Legal Environment FINAL
After acquiring the RazRSleek brand name and electric shaver assets, Flyy controlled 55 percent of the electric shaver industry in the United States. Chaser, a competitor, claimed that the acquisition of such a large market share was a violation of the law because the increased competition from Flyy would decrease Chaser's profits. Does Chaser have a valid claim?
. No, unless Flyy excluded competitors and controlled prices.
To have an illegal monopoly, a company must: 1. control the market. 2. maintain its control improperly. 3. have a market share greater than 90 percent.
1 and 2
After the death of Babe Ruth, one of the most famous baseball players of all time, his daughters registered the name "Babe Ruth" as a trademark. Which of the following uses would be legal without the daughters' permission?
1 and 3
Eric is a clever fellow who knows all about computers. He: 1.removed the author's name from an article he found on the internet and sent it via email to his lacrosse team, telling them he wrote it. 2.figured out how to unscramble his roommate's cable signal so they could watch cable on a second television. 3.taught the rest of his lacrosse team how to unscramble cable signals. Which of these activities is legal under the Digital Millennium Copyright Act?
1,2,3
Lucas has bought the following insurance this week: 1. A life insurance policy on his brother 2. A life insurance policy on the partner in his accounting practice 3. A fire insurance policy on the fitness club he belongs to, so that if it burns down, he will receive a large enough payment to enable him to join a different club In which of these policies does he have an insurable interest?
2 and 3
To prove a violation of copyright law, the plaintiff does not need to prove that the infringer actually copied the work, but she does need to prove:
2 and 3
Which of the following policies are you likely to need in your lifetime? 1.Service plan on an appliance 2.Whole life insurance 3.Disability insurance 4.Health insurance
3 and 4
Victor purchased $1 million of insurance on his barn even though the barn was worth only $500,000. Victor's barn was struck by lightning and burned down. Under the insurance policy, how much will Victor be able to recover?
500,000
This post appeared on Instagram:khloekardashian Ever since I started taking two @sugarbearhair a day, my hair has been fuller and stronger than ever!! Even with all the heat and bleaching I do to it! sugarbearhair Is there anything wrong with that?
Ads on Instagram must clearly indicate that they are ads. Two weeks later, "#ad" was added at the beginning of this post.
Do you love ice cream? Here is an opportunity for you! For only $800, you can buy a cow from Berkshire Ice Cream. The company gets milk from the cow, and you get to share in the profits from the sale of ice cream. Just last month, Berkshire mailed $32,000 worth of checks to investors, who are expecting a 20 percent annual rate of return. Are there any problems with this plan?
Berkshire is selling a security and must comply with the requirements of the 1933 Act.
A company offered credit cards to consumers with low credit scores. These cards had a $300 limit, a $75 sign-up fee, a $6 per month participation fee, and a $5 monthly fee for paper billing. Despite the fees, 98,000 people signed up. Is there anything wrong with that?
During the first year, credit card fees must be less than 25 percent of a card's credit limit.
Dannie Harvey sued her employer, O. R. Whitaker, for sexual harassment, discrimination, and defamation. Whitaker counterclaimed for libel and slander, requesting $1 million in punitive damages. Both Whitaker and Harvey were insured by Allstate, under identical homeowners policies. This policy explicitly promised to defend Harvey against the exact claim Whitaker had made against her. Harvey's Allstate agent, however, told her that she was not covered. Because the agent kept all copies of Harvey's insurance policies in his office, she took him at his word. She had no choice but to defend against the claim on her own. Whitaker mounted an exceedingly hostile litigation attack, taking 80 depositions. After a year, Allstate agreed to defend Harvey. However, instead of hiring the lawyer who had been representing her, it chose another lawyer who had no expertise in this type of case and was a close friend of Whitaker's attorney. Harvey's new lawyer refused to meet her or to attend any depositions. Harvey and Whitaker finally settled. Whitaker had spent $1 million in legal fees, Harvey $169,000, and Allstate $2,513. Does Harvey have a claim against Allstate?
Harvey sued Allstate for a violation of the covenant of good faith and fair dealing. A jury awarded her $94,000 plus attorney's fees. Harvey v. Allstate Insurance Co., 1993 U.S. app. LEXIS 33865 (10th Cir. 1993).
Jane's Boutique would like to buy some of Holistic Health Co.'s popular nail polish for resale. Holistic Health tells Jane that if she buys less than 100 units, she must also buy a small order of their new vitamin product. Jane has no interest in selling vitamins in her boutique. If Jane wanted to challenge Holistic Health's requirement as an illegal tying arrangement, what additional facts would she have to prove?
Holistic Health has significant power in the nail polish market and is shutting out a significant portion of the vitamin market through the tying arraignment.
Sequenom developed a noninvasive prenatal diagnostic test to assess the risk of Down syndrome and other chromosomal abnormalities in fetuses. The test analyzes DNA from the fetus that is found in the mother's blood. Prior to this test, women had to undergo invasive tests that carried a slight risk of miscarriage. The PTO awarded Sequenom a patent on the test, but other diagnostic testing companies sued to invalidate the patent. Is Sequenom's patent valid?
In 2013, a California federal court invalidated Sequenom's patent on the basis that it covered a natural phenomenon—the presence of DNA from the fetus in the mother's blood. This was based on the Myriad precedent discussed in this chapter.
Linda and Eddie had two children before they were divorced. Under the terms of their divorce, Eddie became the owner of their house. When he died suddenly, their children inherited the property. Linda moved into the house with the children and began paying the mortgage, which was in Eddie's name alone. She also took out fire insurance. When the house burned down, the insurance company refused to pay the policy because she did not have an insurable interest. Do you agree? Argument for the Insurance Company: Linda did not own the house; therefore, she had no insurable interest. Argument for Linda: She was harmed when the house burned down because she and her children had no place to live. She was paying the mortgage, so she also had a financial interest.
Linda had an insurable interest because she had made a substantial financial contribution by paying the mortgage. Also, the house was owned by her children, and as their guardian, she had an insurable interest in the house. Motorists Mutual v. Richmond, 676 S.W.2d 478 (Ky. Ct. App. 1984).
In the registration statement filed with the SEC, DrugsUSA stated that it had three different medicines approved by the Food and Drug Administration (FDA). In reality, DrugsUSA had filed applications for approval with the FDA that were still pending. The SEC approved the sale of DrugsUSA stock, and Marilyn purchased $100,000 worth of stock. Two months later, all three of DrugsUSA's applications were denied by the FDA. The stock price plummeted, reducing the value of Marilyn's shares to a total of $2,000. What, if anything, can Marilyn recover?
Marilyn can recover $98,000 from DrugsUSA and the signatories of the registration statement.
Reserve Supply Corp., a cooperative of 379 lumber dealers, charged that Owens-Corning Fiberglass Corp. violated the Robinson-Patman Act by selling at lower prices to Reserve's competitors. It presented proof that these prices had harmed competition. Owens-Corning admitted that it had granted lower prices to a number of Reserve's competitors to meet, but not beat, the prices of other insulation manufacturers. Is Owens-Corning in violation of the RPA?
No because a manufacturer is not liable under the RPA if it charges lower prices to meet competition.
Sarah owns Fine Cuts hair salon. Hairdressers each rent a chair in the salon where they can style customers' hair, and Sarah provides receptionist services, maintains the space, and sells some hair care products at the front of the salon. The hairdressers must pay 35 percent of their profits to Sarah in return for the chair space and earn a commission for each hair product that they sell. Is Sarah selling the hairdressers a security in Fine Cuts?
No, the hairdressers are not expecting to earn money predominately from Sarah's efforts.
While in college, David invented a new and useful machine to make macaroni and cheese (he called it the "Mac n' Cheeser"). It was like nothing on the market, but David did not apply for a patent. At that time, he offered to sell his invention to several kitchen products companies. His offers were all rejected, and he never sold the invention. Years later, he decided to apply for a utility patent. Is David entitled to a utility patent?
No, while the Mac n' Cheeser was new, useful, and nonobvious at the time it was invented, David's disclosure to the kitchen product companies years before renders it not novel now. Inventors have a grace period of one year once disclosure is made to apply for a patent. That time lapsed. Patent rejected.
CPA QUESTION On July 1, 2015, Quick, Onyx, and Nash were deeded a piece of land as tenants in common. The deed provided that Quick owned one-half the property and Onyx and Nash owned one-quarter each. If Nash dies, the property will be owned as follows:
Quick ½, Onyx ¼, Nash's heirs ¼
In 1931, Rose Ray purchased a cottage in the Adirondacks. Although the home was hers, the land belonged to a landlord, who agreed to give her a long-term lease. In 1960, the landlord terminated the land lease and sold the entire area to a developer. In 1963, Ray's son and his wife re-entered the cottage and began to use it one month a year, for 25 years. They paid property taxes, bought insurance, installed utilities, and posted "No Trespassing" signs. Years later, a new owner took over the land and sought to eject the Rays. The Rays filed suit, claiming title to the cottage by adverse possession. Who wins and why?
Ray v. Beacon Hudson Mountain Corp., 88 N.Y.2d 154 Court of Appeals of New York, 1996. The Rays acquired title by adverse possession. Beacon Hudson argues that the Rays cannot demonstrate continuous possession because they only occupied the property one month per year. However, that argument fails to consider the Rays' other acts of control over the premises. The couple maintained and improved the cottage and installed utilities. They also repelled trespassers, posted the land, and padlocked the cottage. These acts demonstrated continuous control of the property. The Rays' seasonal use of the cottage, along with the improvements described, put the owner on notice of the couple's hostile and exclusive claim of ownership, especially considering that all neighboring structures had collapsed due to vandalism and neglect. The Rays have obtained title by adverse possession.
If Chip helps out his daughter Sarah by buying a policy to insure her apartment, then is the insured, is the beneficiary, and is the owner.
Sarah; Sarah; Chip
Paul's Pen Co. manufacturers and sells an inexpensive ball-point pen. Stacy's Stationery purchases the pens for $.25 each in quantities of 1,000. Stacey's discovered that a national chain, a competitor of Stacey's, buys the pen at $.20 for 1,000. If Stacy's Stationery sues Paul's Pen Co. for price discrimination:
Stacy's Stationery will win unless Paul's Pen Co. can justify the price differential.
CPA QUESTION Which of the following forms of tenancy will be created if a tenant stays in possession of the leased premises without the landlord's consent, after the tenant's one-year written lease expires?
Tenancy at sufferance
ETHICS After TNT Motor Express hired Joseph Bruce Drury as a truck driver, it ordered a background check from Robert Arden & Associates. TNT provided Drury's Social Security number and date of birth, but not his middle name. Arden discovered that a Joseph Thomas Drury, who coincidentally had the same birth date as Joseph Bruce Drury, had served a prison sentence for drunk driving. Not knowing that it had the wrong Drury, Arden reported this information to TNT, which promptly fired Drury. When he asked why, the TNT executive refused to tell him. Did TNT violate the law? Whether or not TNT was in violation, did its executives behave ethically? Who would have been harmed or helped if TNT managers had informed Drury of the Arden report?
The Fair Credit Reporting Act required TNT to ask Drury's permission before requesting a consumer report. Then, before firing him, TNT was required to give him a copy of the report and a description of his rights under this statute. Drury v. TNT Holland Motor Express, Inc., 885 F. Supp. 161, 1994 U.S. Dist. LEXIS 11583 (D.Ct. 1994).
Businesses in Silicon Valley often struggle to recruit enough engineers and, as a result, salaries are highly competitive. Adobe, Apple, Google, Intel, Intuit, Pixar, Lucasfilm, and eBay entered into various agreements with each other not to recruit the other's employees. Is this legal?
The Justice Department charged them with violating Section 1 of the Sherman Act—for entering into agreements that unreasonably restrained trade.
Zach sells Cutco Knives door to door. Which of the following statements is false?
The seller can cancel orally or in writing.
In the documentary movie Expelled: No Intelligence Allowed, there was a 15-second clip of "Imagine," a song by John Lennon. The purpose of the scene was to criticize the song's message. His wife and sons, who held the copyright, sued to block this use of the song. Under what theory did the film makers argue that they had the right to use this music? Did they win?
The court held that Sesame Street had not infringed Reyher's copyright because Reyher could not copyright the plot of a story, only her expression of the plot. Reyher v. Children's Television Workshop, 533 F.2d 87, 190 U.S.P.Q. (BNA) 387 (2d Cir. 1976).
ETHICS Lisa Preece rented an apartment from Turman Realty, paying a $300 security deposit. Georgia law states: "Any landlord who fails to return any part of a security deposit which is required to be returned to a tenant pursuant to this article shall be liable to the tenant in the amount of three times the sum improperly withheld plus reasonable attorney's fees." When Preece moved out, Turman did not return her security deposit, and she sued for triple damages plus attorney's fees, totaling $1,800. Turman offered evidence that its failure to return the deposit was inadvertent and that it had procedures reasonably designed to avoid such errors. Is Preece entitled to triple damages? Attorney's fees? What is the rationale behind a statute that requires triple damages? Is it ethical to force a landlord to pay $1,800 for a $300 debt?
The court held the defendant liable for $900 (treble damages) and an additional $900 in attorney's fees. The rationale for treble damages is that, historically, landlords often willfully refuse to refund security deposits, knowing that most tenants will not bother to sue. That was obviously unethical. By trebling the damages, state legislatures have given landlords a financial incentive to be fair. By permitting attorney's fees, such laws ensure that injured tenants have access to court and a remedy. Preece v. Turman Realty Co., Inc., 228 Ga. App. 609, 492 S.E.2d 342, 1997 Ga. App. LEXIS 1216 (Ga. App. 1997).
Marta places a large, prefabricated plastic greenhouse in her backyard, with the steel frame bolted into concrete that she poured specially for that purpose. She attaches gas heating ducts and builds a brick walkway around the greenhouse. Now, the town wants to raise her real property taxes, claiming that her property has been improved. Marta argues that the greenhouse is not part of the real property. Is it?
The greenhouse is a fixture and is part of the real property.
Jackson lived in an apartment with Miri, to whom he was not married. When he applied for homeowners insurance, the form asked their marital status. He checked the box that said "married." Later, the apartment was robbed, and Jackson filed a claim with his insurance company. When the company discovered that Jackson and Miri were not married, it refused to pay the claim on the grounds that he had made a material misrepresentation. Jackson argued that the misrepresentation was not material because the insurance company would have issued the policy no matter how he answered that question. Is Jackson's policy valid?
This representation was material because it would have changed the amount of the premiums Jackson had to pay. The policy is invalid.
Through her job as a paralegal at the Attorney General's office, Charlotte learns that MegaCorp has been defrauding its customers. Although the information is highly confidential, Charlotte shares it with her mother and asks her not to tell anyone. Charlotte's mother does not disclose the secret, but she does sell her stock in MegaCorp. Has Charlotte's mother committed a violation of securities law?
Yes, Charlotte's mother has committed insider trading by misappropriation.
James, the CEO of a major restaurant chain, learns that he is about to be fired by the Board of Directors. Furious, he writes a press release calling all of the company's executives "greedy scoundrels," and stating that "whoever has to fill my shoes will have to answer to the shareholders for the financial mess that they have created." James had no actual knowledge of any financial mismanagement by the company. The company's stock drops substantially in the few hours of trading that occur before the markets close after James releases his statement. The next day, James issues an apology, saying (truthfully) that his press release had no factual basis, and the stock recovers over the course of the week. Is James liable for a securities law violation?
Yes, James is liable for making an untrue statement of material fact.
Smalltown has two family-owned hardware stores that have been in business for years. Major Hardware opens one of its superstores in Smalltown, advertising extremely low prices, which are at below cost. Because Major owns stores nationally, it is able to keep prices extremely low until it forces both of the family-owned stores out of business. Once Major is the only hardware store in town, it raises its prices enough to make up for its former losses and to make some additional profit. Has Major violated any antitrust laws?
Yes, Major has engaged in predatory pricing
Bobby works as a janitor for a large office building. One night when emptying the recycling bins in the offices of Big Co., Bobby sees a memo marked "Confidential - Eyes Only" on the top. Curious, Bobby reads the memo and learns that Big Co. is closing half of its juice manufacturing plants in the U.S. and laying off 2,000 employees. At the end of his shift, Bobby tells this to his supervisor and good friend who promptly sells her stock in Big Co. the next day. Is Bobby liable for insider trading?
Yes, as a tipper.
Company A completes its initial public offering (IPO) and complies with all of the 1933 Act requirements. Must Company A register with the SEC as a reporting company under the 1934 Act?
Yes, because Company A has completed a public offering under the 1933 Act.
Jeremy is a doctor who would like to be able to provide low cost medical care to underprivileged families. Jeremy and two nurses form Medicine for All and file a registration statement and prospectus with the SEC. The prospectus states that Medicine for All is looking for funding for the salaries of Jeremy and the nurses and medical supplies and that the organization will earn little profits. Will the SEC allow Medicine for All to sell its securities?
Yes, provided all of the required disclosures are made clearly
Frank Deluca and his son David owned the Sportsman's Pub on Fountain Street in Providence, Rhode Island. The Delucas applied to the city for a license to employ topless dancers in the pub. Did the city have the power to deny the Delucas' request? Argument for the Delucas: Our pub is perfectly legal. Further, no law in Rhode Island prohibits topless dancing. We are morally and legally entitled to present this entertainment. The city should not use some phony moralizing to deny customers what they want. Argument for Providence: This section of Providence is zoned to prohibit topless dancing, just as it is zoned to bar manufacturing. There are other parts of town where the Delucas can open one of their sleazy clubs if they want to, but we are entitled to deny a permit in this area.
Yes, the city could use its zoning powers to deny the license. Earlier zoning ordinances had allowed topless dancing in the section of the city where the pub was located, but the current ordinance prohibited such dancing in that section. The city had no obligation to grant a variance for the Delucas and denied the request. Jonathan Saltzman, "License Is Denied for Topless Dancing at Downtown Pub," Providence Journal-Bulletin, July 11, 1995, p. 2C.
You are the president of Turbocharge, Inc., a publicly traded company. You have been buying stock recently because you think the company's product—a more efficient hybrid engine—is very promising. One day, you show up at work and find your desk in the hallway. The CEO has fired you. In a huff, you sell all your company stock. The only silver lining to your cloud is that you make a large profit. Or is this a silver lining?
You are in violation of Section 16. Even though you acted without any bad intent, you must turn over all your profits to the company.
Dr. Kaminsky was a gynecologist who practiced elective abortions in the state of Texas. In May 1983, the doctor signed a two-year lease for clinic office space from the building's owner, Fidelity Mutual Life Insurance Company. A clause in the lease stated "Lessee, on paying the said Rent, and any Additional Rental, shall and may peaceably and quietly have, hold and enjoy the Leased Premises for the said term." After moving into the building and beginning his practice, abortion protestors discovered the clinic location, and started organizing demonstrations in and around the building. On the days Dr. Kaminsky performed abortion procedures (usually Saturdays), singing and chanting demonstrators picketed in the building's parking lot, inner lobby, atrium area, stairwells, and even the office area waiting room. Protestors approached patients to speak to them, distributed literature, and attempted to block them from entering the building. Despite the doctor's repeated attempts to solicit help from Fidelity Mutual in controlling the demonstrators, there was little or no response. In December 1984, Dr. Kaminsky abandoned the premises, and Fidelity Mutual filed a claim against him for the unpaid rent. Will Fidelity Mutual prevail in their claim?
a. No, because Dr. Kaminsky was constructively evicted.
On March 1, Randy files an application with American Insurance Co. for home insurance on a house he is purchasing on March 15. On March 2, American sends Randy a binder that acknowledges receipt of the application and premium for the insurance policy. A hurricane causes substantial damage to the house on March 10, and on March 11 American denies Randy's application. Can Randy recover any money from American?
a. No, because Randy does not have an insurable interest in the house.
Victoria's Secret, a well-known lingerie company, found out that a man named Victor Mosley is running a small store in Kentucky named "Victor's Little Secret." Mosley's shop sells guns and a variety of other weapons. Does Victoria's Secret have a valid claim?
a. No, unless Victoria's Secret's reputation was tarnished by association with unwholesome goods sold by Victor.
Pauline wants to develop a line of flatware and pottery. She is experimenting with various names and symbols to develop a trademark. Pauline's three-year-old daughter tells a neighbor that "mommy makes Fatware and Potty." Pauline laughs so hard that she decides to design a trademark of a large, obese, pink pig sitting on a toilet, with the letters FP (initials for the term Fat-Potty) written underneath the pig. What is the best argument that Pauline's trademark is valid?
a. The mark is arbitrary.
Advertisements for Clean Mouth mouthwash claimed that it was as effective as flossing in preventing tooth plaque and gum disease. This statement was true, but only if the flossing was done incorrectly. In fact, many consumers do floss incorrectly. Is this advertisement deceptive?
a. Yes, because Clean Mouth omitted important information from its claim.
In 1985, Susannah Jones purchased a farm and several acres of land. An old wooden fence stood 200 yards south of the actual southern boundary of the plot of land that Jones purchased, but Jones thought that the fence ran along the southern boundary of her land. Jones installed a new, electrified fence, cleared the land on "her" side of the new fence, and began to graze cattle there. In 2000, Sam Kerry purchased the land that bordered the other side of the fence. In 2007, Kerry had the property surveyed and discovered that the true property boundary lay 200 yards north of the fence. The statutory period for adverse possession is 20 years. If Jones files suit the same year seeking a declaration that she now owns the 200 yards between the legal boundary and the fence, will Jones win?
a. Yes, because Jones has adversely possessed the land.
Aaron and his twin brother Erin lived together in an apartment near the college they were both attending. Aaron was working full-time in addition to going to school, while Erin was spending his time sleeping and playing video games between classes. One morning just before 9AM, Aaron's mobile phone rang and he answered, although he didn't recognize the incoming phone number. "Hello, is this Erin?" the caller asked. "Yeeess" Aaron replied tentatively. The caller launched immediately into disclosures about collecting a debt, told Aaron that he owed $4,500 on credit card accounts, and asked how he would like to set up payments. Aaron realized that the collection agent was really calling for his brother, so he hung up the phone. When the debt collector's number appeared again on Aaron's line, he blocked the caller. Has the debt collector violated the Fair Debt Collection Practices Act (FDCPA)?
a. Yes, because the collector did not verify Aaron's identity.
Gerald wants to buy a new digital camera, and he sees an ad for a PicturePerfect Model A digital camera at a 25 percent discount at Bull's Eye—a large department store. Gerald goes to Bull's Eye the following day, but the store clerk tells him that they are out of that particular camera. The clerk suggests that Gerald purchase the PicturePerfect Model B camera instead. Even though the Model B is not on sale, the clerk insists it is worth it because the camera takes much better pictures and "will not break in a year, like the flimsy Model A cameras." Has Bull's Eye committed an FTC violation?
a. Yes, this is a bait-and-switch scheme.
Roxy applies for a life insurance policy with Young Insurance Company, naming her brother Paul as the beneficiary. When completing the application form about past surgeries, Roxy forgets to disclose that twelve years ago she had corrective laser eye surgery. One year after issuing the policy, Roxy died suddenly in a car accident. Young denies payment under the policy based on misrepresentation. If Roxy's brother, Paul, sues Young, he will:
a. win, because Roxy's misrepresentation was not a material fact and did not increase Young's risk in insuring Roxy's life.
Depending on state law, if a lender violates the usury laws, the borrower could possibly be allowed to keep: 1. the interest that exceeds the usury limit 2. all the interest 3. all of the loan and the interest
all of these
Fred is engaged to Angela, and has a daughter, Samantha, from a previous marriage. Fred borrows the cost of his upcoming wedding from his friend Ed, and signs a loan agreement with a payback schedule. The week before the wedding, Fred dies in a tragic skiing accident. Who may recover from a life insurance policy on Fred, assuming the policy was taken out prior to his death?
all of these
In 2009, Melissa developed a hydrogen powered engine for a car while working in her garage in her spare time. Melissa installed the engine in a small car that she has been driving around town. In 2012, engineers working for Ford Motor Co. independently developed an identical hydrogen powered engine. After completing tests on the engine for two years, Ford filed a patent for the engine on March 1, 2014. On March 2, 2014, Melissa also filed for a patent for her engine. Assuming the engine satisfies all of the requirements for a patent, who is entitled to the patent?
b. Ford, because Ford was the first to file for the patent.
Zoe rents a loft space for two years to use as her art studio. One day, Zoe accidentally clogs the sink by washing too much paint down the drain, causing the water to back up and flood into the loft. When the landlord comes to repair the water damage, she notices that there is a leak in the 20-year old windows, and that Zoe has installed extra light fixtures on the walls to better illuminate her work. Zoe assures the landlord that she can easily remove the light fixtures before the end of the lease without damaging the walls. The landlord tells Zoe that she will have to pay for the cost to repair the water damage caused by the flooding and damage to the sink and replacing the windows, and demands that Zoe remove the extra lights immediately. Which of the landlord's demands would a court uphold?
b. Only the demand to pay for the cost to repair the water damage and plumbing.
Stephanie purchases an automobile insurance policy that includes collision, comprehensive, and liability coverage. Stephanie lends her car to her brother Daniel. Sally, who is uninsured, crashes into Stephanie's car while Daniel is driving. The car requires $5,000 in repairs, and Daniel pays $3,000 in medical bills to treat his injuries from the accident. How much will Stephanie's insurance cover?
b. The $5,000 for car repairs, but not the $3,000 in Daniel's medical bills.
Tom is renting an apartment from Brady. After Tom fails to pay rent for three months, Brady sends Tom a notice that he is in breach of the lease for nonpayment of rent. The next month, Tom again fails to pay any rent. Brady places Tom's belongings in storage, changes the locks to the apartment, and leases the apartment to a new tenant. If Tom sues Brady for a wrongful eviction, who will win?
b. Tom, because Brady did not follow the proper eviction procedures.
Foster is a reporter for the Daily Journal where he writes a column on Wall Street gossip. His columns often affect the stock prices of the companies he writes about. He tells his friend, Ken, who is a stock broker, about some of his columns before they run. Ken trades on this information. Which of the following statements are true?
both are true
Big Drug Company produces a medicine that greatly reduces the risk of a mother transmitting HIV to her child. Big Drug filed for a patent for the medicine in 1990 and was issued a patent in 1992. Big Drug sells the medicine at an extraordinarily high price. In 2011, Zachary begins purchasing the medicine from Big Drug and distributing it in developing countries for free to pregnant women who cannot afford the drug at Big Drug's price. If Big Drug sues Zachary for patent infringement, will Big Drug win?
c. No, because the patent term has expired.
Pop-Cola is a small, not very successful, company that produces soft drinks and sells them in a small number of stores in Virginia. Heads of Pop-Cola hire a chemist from a successful national soft drink company, Refresco, whose products are known for its "one of a kind" taste. The chemist tells Pop-Cola that the key ingredient to Refresco's secret recipe is a special leaf that grows in the mountains. May Pop-Cola use the secret ingredient in its own soft-drinks?
c. No, because the recipe is a trade secret.
Bobby applied for and received a credit card with a $5,000 limit when he graduated from college and started his new job. Bobby's roommate and Bobby agree to split the purchase of a $5,500 large flat-screen 3-D television and sound system for their apartment. Bobby purchases the items using his credit card, and the charge goes through without a problem. When Bobby's roommate does not pay him back, however, Bobby has trouble making the credit card payments. It is not until Bobby receives a loan from a family member several months later that he can pay off the credit card balance. In that time, the credit card company charged Bobby a $50 overlimit fee and $100 in late fees for the two months that Bobby did not pay on time. Must Bobby pay these charges?
c. Bobby must pay only $60 of the late fees.
Cameron and Mitchell own a commercial office building as joint tenants. Mitchell transfers his interest in the building to his sister Claire. A year later, Claire dies. Who receives Claire's 50 percent interest in the office building?
c. Claire's heirs receive Claire's interest.
Samantha buys a DVD and after watching it decides she does not like the movie. Samantha sells the DVD on the internet to Derrick, who burns a copy for his cousin. Have Samantha and Derrick violated the movie's copyright?
c. Derrick has violated copyright, but not Samantha.
Baker George took orders for his famous Christmas Fruitcake. His ad demanded that orders must be placed two months prior to delivery. However, this year, George received three times his usual number of orders. In mid-October, George knew that he could not make on-time deliveries. Which of the following is true?
c. George has to notify customers and ask if they still want their fruitcake.
Dannie Harvey, an architect, worked for O. R. Whitaker & Sons, an architecture firm. After she was fired, Harvey sued Whitaker for employment discrimination and Whitaker sued Harvey for slander. Discrimination and slander are intentional torts. Both Harvey and Whitaker carry professional liability insurance. Will either of them be covered by their professional liability insurance policies if they are found liable at trial?
c. Neither Harvey nor Whitaker will be covered.
Brother invites Sister to use his second home after Sister's apartment burns down and tells her to stay as long as she would like. If Sister lives in the home continuously for ten years, using it as a true owner would, and no one else uses the property in this time, can she claim adverse possession?
c. No, because Brother invited Sister to stay at the house and never revoked the invitation.
Mitchell notices that his neighbor has allowed a large tree to grow close to his house, and that the tree appears to be rotted. Although the tree does not present a danger to Mitchell's house, he suspects that it could break and fall on his neighbor's house during a storm. Looking to make some easy money, Mitchell takes out an insurance policy on his neighbor's house. The following winter, Mitchell's instincts are proven correct when the tree crashes through the neighbor's roof, causing significant damage. May Mitchell recover under the insurance policy?
c. No, because Mitchell does not have an insurable interest in his neighbor's house.
Molly ordered a custom-made plaque online from Master Woodwork, Inc., for her niece's college graduation. Master Woodwork promised that the plaque would ship on or before April 15, which meant it would arrive in plenty of time for the graduation on May 1. On April 1, Master Woodwork notified Molly that the shipment would be delayed until April 22. Molly did not respond because she was sure the plaque would still in arrive in time for the graduation. Master Woodwork sent Molly an e-mail on April 20 stating that the plaque would be shipped on April 30. Frustrated, Molly deleted Master Woodwork's email without responding and bought her niece a gift certificate. When the plaque arrived on May 4, Molly refused to accept it and told Master Woodwork she would not pay. Can Master Woodwork make Molly pay for the plaque?
c. No, because the order was cancelled when Master Woodwork missed the April 22 shipment date.
In the documentary movie Expelled: No Intelligence Allowed, there was a 15-second clip of "Imagine," a song by John Lennon. The purpose of the scene was to criticize the song's message. John Lennon's wife and sons, who held the copyright to the song, sued the movie makers to prevent its use. Who won?
c. The movie makers under the fair use doctrine.
Joe Kraft writes a series of short stories and one of the stories is published in a magazine. Later, Kraft learns that Robert Rill has copied the story, removed Kraft's name, and is selling it on the internet as his own. Kraft registers the story with the Copyright Office and sues Rill for copyright infringement. Will Kraft win?
c. Yes, because Kraft's story was copyrighted automatically when he wrote it, and Rill is selling the copyrighted material without Kraft's permission.
Taylor Swift wanted to trademark her song lyrics: "And I'll write your name." She
can trademark it because it is a short phrase associated with her entertainment services
In the movie The Hangover Part 2, Stu, the character played by actor Ed Helms, wakes up with a facial tattoo identical to that boxer Mike Tyson, who also appears in the film. Before the movie was released, the artist who designed and tattooed Mr. Tyson sued Warner Brothers in federal court for infringement. The suit delayed release of the film for several months and prevented the studio from showing the tattooed actor in trailers or clips of the film. The suit was later settled for an undisclosed amount, and the movie was then released intact. What would be the best form of protection for the intellectual property in a tattoo?
copyright
CPA QUESTION A tenant renting an apartment under a three-year written lease that does not contain any specific restrictions may be evicted for:
counterfeiting money in the apartment.
Companies must obtain permission from a consumer before charging for overdrafts on:
credit cards
In 2012, Donny wanted to get a loan to buy a house but was told that his credit scores were bad. Which of the following, if distributed via his credit report, is NOT in violation of the FCRA?
d. A note claiming that five businesses sought Donny's credit score in 2010.
Bob and Marsha co-own a house. In which of the following situations are they tenants in common?
d. All of these answers are correct.
Lauren has owned her frozen yogurt shop "FroYo2GoGo" for about three years. While running her business, she developed a machine and process that can freeze yogurt and maintain its high quality for up to 12 months. Current methods only maintain the frozen products for 2-3 months with the same quality shown by what Lauren has developed. Her brother Troy is an engineer, so she talks to him about both the machine and her freezing process. Troy thinks a skilled mechanic could "reverse engineer" Lauren's machine and figure out how it operates, but he is stumped regarding her freezing process, which involves a considerable number of steps and precise timing. How should Lauren protect her machine and her yogurt freezing process?
d. By applying for a utility patent for the machine, and protecting the freezing process as a trade secret.
Marissa accidentally left her wallet on an airplane. She did not discover the mistake until she unpacked her bags the next day. Marissa called the credit card companies of the two credit cards she owns, a MasterCard and an American Express Card, and reported the loss. Marissa did not think to call her bank and report her debit card stolen for two weeks. By the time Marissa called MasterCard, $200 in charges for purchases Marissa had not made had been placed on the card. After Marissa had notified American Express, the card was used to make a $500 purchase. Marissa's debit card was used the same day she lost it to make a $25 purchase, and then again the following week to make a $1,000 purchase. What charges, if any, is Marissa liable for?
d. Marissa is liable for $50 worth of charges on the MasterCard, and the first $500 of charges on the debit card (a total of $550).
Roger Schlafly applied for a patent for two prime numbers. (A prime number cannot be evenly divided by any number other than itself and 1—2, 3, 5, 7, 11, 13, for example.) Schlafly's numbers are a bit longer - one is 150 digits, the other is 300. Should the Patent and Trademark Office (PTO) issue this patent?
d. No, because numbers are not patentable subject matter.
Jasmine signs a lease for a residential apartment for 2 years. Jasmine does not renew the lease, but when the lease expires she does not want to move out. Instead, Jasmine remains in the apartment and sends the landlord that month's rent. The landlord returns the rent to Jasmine and tells her to sign a new lease or leave. What kind of tenancy does Jasmine currently have?
d. Tenancy at sufferance.
David Delta rents an apartment on the second story of a building. The landlord leases space on the first floor below David's apartment to a cleaning company that mixes its cleaning chemicals in the leased space. The fumes from the company's chemical mixing drift up into David's apartment, even when the windows are closed. They cause David to suffer severe nausea and headaches, and he cannot sleep in the apartment. David's girlfriend and friends also refuse to come over due to the strong odors. If David brings a claim for nuisance, is he likely to win?
d. Yes, and the court will order an abatement.
Mark leases a house to Julia. When Julia mentions that the bedroom door is difficult to close, Mark comes to the house and fixes the door. Unfortunately, Mark leaves a sharp edge on the door that Julia catches her foot on, making a deep cut requiring multiple stitches. Julia sends Mark her medical bills associated with the injury. Under the common law rules, must Mark pay?
d. Yes, because Mark negligently performed a repair.
Mrs. Rosenberry enters into an agreement for the sale of her mansion to Mr. Green. The house has a very large decorative gas fireplace, which Mrs. Rosenberry had specially designed. The fireplace is connected to the gas line in the house; it can be removed and replaced by a professional in a matter of hours, but that may result in damage to the wall and floor surrounding the fireplace. The agreement does not specify whether the fireplace is included in the sale of the mansion. Does Mr. Green's purchase of the mansion include the fireplace?
d. Yes, because the fireplace is a fixture.
Suzy Tomlinson, died unexpectedly at age 50. Suzy was on the board of directors of a company her long-time friend J.B. Carlson had started. Her family was stunned to find out that she had a $15 million life insurance policy, with the proceeds payable to a company J.B. controlled. J.B. said it was a key man policy and that he wanted to protect the company if she died because she had frequently introduced him to potential investors. Is the life insurance policy valid?
d. Yes, if J.B can show a true business relationship existed with Suzy and the company.
Alice goes to her local Town Savings Bank and takes out a mortgage loan for $200,000 to purchase a new home. Town Savings Bank discloses the total payments, finance charge, and APR in the loan documents. If, after signing the loan agreement, Alice has an objection to the finance charge, could her claim be protected by the Truth in Lending Act (TILA)?
d. Yes, if the information was not disclosed clearly.
Walter writes a song celebrating President Obama. Walter then applies for and receives a copyright to the song. If Stephen uses the song at concerts, on his TV show, and puts Walter's song on a CD, has Stephen violated Walter's copyright?
d. Yes, unless Stephen changed the words enough that it has become a parody.
On the first of every month, your monthly rent is automatically deducted from your bank account. You are moving out and want to make sure the payments stop. What should you do?
either a or b
To receive a patent, an invention must meet all of the following tests, except:
it has not ever been used anyplace in the world.
Michael signs a lease for an apartment. The lease establishes a periodic tenancy for one year, starting September 1 and ending the following August 31. Rent is $800 per month. As August 31 approaches, Michael decides he would like to stay another year. He phones the landlord to tell him this, but the landlord is on vacation and Michael leaves a message. Michael sends in the September rent, but on September 15, the landlord tells him the rent is going up to $900 per month. He gives Michael the choice of paying the higher rent or leaving. Michael refuses to leave and continues to send checks for $800. The landlord sues. Landlord will:
lose
If you are a smart consumer, you will: 1. insure against as many different kinds of risks as you can so that no matter what happens, you will be protected. 2. select as low a deductible as possible so that no matter what happens, you will not have to pay large sums out of pocket. 3. buy flight insurance when you take long airplane flights so that your family will be protected if your plane crashes.
neither 1, 2, 3
Which of the following items cannot be trademarked?
surname
You are in violation of Section 16. Even though you acted without any bad intent, you must turn over all your profits to the company.
unknown
An insurance company does not violate its covenant of good faith and fair dealing if it:
tells potential customers that their returns on a whole life policy are certain to be higher than an equivalent amount invested in the stock market.
Carol is a 30-year-old surgeon with a husband and two young children. Carol receives a generous pension from her employer and diligently puts a portion of every paycheck into a trust fund for her children's education. Carol's husband works part-time as a graphic designer and spends more time taking care of the children to allow Carol to work the long hours her job requires. What type of life insurance should Carol get?
term insurance
Under Regulation Crowdfunding:
the issuer may sell only through one online platform.
Alice Randall wrote a novel entitled The Wind Done Gone, which retells the Civil War novel Gone with the Wind from the perspective of Scarlett O'Hara's (imagined) black half-sister and slave. The novel does not use any of the names of the original, but clearly references the same characters, places, and plot lines. Randall was sued, but alleged fair use. Should she win?
unknown
Angel and Linda Mendez bought a home next door to Rancho Valencia, a fancy hotel on 45 acres of land. The house was about 600 feet from the site where the hotel held outdoor wedding receptions and parties. Even though the Rancho Valencia had installed noise-abating equipment, the Mendezes could still hear music and announcements from its sound system for about 8 hours a month, mostly during the evenings. These noise levels complied with the applicable county noise ordinances. On what theory could the Mendezes sue Rancho Valencia? Will they succeed?
unknown
Armeen ran a stop sign and hit the Smiths' car, killing their child. He had $1.5 million in insurance. The Smiths offered to settle the case for that amount, but Liberty State, Armeen's insurance company, refused and proposed $300,000 instead. At trial, the jury awarded the Smiths $1.9 million, which meant that Armeen was liable for $400,000 rather than the zero dollars he would have had to pay if Liberty had accepted the Smiths' offer. What is Liberty's liability? Under what theory?
unknown
Clyde received a letter from his automobile insurance company notifying him that it would not renew his policy that was set to expire on February 28. Clyde did not obtain another policy, and, in a burst of astonishing bad luck, at 2:30 a.m. on March 1, he struck another vehicle, killing two men. Later that day, Clyde applied for insurance coverage. As part of this application, he indicated that he had not been involved in any accident in the last three years. The new policy was effective as of 12:01 a.m. on March 1. Will the estates of the two dead men be able to recover under this policy?
unknown
It used to be that disposable contact lenses cost $169 a year. But then each of the five major manufacturers independently told retailers to charge at least $270 a year. Is this legal?
unknown
Philip Schwachman owned a commercial building and leased space to Davis Radio Corp. for use as a retail store. In the same building, Schwachman leased other retail space to Pampered Pet, a dog grooming shop. Davis Radio complained repeatedly to Schwachman that foul odors from Pampered Pet entered its store and drove away customers and workers. Davis abandoned the premises, leaving many months' rent unpaid. Schwachman sued for unpaid rent and moved for summary judgment. What ruling would you make on the summary judgment motion?
unknown
Rebecca Reyher wrote (and copyrighted) a children's book entitled My Mother Is the Most Beautiful Woman in the World. The story was based on a Russian folktale told to her by her own mother. Years later, the children's television show Sesame Street televised a skit entitled "The Most Beautiful Woman in the World." The Sesame Street version took place in a different locale and had fewer frills, but the sequence of events in both stories was identical. Has Sesame Street infringed Reyher's copyright?
unknown
Synchrony (formerly known as GE Capital) offered a special deal providing that if credit card holders paid part of what they owed, it would write off the rest and the customer would never have to pay it. The company did not offer this deal to people who lived in Puerto Rico or were native Spanish-speakers. Is there anything wrong with that?
unknown
There you are on FindMeLove.com. You joined for free, but you have to upgrade to a paid version if you want to see full-size photos or send personalized messages. So far, you are fine with the free version. But then, a really attractive guy messages you and wants to chat. To respond, you have to upgrade. Once you do, you never hear from him again. Only later do you realize that his profile had a little "VC" in the upper corner. That meant he was a "virtual cupid," that is, not a real person. Is there anything wrong with that?
unknown
Are horizontal price-fixing and vertical price-fixing per se violations of the Sherman Act?
yes/no
If you receive a product in the mail that you did not order:
you must return it, but the company must reimburse you for postage.
