Exam 1 Business Law

Cody believes that Delta Corporation has discriminated against him on the basis of gender. Cody files a suit against Delta under Title VII. To establish a prima facie case of employment discrimination, Cody must show that

Cody is a member of a protected class.

____ is something of value or something bargained for in exchange for a promise.

Consideration

Lulene makes the best lemon meringue pies in Mississippi. So Ellen, who owns Ellen's Old Fashion Cafe, contracts with Lulene to buy 50 pies per week at the price of $5.00 per pie. Although Lulene took a class in business law, she forgot to get her agreement with Ellen in writing. Lulene and Ellen agreed during a chat. Lulene said: "I will supply you with lemon meringue pies for however long you want them at $5.00 per pie." Ellen said: "That's great, I'll take them." Both women were pleased. Soon Lulene had a problem. Between a hurricane in Florida and brush fires in California, the price of lemons increased by 200%. Now, instead of the $5.00 per pie price she intended to charge Ellen, she feels she must charge $7.00 per pie to make a little profit. Lulene calls Ellen with the bad news and Ellen has a fit. She tells Lulene that's too bad, but the deal is off. Lulene says, "That's what you think!" and goes to see Amanda, her attorney. Refer to Fact Pattern 10-1. Instead of meeting to discuss the deal, Lulene had sent Ellen a letter offering to sell her lemon pies for $5.00 per pie for as long as Ellen likes. Lulene says she must receive Ellen's answer by May 10. On May 8 Ellen signs a letter accepting the offer and mails it. On May 9 Lulene calls to withdraw her offer. Ellen says it's too late, she has accepted. Who wins?

Ellen wins, because it was effective when sent

For federal income tax purposes, a partnership is not a tax-paying entity.

False

The Civil Rights Act of 1964 does not prohibit job discrimination in the hiring process.

False

Lita replaces Manny in his job at Neighborly Business Corporation (NBC). Refer to Fact Pattern 25-1. Manny believes that he has been discriminated against on the basis of his age. For the Age Discrimination in Employment Act of 1967 to apply

Manny must be forty years of age or older.

A corporation is an artificial being.

True

A limited liability company can sue or be sued, enter into contracts, and hold title to property.

True

A partner owes to the partnership and the other partners a duty of care.

True

A partner owes to the partnership and the other partners a duty of loyalty.

True

A sole proprietor has unlimited liability for all obligations that arise in doing business.

True

A sole proprietorship lacks continuity on the death of the proprietor.

True

For most purposes, the law recognizes a partnership as an independent entity.

True

In certain instances of fraud, a court may "pierce the corporate veil" to hold the shareholders individually liable.

True

The members of a limited liability company enjoy limited liability.

True

Under the employment-at-will doctrine, an employer can end an employment relationship at any time.

True

In general, if a partnership agreement does not specify what happens in case of the death or departure of a partner, one looks to:

Uniform Partnership Act

Silky Coordinates, a women's clothing store, employs female attendants to assist customers in the dressing rooms. Radley, a forty-one-year-old male, applies for an attendant's job, but is not hired. In Radley's suit against Silky for employment discrimination under Title VII, the store has

a bona fide occupational qualification defense.

The legal relationship that consists of the rights and duties of the agreeing parties growing out of promises is:

a contract

Partners in a partnership owe each other:

a fiduciary duty

An employment of an agent for the purpose of representation in establishing relations between a principal and third parties is known as a(n):

agency relationship

Which of the following determines the scope of authority given to an agent:

agency relationship

Cody is a partner in Delta Accounting Service. Cody can inspect

all of Delta's books and records.

Basic elements of a contract must include:

all of the other choices

Which of the following is not a category of agents covered in the text:

all of the other choices are covered

A key element of an agency relationship is:

an agent's ability to transact business for the principal

A general partnership is:

an association of two or more persons to carry on a business as co-owners for a profit

General partners in a limited partnership:

are personally liable to the partnership's creditors

Dani is considering forms of business organization for her financial advisory firm. Like most states, Dani's state requires that to form a limited liability company, she must file with a central state agency

articles of organization.

Many companies give employees handbooks that discuss company policy and procedures. Legally, handbooks:

can create binding contractual employment obligations

A ____ is one whose shares are held by one shareholder or a small group of shareholders.

close corporation

____ is the legal ability to create a contract.

contractual capacity

A ____ is an artificial person, or legal entity, created under state law.

corporation

A board of directors' fiduciary duty of loyalty requires that:

directors place the interests of the corporation before their own interests

A complete termination comes about only after the partnership has been ____ and its affairs have been wound up.

dissolved

Which of the following is usually not a requirement for a contract to be valid?

equal value in exchange

An agent is a(n) ____ of the principal, which means that the agent occupies a position of trust, honesty, and confidence for the principal.

fiduciary

If an agent competes with his principal without the principal's consent:

he is violating his duty of loyalty

A contract that violates state or federal statutory law is:

illegal and unenforceable

Lulene makes the best lemon meringue pies in Mississippi. So Ellen, who owns Ellen's Old Fashion Cafe, contracts with Lulene to buy 50 pies per week at the price of $5.00 per pie. Although Lulene took a class in business law, she forgot to get her agreement with Ellen in writing. Lulene and Ellen agreed during a chat. Lulene said: "I will supply you with lemon meringue pies for however long you want them at $5.00 per pie." Ellen said: "That's great, I'll take them." Both women were pleased. Soon Lulene had a problem. Between a hurricane in Florida and brush fires in California, the price of lemons increased by 200%. Now, instead of the $5.00 per pie price she intended to charge Ellen, she feels she must charge $7.00 per pie to make a little profit. Lulene calls Ellen with the bad news and Ellen has a fit. She tells Lulene that's too bad, but the deal is off. Lulene says, "That's what you think!" and goes to see Amanda, her attorney. Refer to Fact Pattern 10-1. Assume that Ellen doesn't call the deal off when she is told the price is now $7.00, but wants to hold Lulene to the deal to supply pies at $5.00. If Lulene fails to supply the pies, and if Ellen then sues her for a breach of contract, what is Lulene most likely to argue to avoid liability?

impossibility

Lulene makes the best lemon meringue pies in Mississippi. So Ellen, who owns Ellen's Old Fashion Cafe, contracts with Lulene to buy 50 pies per week at the price of $5.00 per pie. Although Lulene took a class in business law, she forgot to get her agreement with Ellen in writing. Lulene and Ellen agreed during a chat. Lulene said: "I will supply you with lemon meringue pies for however long you want them at $5.00 per pie." Ellen said: "That's great, I'll take them." Both women were pleased. Soon Lulene had a problem. Between a hurricane in Florida and brush fires in California, the price of lemons increased by 200%. Now, instead of the $5.00 per pie price she intended to charge Ellen, she feels she must charge $7.00 per pie to make a little profit. Lulene calls Ellen with the bad news and Ellen has a fit. She tells Lulene that's too bad, but the deal is off. Lulene says, "That's what you think!" and goes to see Amanda, her attorney. Refer to Fact Pattern 10-1. Under the common law, Lulene's offer:

is invalid based on indefiniteness

The business organization that has at least one general partner and other investors who have limited liability is a:

limited partnership

When an employer-employee relationship exists, employers:

may be liable for the torts committed by employees in the course of employment

Phillipa is the sole proprietor of Fun Floral Arrangements. As a sole proprietor, on Fun Floral Arrangements' profits, Phillipa

pays only personal income taxes.

Tundi is a partner in YooHoo! Amusement, a new partnership. A YooHoo! debt comes due. Tundi is

personally liable to the full extent of the debt.

The business judgment rule:

protects directors and managers of a corporation who have made honest mistakes in judgment

When a seller has agreed to supply all of the needs of a buyer, there is a:

requirements contract

Withdrawal of an offer by the offeror is a:

revocation

The owners of a corporation are called:

shareholders

A person doing business for himself or herself is a(n):

sole proprietor

To create a corporation:

the corporation's articles of incorporation are filed with the appropriate officer of the state

Apparent authority arises when:

the principal creates an appearance of authority in an agent that leads a third party to conclude reasonably that the agent has authority to act for the principal

Lucy is a limited partner in Metro Contractors, a limited partnership, which cannot pay its debts. Lucy is personally liable for the debts

to the extent of her capital contribution.

An effective acceptance must be:

unequivocal

Marvin is an employee of Wild Thing Farms. Marvin finds out that the head of Wild Thing Farms is illegally importing endangered animals to sell as pets. If Marvin reports his employer's illegal activities he will probably be protected from retaliatory discharge by

whistleblower statutes.