law

Mainline Bank claimed that Big Four Accounting negligently prepared its audit. To hold the accounting firm liable, which of the following elements must be established?

Big Four breached its duty to Mainline by failing to exercise the degree of skill and competence that an ordinarily prudent accountant would under the circumstances.

The Creamy Peanut Butter Company and Grape Jelly Corporation decide that they are going to merge. They are both large, public corporations. Which federal agency must they notify?

Federal Trade Commission

The federal government can consider the cost-benefit of a regulation under which statutes?

See both section 25-2a and 25-3b

Which of the following is NOT a provision of the Clean Air Act?

See section 25-2a.

Which is not considered a source of water pollution under the Clean Water Act?

See section 25-3.

The disposal of hazardous solid waste is:

See section 25-4a.

The Toxic Substances Control Act requires which of the following:

See section 25-5. Only one of these events are covered by the TSCA. The others are covered by other statutes.

Scott Enterprises, a client of Stark & Associates, an accounting firm, claimed that Stark fraudulently prepared an audit. To hold the accounting firm liable, which of the following elements must be established?

See section 26-2c. Note that Scott is a client.

To prevail under the 1934 Securities Act, a plaintiff must prove

See section 26-3d

What is not a name commonly associated with antitrust law.

Senator Robert Wagner of New York

Legal requirements for a will depend on state law, but generally include all but which of the following?

Signatures of at least three witnesses

In 1978, the U.S. Supreme Court affirmed the shut down of the construction of the Tellico Dam because of a Endangered Species Act claim. Which endangered specie was the subject of the ESA claim?

Snail darter

Lake's breach of contract lawsuit against Tom was thrown out of court because the breach occurred ten years ago. What were the most likely grounds for the dismissal?

Statute of Limitations

Melanie leased commercial space in Oxford for her graphics design business. She decided to finish the space herself. She installed a professional printing unit and a new fan built into the wall to keep the printing area cool. Upon expiration of the lease, Melanie needs to decide what she can move. The printer can easily be removed without harming anything. Removal of the fan, however, will leave a huge hole in the exterior wall of the building. Are the printer and fan fixtures?

The fan is a fixture, but the printer is not.

Dominic put together a flyer for an event he was planning. On the flyer, he used a photograph that he downloaded online. He thought it was in the public domain, but Sara had shot the photograph, copyrighted it, and was selling it on her photography website. Does Sara have a legitimate claim for infringement?

Yes. Dominic infringed on Sara's copyright.

Boardwalk Inventions is filing for a patent. Which of the following is a requirement for its patent?

the invention must be useful.

What document does the stock investor most often see?

the prospectus.

The Federal Trade Commission Act primary focus is regulating which of these transactions?

the sale of consumer products and services

In acquiring a business, which of the following documents is not on the Inc. Magazine's recommended checklist for closing on a business?

incorrect; (Consultation/Employment Agreement) See the Inc. article on buying a business.

Under the Clean Water Act:

the states were required to develop plans to achieve EPA standards addressing water use.

Under the Truth In Lending Act, which action will get a lender in trouble?

scattering disclosures throughout a loan document

Which of the following statements, if made by a seller who knows the statement to be untruthful, would NOT be misrepresentation of material fact resulting in a cause of action for fraud?

"This car's engine is so good, you'll be able to outgun any car on the road."

Which of the following statements could most likely create an express warranty?

"This hair coloring will take the grey out of your hair."

Which of the following acts creates a bailment

Val finds an iPhone in her office after a meeting with Craig and sees that the phone has a photo of him.

Which of the following is NOT required to create a valid trust?

Witnesses

Wright Engineering and NG Energy, both Fortune 500 companies, entered into a contract whereby Wright agreed to install a new drilling system for NGE's natural gas operations in eastern Ohio. A clause in the contract states that Wright will not be liable for damages caused by the negligent installation of the system, except that Wright warrants the system and will fix any problem for a period of two years following installation. Wright completes the installation of the system and NGE begins drilling. Six months later, the system suffers a catastrophic failure because of Wright's ordinary negligence and closes off NGE's ability to access its natural gas supplies for six months. Wright fixes the system but NGE suffers significant lost profits during the time that drilling was shut down. NGE sues for the lost profits. Who wins?

Wright wins; this exculpatory clause is enforceable.

Does an employee handbook constitute a contract?

Yes, if the employee has accepted an express or implied contract to work because of the handbook.

Often corporate lawyers are referred to as the:

business prevention department.

Danielle begins to sell her invention commercially. How long does she have to file for a patent?

12 months

Liz applies for credit with Hometown Bank. How long does Hometown have to respond to Liz's credit application?

30 days

Which is not a form that a public company is required to file?

8-Q

Which of the following is an example of a purchase money security interest in consumer goods?

A construction worker acquiring lumber for his backyard shed.

Which of the following types of property would be classified as "goods" under Article 2 of the UCC?

A desk in the office building.

What is a title?

A legal document establishing a right of ownership in a property.

Which of the following cannot be patented:

A scientific formula.

Which of the following is correct?

A trademark is protected for 10 years.

What is not a means by which an offer is terminated?

Acceptance

Which of the following opinions indicates that the company's financial statements do not accurately represent its financial condition according to GAAP?

Adverse opinion

Kaitlyn is a bailee. Depending on the circumstances, what are her rights?

All of the answers are correct. to compensation. to possession of the bailed property. to use the bailed property.

Which of the following projects would require the preparation of an Environmental Impact Statement?

All these would require an EIS. The building of a privately financed sports stadium that will be built in wetlands. Having a massive fireworks show on the Ohio River. A plan initiated by the Department of Defense to build a new runway on land acquired next to an Air Force base.

Which of the following duties can most probably be delegated?

An agreement to repair the company's car fleet.

Car4You is a car rental business. It rented a car to Peta. The brakes failed and Peta was involved in a serious accident. What is Car4You's liability to Peta?

Car4You is liable if it could have discovered the faulty brakes with reasonable diligence.

The Metropolitan Sewer District of Hamilton County (Ohio) is under a federal consent decree to fix its wastewater control system (i.e. their sewers). Based on the information in this question, which federal statute did MSD violate?

Clean Water Act

Symmes Inc. is accusing Green Ltd. of violating one of its trademarks. What standard will the court use in determining liability?

Confusion.

Which of the following is a provision of the Sarbanes-Oxley Act of 2002?

Congress established the Public Company Accounting Oversight Board, which has the authority to regulate public accounting firms, establishing audit rules and ethics guidelines.

Mohican Dairy contracts to purchase 1,000 milk cartons with its logo and brand message printed on the cartons. After JDJ Graphics completed the order, Mohican refused to accept or pay for the cartons. Because of the special branding, JDJ could only sell the cartons to another buyer at cost. If JDJ sues Mohican, what is the proper measure of JDJ's damages?

Contract price minus cover price.

Porkopolis Brewery contracts with Pisgah Distribution to deliver its beer. It negotiates a price it will pay per load, and the timing and location of each shipment. These clauses are called:

Covenants

Which of the following does NOT act as a revocation of a will?

Creating a codicil

Liberty Machinery shipped 200 crates of gears by DD Carriers, a common carrier. DD offered Liberty a shipping rate of $1,000 for a limited liability of $25,000 or a rate of $5,000 for full liability for any harm to the gears. Liberty chose the $1,000 rate. In transit, DD Carrier's driver had a accident during an snowstorm and all of Liberty's goods were destroyed, causing a loss of $100,000. If Liberty sues DD Carriers:

DD Carriers will be liable for only $25,000 because a common carrier is allowed to limit its liability by contract.

Tony obtains a five-year loan through Rip-Off Financing Company for $3,000 at a 35% annual interest rate. The state attorney general files a lawsuit against Rip-Off on behalf of Tony and other Rip-Off borrowers. If the attorney general wins and the loan agreement is found to have violated the applicable usury statute, Rip-Off may have to forfeit what amount?

Depends on the state where the loan was made.

Maurice invented a car engine that runs on used coffee grounds. He began to market the engine to car makers, but never filed a patent application. Six months later, Gaston also invented an engine that runs on used coffee grounds. His design is identical to Maurice's. Gaston filed an application for a patent on his engine. Hearing about the filing, Maurice filed an application for a patent on his engine. Who has priority?

Gaston

Which of the following is true about wills?

If the will meets the legal technicalities, the surviving spouse can override it.

Betty opened her monthly bank statement and noticed an unauthorized electronic funds withdrawal. In order for her to not be liable for the withdrawal, how long does she have to notify her bank (from the date of the bank statement)?

Incorrect; (90) See section 24-3d, Debit and ATM Cards

On April 10th, Brooke's Pet Store agreed to buy a dog washer from Pets-a-Lot, signing a promissory note and security agreement giving Pets-a-Lot a security interest in the washer. On April 15th, Brooke took delivery of the washer. On May 1st, Brooke's Pet Store took out a loan from Hometown Bank and signed a promissory note and security agreement giving Hometown a security interest in all of her equipment and inventory. Hometown filed its financing statement on May 5th. Pets-a-Lot filed its financing statement on May 6th. Which of the following is correct?

Incorrect; (Hometown has priority over all equipment except the dog washer.) See section 16-5. Note the timeline.

Janis receives a $3,000 credit card bill in the mail from her credit card company for a guitar she returned to the store. Does she have any recourse?

Incorrect; (Yes, under the Fair and Accurate Credit Transactions Act (FACTA), Janis can place an alert in her credit files.) See section 24-3d, Dispute with Credit Card companies.

The Cincinnati Reds, a professional baseball team, ordered 500 wooden baseball bats from Bats, Inc., for delivery on April 1st, two days before Opening Day. On April 1st, the ball team received 500 aluminum bats, instead of the wooden ones. The use of aluminum bats are against league rules. The Reds:

Incorrect; section 14-1c, buyers remedies

Joe is starting a fast food restaurant. Which of the following phrases could he register as a trademark?

Joey's Mega Burgers

Which of the following types of concurrent ownership provides for rights of survivorship?

Joint tenancy.

Judy is a poor college student struggling to work and keep up with her studies. Frida, her aunt, promises to pay Judy support of $500 per month for the next school year if she would watch Bella, Judy's niece, when Frida was at work. Although Frida didn't ask her to, Judy quits her current job in order to devote full time to her studies and watching Bella for the next school year. Frida pays during the first term and then stops with no explanation. If Judy sues, what is the likely result?

Judy would win, as a contract was formed when Frida promised to pay her the support.

Kate's Kups manufactures and sells plastic cups with designs on them. Pam's Party Store purchases the cups for $1.25 each in quantities of 500. Pam discovered that a national chain, a competitor of Pam's, buys the cups for $1.00 each for 1,000. If Pam's Party Store sues Kate's Kups for price discrimination:

Kate's Kups will win if it can justify the price differential.

Lakota, Inc. sold a parcel of property to Talawanda Corp., which in turn leased it to Ross Ltd. to use to store equipment. A neighbor calls the EPA because of a noxious odor coming from the site. EPA investigates and determines that the smell is from hazardous waste that was dumped by Lakota, unbeknownst to Talawanda and Ross. Who is liable for the cleanup under CERCLA?

Lakota

Larry has been drilling for oil for years on a piece of land he owns - all without success. One of Larry's neighbors, Tex the Rancher, wants to buy the land to raise his cattle. Larry agrees to sell the land to Tex, with both parties thinking the land is barren of oil. Before signing over the deed Tex, Larry learns one day to his surprise that one of his drills struck paydirt. He decides not to sell the land to Tex, who promptly rushes into court to sue. What is the likely result?

Larry wins; there was a mutual mistake.

Among the following, what does NOT have to be included in a written contract?

Manner in which the agreement can be terminated

Mattel manufactured and sold the Jeep Wrangler Power Wheel mini-car for children. 150 caught on fire and thousands overheated. Upon learning of the defect, how long did Mattel have to report it to the Consumer Product Safety Commission?

Mattel had twenty-four hours to report it.

What legal doctrine states that an acceptance must be on precisely the same terms as the offer.

Mirror Image Rule

Which of the following would exempt a business from being covered under the Americans with Disabilities Act (ADA)?

None of the above.

Farmer Bob owns on a farm that his family has lived on and worked for five generations. He had always planned to eventually sell it for his retirement. A large developer wants to buy the farm and build a 1,000 home community. The developer will pay $2 million to Farmer Bob contingent upon the land being rezoned. The local government refuses to change the zoning and will only permit the development of 200 homes. The developer backs out. What does the local government owe Farmer Bob?

Nothing.

Denny signed a one-year fixed year lease at an office condominium for office space. As the lease expired, the owner of the unit notified Denny that he wanted to let Denny stay in the space after the one-year. This is an example of a:

Periodic Tenancy

Lora wrote a check which said, "Pay to the order of James Bond $1,097." The next line of the check stated, "Ten and 97/100 Dollars." In applying the rules of interpretation, how much should the bank pay?

Ten dollars and 97 cents. Words control over numbers.

Potter Excavating signed a contract with Tremain Industries to pave the new parking lot for its large distribution center. The contract manager for Tremain made an error in processing the paperwork. The amount of the contract ended up being $40,000, when it should have been $400,000. Termain signed the contract not realizing the error. Potter's contract manager likewise signed it, not realizing the amount was incorrect. What is the status of the contract?

The contract is enforceable. The court will most likely enforce the contract on the intended terms (i.e. $400,000).

Miller-Valentine sells an office building to FeldCo Investments. What is the status of the leases of the companies that have leased space in the building?

The leases remain valid and FeldCo may not raise the rent during term of the existing lease

Jasmine writes a blog. Aladdin Publishing has taken her blog posts and published some of them as a book without her permission. What is not a consideration for the court when Jasmine files suit?

The novelty of Aladdin's book.

Max Tax Service offers to do Rebecca's home business taxes for $5,000. By midnight on April 15th (the day taxes are due to be filed with the government), Max has only completed half of her tax return. Which of the following will the court most likely decide?

This is a material breach. Rebecca doesn't have to pay Max anything.

Traci was a children's day-care provider for several years in the small town of Camden. She decided to give it all up and move to Chicago. She sold her business to Zach, agreeing not to open a competing business within two miles of Camden for a period of six months. After four months of the big city life, Traci was tired and ready to move back to Camden. She opened a children's indoor playground with inflatable play areas, with a parents' area where they could watch their children play. Zach sues on the noncompete clause. What is the most likely result?

Traci wins. The new business is not within the scope of activity of the agreement.

TradeCo is debating whether to file a patent on its new compound material that it has developed. What among the following would make it decide against filing?

TradeCo wants its compound formula to remain confidential.

All but which of the following may be used as collateral in a secured transaction under UCC Article 9?

all of these may be used. a desk. an IRA. a trademark.

The Magnuson-Moss Warranty Act requires that:

all warranties state what a consumer must do.

An engagement letter is a written contract

between an accountant and client.

Which of the following is a standard provision frequently found in contracts?

choice of law.

Jackie called her husband, Sam, from the office. "Sam, I have terrible news. It looks like my bosses are closing a deal for us to be bought and I might lose my job." Sam gets off the phone with Jackie and calls his father to let him know they might need a loan to make it through. He mentions the expected sale of Jackie's company to his father and suggests that he might want to pick up some shares. Sam's father hangs up and calls his broker to buy shares in the company acquiring Jackie's company. Sam has:

committed an act of improper insider trading.

Damages that can only be recovered if the breaching party should have foreseen them when the two parties formed the contract are known as:

consequential damages

When a landlord substantially interferes with the tenant's use and enjoyment of the premises, the landlord has engaged in which action?

constructive eviction.

Jane is a CPA in charge of auditing her client, Striker & Co.. Jane's duty of care to Striker will most likely be breached if Jane

fails to follow generally accepted auditing standards (GAAS).

You are working for a company that extends consumer financing on the products you sell. You are considering the application of Maria who is a single 25-year-old. You request a credit report on her and see that she has borrowed money on numerous occasions. Her payment record has been good, except she has been delinquent in paying a few bills. Which of the following is true regarding the credit information you gathered on Maria?

incorrect; (Due to her past delinquencies, she cannot see the credit files.) See section 24-3f.

Hometown Bank, located in Ohio, loaned Darcy Enterprises, which is located in Kentucky, $500,000 and obtained a security interest in a piece of heavy machinery owned by Darcy. In order to perfect its interest, Hometown filed a financing statement in Ohio. The financing statement provides Darcy's correct name, business address, and a reasonable description of the machinery used as collateral. Is the financing statement most likely sufficient?

incorrect; (No, Hometown needed to file a financing statement in both Ohio and Kentucky.) See section 16-3a, Place and Duration of Filing.

The 1933 Securities Act is primarily intended to:

incorrect; (coordinate federal and state laws with a primary emphasis on allowing the individual states to maintain primary control over securities law.) See section 23-1b. Note which Act is the subject of the question.

Steve is auditing Black Widow Inc. In reviewing the sales ledger, Steve saw that Black Widow had sold 5,000 grappling hooks to Hawkeye Ltd. Steve reviewed the acknowledgement of receipt signed by Hawkeye and the manifest given to the carrier. He then verified each step along the paper trail, checking backwards, until he reviewed the original invoice of this sale to ensure that the date, price, quantity, and customer's name all match. This illustrates what type of auditing?

incorrect; (tracing.) See section 26-1c

Under the UCC, a holder in due course is a holder who has given value for the instrument. Which of the following holders have given value for the instrument?

incorrect; See section 15-2a. Note the timing of the transfer of the instrument in relation to the services provided.

Brycen Distribution enters into a contract to provide fresh orange juice to Marcello's Eatery for the next six months. One month into the contract, the price of oranges doubles because of a deep freeze in Florida. While Brycen can still acquire the oranges needed to fill the order, he wants out of the contract. Is the contract enforceable or unenforceable?

incorrect; not (Enforceable. But only if Brycen doesn't lose money.)

Hometown Bank loaned $100,000 to Peter, taking a security interest in his yacht. Peter defaulted on the loan and Hometown Bank repossessed the boat. Hometown sold the yacht at a public sale. The sale yielded $90,000 at the auction. Hometown Bank:

is entitled to recover an additional $10,000 from Peter.

In connection with a living will, a health care proxy for an individual is to:

make decisions if they become incompetent.

SP Enterprises breaches a contract with Sleepy Pillow, Inc. to provide the filling for Sleepy Pillow's pillows. Sleepy Pillow is under contract to supply these pillows to its retailers. Sleep Pillow is required to do which of the following:

mitigate its damages.

Waffle Lumber sold the Ryans $5,000 worth of lumber to build a gazebo. The Ryans used their Waffle Lumber financing card. Waffle Lumber sold the note from the financing to WeBuyLoans.com. The Ryans' dream gazebo fell apart because the lumber was rotted. The Ryans refused to pay. WeBuyLoans.com is a:

not a holder in due course if the loan complied with the FTC.

The guiding principal of federal securities law is

o protect investors.

A monopoly is illegal

only if it is gained or maintained by using wrongful tactics.

The Box Cinematic Experience is a movie theater that offers valet parking for its patrons. John stops by and asks the valet to watch his car while he runs into a store next to the theater. John doesn't pay the valet. If damage is caused to his car, what duty of care does BCE owe to John?

only slight care, because this is a bailment for the sole benefit of the bailor.

A tenancy with a fixed duration is a

periodic tenancy.

Deer Hollow, Inc. is digging the foundation for their new global headquarters and discovers a huge deposit of cobalt, which is the primary component needed for electric car batteries. Deer Hollow's rights in the unmined mineral deposit would be protected under which area of the law?

real property

Which of the following property is NOT affected by a will?

retirement benefits

Dusty's Bar & Grille formally cancelled an offer to buy out another restaurant. It did what to the offer?

revoked