contract with a vendor for the purchase of 10 widgets for $60. If the vendor refuses to sell, and the customer buys substitute widgets for $90 from other sellers, not including incidental damages, how much can this customer claim in damages?
$30
Members 1 and 3 formed a limited liability company (LLC) in a state that has adopted the Uniform Liability Company Act (ULCA). Member 1 later decides to dissociate from the firm. By when must Member 1's interest be purchased by this LLC?
120 Days
Ruby invents a new type of pillow and obtains a patent for it. Sleep-Time Inc. believes that Ruby's pillow infringes on one of Sleep-Time's previously patented products. Sleep-Time must file a challenge to Ruby's patent within
6 years
What is an example of an unsecured creditor?
A bank that issues a credit card
What is the function of an order for writ of execution?
A court order issued post-judgment to seize the debtor's property in the debtor's possession
Who is a consumer-debtor?
A debtor whose debts result primarily from the purchase of goods for personal, family, or household use.
A 14-year-old signs a lease for a one-bedroom apartment with a landlord. The 14 yo promises to pay $1,000 in rent on the first of each month for 12 months. During the terms of this lease, which type of contract did the 14 yo sign?
A voidable contract
A corporate officer enters into a contract with a supplier for the purchase of raw materials for the corporation. What is the agency status between the corporate officer and the corporation?
Agent and principal, agency relationship
Who monitors the external auditor of a company?
Audit committee
A business advertised a reduced price on its new skillet for one day only. A customer saw this advertisement and visited the business, where the clerk instructed them to try the new, more expensive grills. The business never had any skillets in stock. Which type of advertising technique is this business engaging in?
Bait-and-switch advertising
What is the last resort when resolving creditor-debtor problems?
Bankruptcy
What is a reorganizational plan under Chapter 11?
A plan to conserve and administer debtor's assets for an eventual return to successful operation and solvency
On April 1, Peter sent a letter to his friend Monica, offering to buy 200 of her puff pastries for $100. After he sent the letter, Peter realized that his neighbor Joelle was selling her puff pastries for only $75. Peter sends a second letter to Monica by express mail, stating that he withdraws his former offer to buy her puff pastries. The second letter is delivered to Monica's home on April 3, and the first letter is delivered to Monica's business on April 6. Which act has Peter completed?
A revocation
Actions from a principal cause a third-party to reasonably believe that another person with no agency relationship with the principal is the principal's agent. The third party, relying on the principal's actions, enters into a contract with that agent and incurs a loss. Which agency relationship is created by the actions of the principal?
Agency by estoppel
What is a warranty in sales and lease law?
An assurance by the seller about the quality and features of the goods being sold
The chapter of bankruptcy in which the debts are discharged, and the debtor is given the opportunity of a fresh start is
Chapter 7
What describes the content of the Code of Federal Regulations?
Codification of the general rules and regulations adopted by administrative agencies
Which source of law is considered primary?
Common law doctrines
The acquisition of a share of stock makes a person an owner and a shareholder in a corporation. Shareholders exercise ownership control through the power of their votes. Which class of stockholders has a right to vote?
Common stockholders
What determines the compensation of the CEO of a publicly listed corporation?
Compensation committee
What is a cramdown provision?
Confirmation of the reorganization plan by the court over the objections of a class of creditors
Which situation is considered as a perfect tender rule?
Conformance of goods
How is disposable income calculated under the means test?
By subtracting living expenses and secured debt payments from monthly income.
Which event can cause an agency authority to terminate by the operation of law?
Death or insanity of either the principal to the agent
Which bankruptcy filing has the advantage of being the least expensive and complicated?
Debtor-initiated filing under Chapter 13 Repayment Plan
What is the measure of damages when a buyer refuses to accept the nonperishable goods as sold?
Difference between contract price and market price
An accountant was performing a contract for a local fast-food restaurant. While looking for some files, the accountant found the local restaurant's secret recipe. The accountant took a photo of the secret recipe to cook it at home. Which duty has the accountant breached?
Loyalty duty
When winding up a limited liability company (LLC), who would be paid first from the sales proceeds?
Members who are creditors of the LLC
Miklos employs Nathalie to handle a list of financial transactions on Miklos's behalf. This power will terminate on
Miklos' death or incapacity
What is being used when a promotion matches the rest of a web page's content?
Native ad
Which form of business structure can issue stocks to the general public to obtain funding?
C corporation
Brie, Cam, and Franco are co-sureties of Samson's debt to Finance LLC. Brie pays the entire debt. Her right to contribution entitles her to recover any amount paid above the surety's obligation from
Cam and Franco
What is an example of a secured creditor?
Car loan provider
Which element is being satisfied under the Lanham Act when a business claims false advertisement as the only reason for its harm?
Causation
A corporation wants to conduct business in a state other than the state of its formation. Which filing gives the corporation the right to conduct business in a state other than the state of its formation?
Certificate of authority
Which measure of the Sarbanes-Oxley Act ensures corporate accountability for the information in the financial reports?
Certification by the CEO and CFO for the accuracy of information in the financial statements
What is the relief provided to an individual debtor under a Chapter 13 Bankruptcy filing?
Chapter 13 Repayment plan provides for adjustment of debts to an individual debtor with regular income. The debtor continues in business or possession of assets. Most debts are discharged after the plan period.
A company created a film to train its employees on workplace safety. Which type of protection should the company seek for the training film?
Copyright
An artist was on social media and saw someone re-creating a piece of their artwork. Which kind of suit should the artist pursue?
Copyright infringement
A business motto says, "they cannot believe that it's not sour cream" when, in fact, the product is sour cream. The Federal Trade Commission issues a cease-and-desist order and demands that it advertises anew as producing sour cream. What is this sanction called?
Counteradvertising
Credit Loan Company extends credit in the ordinary course of its business. Under the Truth-in-Lending Act, Credit Loan must inform potential borrowers of
Credit Loan's credit terms
A CEO thinks it is time to talk about business ethics to senior management. She is developing a list of talking points. What is a fundamental ethical issue that must be included in these talking points?
Developing integrity and trust
The Sarbanes-Oxley Act (SOX) of 2002 requires senior-level corporate officers to establish and maintain an effective system of internal controls. What are internal controls?
Disclosure measures and procedures to ensure accuracy and timeliness of company financial reports
What is one of the disadvantages of a corporation form of business entity?
Double taxation
Under the Uniform Commercial Code, and without the parties agreeing to the contrary in the contract, when is a title passed from the seller to the buyer for the sale of goods?
During delivery of the goods to a shipping company
If two parties agreed on mail for their communication in their offer, under the majority rule, and without any other terms stipulated, when is the acceptance deemed to be valid?
During delivery to the post office
After dissociation with a limited liability company (LLC), which member duty continues with respect to events occurring before the dissociation?
Duty of care
Which fiduciary duty is exercised when a partner refrains from intentional misconduct?
Duty of care
A principal provides special equipment and office environment for all its agents and employees. What is this duty?
Duty to provide safe working conditions
A teacher copies a photo out of a textbook for a lesson. The teacher made 37 copies, one for each student. Did the teacher infringe on the artist's work?
No, because the work was reproduced for teaching purposes.
What should a business use to protect its trade secrets?
Non-disclosure agreement
Who are the members of the audit committee of a public company/
Outside directors
What does a surety's right of subrogation do?
Entitles the surety to the rights a creditor would have in bankruptcy
A consumer is told that he cannot receive a credit card because he receives public assistance benefits. Under which act might he bring suit against the lender?
Equal Credit Opportunity Act
Partners A and B agree to share profits and losses as well as joint ownership of the business. To what else must they agree in order to form a partnership under the Uniform Partnership Act (UPA)?
Equal right to be involved in the business's management
Which element does fraudulent misrepresentation require?
Scienter
Who is responsible for the establishment and maintenance of systems of internal control in a corporation?
Senior-level corporate officers
A buyer enters a contract to buy a new house. The seller breaches the agreement after the buyer made a deposit. The seller offers to return the deposit, but the buyer wants to buy the house. Which type of remedy will this buyer seek?
Equitable
A consumer purchases goods through the mail. Under which circumstances would the merchant violate the Mail, Internet, or Telephone Order Merchandise Rule?
Failing to notify the consumer when orders cannot be shipped on time
What is the strongest type of trademark?
Fanciful
Which type of trademark receives automatic protection?
Fanciful marks
Which type of trademark is "Xerox" in association with the sale of printers?
Fanciful trademark
What is a bad faith bankruptcy filing under Chapter 7?
Filing for Chapter 7 liquidation after dismissal of two or more bankruptcy petitions during the prior year
Bey indicates that he is acting as an agent on behalf of an identified client-Flight Services Inc.-when she enters into a contract with Go Airlines. Liability to Go for nonperformance of the contract may be imposed on
Flight Services only
What is a written offer that describes the issuer and indicates that more information can be obtained on the Securities and Exchange Commission (SEC) website?
Free-writing prosepectus
A salesperson claims that many flavored waters contain no sugars, leading to weight loss. The salesperson neglects to mention that these same flavored waters may contain other types of artificial sweeteners, which may have negative health effects. What has the salesperson's statement likely contained?
Half-truth
Three people form a limited liability company (LLC). Two years later, one of them dies unexpectedly. Absent a specific provision in the operating agreement, what is the effect on the LLC?
It continues to operate
A hardware store proactively informs clients whenever recalls happen. It is always willing to replace defective items at no cost even if the warranty has expired. Its philosophy is to maximize benefits and minimize harm. This approach is known as outcome-based ethics. What is a characteristic of outcome-based ethics?
It focuses on the consequences of an action
An internal auditor is drafting a code of conduct as instructed by the chief audit executive. The company is privately held and is a large manufacturer. What is a requirement of a private company's code of conduct?
It indicates how employees should act.
Which statement accurately describes common law?
It is a body of law established by court decisions
What is one of the characteristics of a corporation?
It is a legal entity separate and distinct from its owners
Which statement describes cyberlaw?
It modifies traditional laws in relation to the online environment
What results when an agent fails to perform their duties?
Liability for breach of contract
How is the liability determined for members of a limited liability company, absent a member's significant contribution to any tortious conduct?
Limited to the amount of the member's investment
For which circumstances may an individual be personally liable for actions of a limited liability company (LLC)?
Member personally guarantees a business loan
A client owed an accountant $2,500 for an accounting service provided. The client believed that the services the accountant provided cost less than $2,500 because they did not seem difficult, based on the client's judgment. When the accountant demanded payment, the client sent a check for $2,250 marked "tendered in full satisfaction." The accountant endorsed and cashed the check. Which type of settlement agreement is this?
Mutual rescission
A local retailer decided to become a corporate citizen as a way to attract recent college graduates looking for socially responsible employers. It was presented with the opportunity of changing the plastic bags used to an environmentally friendly option. This change would cost $10K more than the plastic bags it used, so the retailer decided not to implement the change. A year later, a new legislation prohibiting the use of plastic bags was passed. Now that plastic bags cannot be used, the local retailer tells applicants that it decided to stop using plastic bags as part of its environmental efforts. Are this local retailer's expressions ethical?
No, because it changed the practice based on law
During an emergency situation, an agent had to deviate from the instructions given by the principal. Did the agent breach the obedience duty?
No, because the agent may deviate when the principal cannot be consulted
A local corporation is the major employer of a city. Thousands of local families depend on the local corporation's jobs. While defining strategies for the next quarter, a tax lawyer advised the local corporation about a tax haven location across the country. Eager to save money, the local corporation decided to close all plants within a month and moved operations to tax haven location. Employees were told that they could always move to the new location. Are this corporation's actions ethical?
No, because the reason to move operations was to save money
Macy offers to sell his fitness watch for $50 to Nona. Nona promises to pay Macy the price. Later, they exchange the watch for the funds. A contract was created when
Nona promised to pay for the watch
What is the process in which a corporation adopts pre-incorporation contracts?
Novation
What must an invention be in order to be patentable?
Novel
Which type of speech is considered unprotected?
Obscene
Partners 1, 2, and 3 execute a partnership agreements, contributing 51%, 39%, and 10% respectively. The agreement is silent on voting between the partners. Under the Uniform Partnership Act (UPA), how will these partners' votes be counted?
Partners 1, 2, and 3 will have only one vote
A company creates new technology to streamline the way companies run cash management accounts. Which kind of intellectual property protection should the company seek for this new technology?
Patent
What is considered a basic obligation of the buyer?
Paying for the goods tendered
On which tax return does a sole proprietor report business income?
Personal tax return
A person engages colleagues to invest in a new offshore company but uses the investments to pay themselves and other initial investors. What is this type of arrangement?
Ponzi scheme
How may the US Patent and Trademark Office (PTO) help entrepreneurs?
Protect intellectual property
What is the entity created by the Sarbanes-Oxley Act of 2002?
Public Company Accounting Oversight Board (PCAOB)
In which situation may a buyer obtain specific performance?
Purchase of an original portrait
An LLC promises to buy all the units that it requires from another business, which agrees to produce and sell these units to the LLC. Which type of contract have these two businesses executed?
Requirements contract
A share of stock is determined to be part of an exempt transaction under Regulation A. Even if it is exempt from the registration requirements, which law might still apply for antifraud provisions?
Securities Act of 1933
To which party does a warranty impose a duty?
Seller
Who are the owners of a corporation?
Share holders
Which type of trademark is "Dairy Queen" in association with soft served ice cream?
Suggestive
Trucking LLC. enters into a contract to deliver a certain quantity of potatoes to the United Food's refrigerated warehouse in exchange for a specified payment. Trucking delivers the potatoes to the location. United's duty to pay is
absolute
As the promoter of Glassworks LLC, Hans enters into a contract with Interstate Transport Company. Once formed, Glassworks can
adopt the contract through novation
Compared to Chapter 7 and 11 plans, a Chapter 13 plan
allows a debtor to retain possession of his or her assets
Under the Securities Act of 1933, securities include
any instrument representing corporate ownership or debt
Denny, a certified public accountant and an investor, and Ethel, an insurance salesperson and a realtor, may create an agency relationship for
any legal purpose
Nature's Eggs, Inc. agrees to supply Omelet Express with five hundred eggs. Nature's Eggs can reasonably ask Omelet Express to pick up the eggs at
any reasonable hour
Ran is a surety for Su's loan from Tempo Credit. When Su pays the debt owed to the lender, Ran's right of subrogation entitles the surety to
any right that the creditor had against the debtor
Megan contracts to sell Nonny her horse for $4,000. This contract will be fully discharged when Megan and Nonny
exchange the horse for the money
With respect to taxes imposed on limited liability companies, most states
follow the federal rules
Bean Processor Inc agrees to ship a certain quantity of coffee beans to Coffee Cafe LLC. Bean sends to Coffee an email indicating that the parties intended to form a contract. Against Bean, as a contract, the email will be sufficient
if it is signed by Bean
Equipment Company holds a lien on Fertile Farm's equipment. The equipment can be sold to satisfy the debt
if, before the sale, notice is given to Fertile Farm
Obie operates Pizza Palace. Obie hires Qua to take and fill customers' orders at an hourly wage of $15.00 plus tips. Obie and Qua are
not partners, because Qua does not have an ownership interest or management rights in Pizza Palace
Open Range agrees to sell Pinewood Ranch a remote parcel of land for $15,000. Both parties believed the land to be worthless, but beneath it is shale rock containing oil. A court would
not rescind the contract
Art and Antiquities LLC orders 5 pieces of rare imperial jade for Art Brokers Inc. In order to meet the terms of the sale, Art and Antiquities pays in full prior to shipment. When the shipment does not arrive in the expected time, Art and Antiquities contacts Art Brokers who responds that they have decided not to sell and offers to return the payment. Art and Antiquities can
obtain specific performance
To be protected under the Copyright Act, a work must be
original and fixed in a durable medium
Bayard organized, owns, and operates Cypress Tours in the simplest form of business organization. This is a
sole proprietorship
Nile is a holder of preferred stock in Oasis Hotels Inc, Nile
has priority over holders of common stock as to payment of dividends
Kathy is a director of Line Production Inc. As a director, with respect to the corporation, Kathy is expected to subordinate
her personal interests to the corporation's welfare
Equity Corporation, and its officers, directors, employees, and shareholders, buy and sell securities. Section 10 (b) of the Securities Exchange Act of 1934 applies to the trading of securities
in almost any circumstances
Ira serves in a representative capacity for Jett. Key is injured through Ira's negligence. Jett may be liable to Key if Ira's conduct occurred
in the course and scope of Ira's employment
Jon contracts with Kino to buy a certain number of sheep for Kino's Animal Farm. Jon makes a deal with Lila for the sheep, but neither Jon nor Kino pays the price. Lila sues Jon for breach. Jon's right to hold Kino liable for any damages is the right to
indemnification
Furnaces and Filters Inc. is a public company whose shares are traded in the public securities markets. Under the Sarbanes-Oxley Act of 2002, to ensure that the firm's financial results are accurate and timely, its senior officers must setup and maintain
internal "disclosure controls and procedures"
Gina's creditors attempt to force her into bankruptcy proceedings. The creditors will be unsuccessful if Gina
is a farmer
Restaurant Food Inc intends to sell a certain quantity of beef for $1,100. In an email, however, the firm's sales representative mistakenly offers to sell the beef to Steak House for $1,000. Steak's manager immediately accepts. The seller
is bound to the deal at the offered price
The US Constitution sets forth the government's
limits and powers
Dairy Stores Inc. owns and operates convenience stores. The firm wants to make an initial public offering of securities. If Dairy qualifies for an exemption from the federal registration requirement, the firm is
not necessarily exempt from a state registration requirement
In a civil case, the object is to
obtain a remedy to compensate the injured party
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
Vera is one of three partners in Waffles Food Truck. Concerning all aspects of the partnership business, Vera is entitled to information
on a complete basis
Peanut Products Company (PPC) makes goods that can cause severe health problems to those with peanut allergies. PPC analyzes the cost of warning people of the risk (which the company's management sees as obvious) and the harm to people if no warning is provided. This analysis most likely is part of
outcome-based ethics
GoodGro Inc. makes genetically modified seeds that are identical to Harvest Corporation's patented seeds, without Harvest's permission. This is most likely
patent infringement
To gain an advantage in a business deal, Masonry LLC engages in fraud. Nicole, a member of Masonry, significantly contributes to the firm's misconduct. For any resulting damages, a court is most likely to hold Nicole
personally liable
Duty-based ethical standards are most likely to derive from
philosophical reasoning
ABC Hardware Store orders one hundred power hand-drills from Drilling Tools Inc. When the hand-drills are delivered, they are all missing pieces. ABC rejects the shipment. To exercise a right to cure, Drilling must
promptly notify ABC of the intent to cure.
If a voluntary petition in bankruptcy is found to be proper, the court's entry of an order for relief
puts in place an automatic stay
Making a business decision based on its projected financial outcome and then arguing that the decision is ethical is
rationalizing the decision
ABC Hardware orders a shipment of hammers and saws from Tools-R-Us for a special DIY event that they are planning. ABC agrees to pay for the tools on delivery. Tools-R-Us accepts the order but fails to deliver. ABC Hardware then purchases the hammers and saws from Enzo's Tools, but the tools do not arrive in time for the event. ABC can
recover consequential damages
Suva is an agent for Tax Accountants, Inc. On the firm's behalf and at its request, Suva pays Uzo for specially coded software. Suva's right to obtain the amount of the payment from Tax Accountants arises under the duty of
reimbursement
Pharma Corporation is a public company whose shares are traded in the public securities markets. With respect to financial and other significant information concerning its securities, the Securities Act of 1933
requires disclosure
The Compensation Committee of the Board is responsible for
selecting the components and amounts of executive compensation
A corporation's authority to act and its liability for those actions is, with respect to the firm's owners,
separate and apart
Among the states, the law governing limited liability companies is far from uniform because
state limited liability company statutes vary from state to state
The federal government has the power to regulate commercial activities among states under
the commerce clause
The National Association of Manufacturers (NAM) announces a new industry code of ethics. The effectiveness of this code will be determined by
the commitment of NAM's members to enforcing the code
Each court has a jurisdiction. Jurisdiction is best defined as
the geographic area in which a court has the power to apply the law
NatGas Corporation obtains a federal license to operate a gas pipeline through a certain area of Oregon. The Oregon state legislature enacts a law that bans gas pipelines in that area. Most likely, the state law violates
the supremacy clause
Olin is a partner in Precision Plumbing. When the partners decide to dissolve the firm, Olin collects and distributes the assets. This results in
the termination of the firm's legal existence
Donna offers to sell her used sofa, chair, coffee table, end table, and lamp to Etta for $700. Etta responds that she will pay that price if Donna's TV set is included. Neither party is a merchant. Their contract is formed according to
the terms of the original offer.
Van starts Wind Systems to make and sell turbines. Later, Van contracts with Xi to invest additional capital in the firm in exchange for 25% of the profits. Van and Xi are not partners in Wind Systems because
they do not have joint control over the business
Built-It Inc. applied an inexpensive but untested technique to brace a transit tunnel wall. The technique was legal, but the tunnel collapsed, killing several commuters. Built-It's action was
unethical because the technique was untested
Like most successful companies, Phones Inc. has trade secrets. The law protects those secrets if the information is
unique and has value to a competitor
Movie Time Corporation files a registration statement and delivers a prospectus to the appropriate parties. These items are intended to enable the evaluation of certain financial risks by
unsophisticated investors
Under Chapter 7, the primary effect of a discharge is to
void a judgment on a discharged debt and prohibit an action to collect it
Grinders Mill agrees to sell to Harvest Company a certain quantity of refined grains. Some of the other terms in the deal are left open. In the case of a dispute, a court will presume
whatever is reasonable
What is the eligibility requirement for a small-business debtor to avoid the appointment of a creditor's committee?
Small-business debtors that do not own or manage real estate with liabilities not exceeding $2.7 million.
What does a trademark indicate?
Source of a good or service
When deciding a case, which source of law are judges most likely to take into consideration?
Stare Decisis
Which type of law primarily governs limited liability companies?
State law
A used car salesperson tells a buyer that the used car will last for at least five more years, if not many more. Which type of statement did this salesperson provide?
Statement of opinion
The accounting department needs to decide on how to classify some transactions but due to their nature, the literature appears to be in conflict. Besides the classification issue, there are some ethical implications as well. The controller is researching how to approach a situation like this from an ethical standpoint. What is a framework used to help in the decision-making process?
Systematic approach
When confirming AR balances during an audit, the accountant realized that several of the accounts were fictitious. The accountant asked the company's CFO to remove those accounts, but he insisted on keeping them in the balance sheet. One morning, the CFO called the accountant and ended the audit client relationship over the phone, before the audit was even completed. Months later, the accountant received a call from the CPA firm asking about why the relationship with the company ended. What should this accountant tell the CPA firm about the audit client relationship with the company?
That the CFO refused to remove the fictitious account
Who certifies for the accuracy of information in the financial statements filed with the SEC?
The CEO and CFO
Who or what is directly responsible for the accuracy of the corporate financial reporting?
The CEO and CFO
What is the equal dignity rule?
The agent's authority is required to be in writing if the agency contract to be executed must be in writing.
A couple filed for Chapter 7 Bankruptcy. They owe $115,000 to a mortgage company on their main residence, $34,000 to an auto financer on their car, and $22,000 to a bank on credit cards. Who is the petitioner?
The couple
Which type of relief does Chapter 7 of the Bankruptcy Code provide to a debtor?
The debtor has an opportunity for a fresh start as most or all debts are discharged on liquidation and distribution to creditor.
An individual tells another person that he will trade his 2016 car for her 2006 car. Which term is likely missing for an effective offer?
Timing for the trade
What is the stated objective of the Sarbanes-Oxley Act of 2002?
To address corporate governance through increased corporate accountability
What is the role of a trustee under Chapter 7 Bankruptcy?
To sell the non-exempt assets of the debtor and distribute the proceeds to creditors
A company started a beverage company that sells a variety of juices. All the juices are sold in a plastic bottle with the company's name, the name of the juice, and a logo the owner found online. Which type of protection should the owner seek for the name of the juice?
Trademark
Which type of intellectual property protection should a watch company seek for its slogan?
Trademark
Which concept characterizes a principal-agent relationship?
Trust
Jimena, a marketing manager for Home Stuff LLC., is responsible for branding the company's products. Aspects of branding that can be trademarked include
a catchy phrase, such as "Stuff your home with Home Stuff!"
Under Chapter 11, soon after the entry of the order for relief
a creditor's committee of unsecured creditors is appointed
A voluntary petition in bankruptcy must include
a list of the debtor's creditors and the amount of the debt owed to each
An outside director is
a member of a company's board of directors who is not an employee or stakeholder in the company
Diamonds and Gold Inc. hires Esme to buy gems and precious metals from various sources on its behalf. In this relationship, Diamonds is
a principal
Retail Store Inc. wants to agree with its creditors on a plan under which it pays a portion of its debt and is discharged of the rest. To accomplish this goal, the corporation should file a petition in bankruptcy under Chapter 11 for relief through
a reorganization
Without creating a separate business organization, Roy starts up Street Cruisers, a pre-owned auto sales enterprise. This enterprise is
a sole proprietorship
Paving Corporation taps into the computer network of Roadwork Inc., a competitor, and downloads confidential business data without Roadwork's knowledge or authorization. This is most likely
a theft of trade secrets
Maeve sells New Energy, a sole proprietorship that makes and sells solar panels, to Olaf. This is
a transfer of the ownership of the business
Jan offers to pay Sari to deliver certain documents within thirty minutes. Sari can accept the offer only by completing the task within the deadline. If she does, Jan and Sari will have
a unilateral contract.
Brew Pub's debt to Credit Service is past due. Credit obtains a judgment against Brew, but the firm refuses to pay. Credit asks the court to order the seizure of Brew's property. This is a request for
a writ of execution
Motor Parts Sales Inc. hires Nolly to work on its shipping dock, accepting deliveries, and dispatching trucks, and dealing with customers and drivers. With respect to Motor Parts, Nolly is most likely
an agent
Nora works at Oil & Gas Inc. She is a sales representative who works with Oil & Gas customers. The company closely supervises its sales reps, and dictates their schedules. With respect to third parties, Nora is
an employee and agent
Marketing Inc. offers to create a campaign to increase N'Ice Creamery, Inc.'s online business. N'Ice agrees to pay for the service. These parties have
an express contract
Jess, a salesperson for Kitchens Inc., shows Lane, a buyer for Metro Diner, display items in Kitchens' Showroom, stating that any purchased equipment will match the display. This is
an express warranty
Rosario is a chef and caterer who hires out on a per-project basis to companies with on-location work sites, as well as to hosts of banquets, corporate meetings, concerts, weddings, and other events. In this capacity, Rosario is
an independent contractor
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
Darcia, the owner of Data Master, a sole proprietorship, wants to obtain additional business capital. This opportunity is most likely limited to
borrowing funds
Jazz Inc. makes and markets music. The company wants to make an initial public offering of securities via the Internet. Most likely, this offering
can avoid high costs and complicated procedures
Jamal and Keri enter into a contract for Jamal to renovate Keri's house by a certain date. Jamal never performs. After the applicable limitations period has passed, Keri decides to bring a suit against Jamal for breach. This suit
can no longer be brought.
Bev is the chief executive officer of Chef Cafes 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
Mattress Company advertises a special sale-all bedding, half price. The ad does not state that the sale price does not include delivery or shipping costs. To avoid claims of deceptive advertising, Mattress should
clearly and conspicuously disclose the shipping cost in the ads.
Auto Sales and Finance wants to get paid for its goods and services, so it will not sell goods or lend funds unless payment is guaranteed. To obtain those goods or services, a customer or borrower might pledge
collateral
The Uniform Commercial Code provides a set of rules governing
commercial transactions
The primary source for contract law is
common law
Lorene, an attorney, contracts with Milos to incorporate the client's business. Their contract stipulates the amount of the fee. On completion of the work, the attorney's right to be paid this amount arises from the client's duty of
compensation
Without the permission of the copyright owner, Nora copies the literary expression of Game of Thrones, changes the names of the main characters, and publishes the result as her own work. This is
copyright infringement
A precedent is
court decision that furnishes an example of deciding subsequent cases involving similar or identical facts or principles
Under Chapter 7, creditors are paid in a certain order of priority. The highest-priority class comprises claims for
domestic support
To reduce traffic, Market Town enacts an ordinance that allows only a few specific street vendors to operate in certain areas. A court would likely review this ordinance under the principles of
equal protection
Rollo has a credit card from Shopping Cards Inc. To change the terms, Shopping Cards must
give Rollo advance notice
Holiday Corporation sells Idyll brand campers and trailers. Under most circumstances, Holiday will be presumed to have warranted that its title to the goods is
good and valid
Which statement by a salesperson would qualify as bait-and-switch advertising?
"I can't show the advertised mini-fridge on sale to you , but you might like this other refrigerator and stove instead."
Which element is entitled to copyright protection?
Video recording of choreographic work
Which requirement of a contract is a "meeting of the minds" part of the legal standard?
Voluntary consent
Which bankruptcy filing requires a debtor to receive credit counseling?
Voluntary filing under Chapter 7 liquidation
When is the principal liable to the third parties for the actions of the agent?
When the agent had authority to enter legally binding contracts on behalf of the principal
When is acceptance demonstrated?
When the buyer starts reselling the goods
Under which scenario may the acceptance of substantially impaired defective goods be revoked?
When the seller promises to cure and fails within a reasonable amount of time.
When might a court order treble (triple) damages under the Telephone Consumer Protection Act (TCPA)?
Willfully violating the act
What is the term to describe the process when the partners are collecting assets, paying debts, and accounting for the value of partner's interest in the partnership?
Winding up
What is the time period for filing Chapter 7 Schedules after the filing of the petition?
Within 45 days after filing the petition in bankruptcy
Who is responsible for filing the management's assessment of internal controls report with the SEC?
Independent auditor
Which provision is typically included in the standard operating agreements for limited liability companies (LLCs)?
How member's interests may be transferred
When can an agent exercise emergency powers?
In unforeseen situations that require action by the agent to protect the property and rights of the principal
Beth offered to sell her house to Dennis. Before Dennis could respond, a tornado completely destroyed Beth's house. What is the destruction's effect on Beth's offer?
The offer is terminated
When an offeree changes the quantity of items to be exchanged from the offeror's initial offer, what is the likely effect for the parties?
The offeree's response is a counteroffer
An owner registered a trademark, "The Marq," with the US Patent and Trademark office and claims that a company "Thee Mark" is infringing on its trademark. What must the owner prove?
The owner must prove "Thee Mark" creates a likelihood of confusion origin of their goods or services.
What must a seller or lessor (merchant or nonmerchant) know for the implied warranty of fitness for a particular purpose to arise in the sale or lease of goods?
The particular purpose for which a buyer or lessee will use the goods and the reliance the buyer or lessee placed on the seller or lessor's skill and judgment.
What is a characteristic of a legal claim?
The remedy is usually monetary damages
A salesperson in a shoe store offers a customer a 50% discount on an open item returned pair of shoes. Promotions and discounts are generally set by the store owner. The store is not having any promotional events offering discounts, but the store policy permits sales personnel to offer discounts on a per-transaction basis. What is the agency status between the salesperson and the store owner?
The salesperson is an agent of the store owner, and the sale is binding on the store owner
A songwriter filed suit in federal district court alleging another artist infringed the copyright of the songwriter's song. The artist's song is not identical, but a good portion of it sounds similar to the songwriter's song. What will happen in this suit?
The songwriter will win because a substantial part of the songwriter's song was reproduced in the artist's song.
