Corporate Law
Midterm Exam
Course Introduction
Corporate Law is the study of the legal framework governing the formation, operation, and regulation of corporations and other business entities. This course explores key concepts such as corporate personality, limited liability, governance structures, fiduciary duties of directors and officers, shareholder rights, mergers and acquisitions, and the regulatory environment affecting corporations. Emphasis is placed on statutory provisions, case law, and practical considerations in corporate transactions, equipping students with the foundational knowledge to understand the legal complexities and responsibilities inherent in the management and oversight of corporate entities.
Recommended Textbook Fundamentals of Business Law Summarized Cases 9th Edition by Roger LeRoy Miller
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41 Chapters
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2290 Flashcards
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Page 2
Chapter 1: The Legal and Constitutional Environment of Business
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Q1) The establishment clause of the U.S.Constitution prohibits the federal government from establishing an official religion.
A)True
B)False
Answer: True
Q2) No state has adopted the Uniform Commercial Code in its entirety.
A)True
B)False
Answer: False
Q3) When state regulations affect interstate commerce,commerce must always yield to the regulations.
A)True
B)False
Answer: False
Q4) Courts never depart from precedents.
A)True
B)False Answer: False
Page 3
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Chapter 2: Traditional and Online Dispute Resolution
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Q1) Carol files a suit against Downwind Boat Corporation.Downwind responds that it appears from the pleadings the parties do not dispute the facts and the only question is how the law applies to those facts.Downwind supports this response with witnesses' sworn statements.This is
A)a counterclaim.
B)a motion for judgment on the pleadings.
C)a motion for summary judgment.
D)a motion to dismiss.
Answer: C
Q2) To have standing to sue,a party must have been harmed or have been threatened with harm by the action about which he or she complains.
A)True
B)False
Answer: True
Q3) Most online dispute resolution services apply general,universal legal principles to resolve disputes.
A)True
B)False
Answer: True
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Page 4
Chapter 3: Ethics and Business Decision Making
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Sample Questions
Q1) Corporate ethical policies must be clearly communicated to be effective.
A)True
B)False
Answer: True
Q2) In studying the legal environment of business,Professor Dooley's students also review ethics in a business context.Ethics includes the study of what constitutes
A)fair or just behavior.
B)financially rewarding behavior.
C)legal behavior.
D)religious behavior.
Answer: A
Q3) An action may be legal but not ethical.
A)True
B)False
Answer: True
Q4) To be ethical is to "do the right thing" but it does not otherwise "pay."
A)True
B)False
Answer: False
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Chapter 4: Torts and Cyber Torts
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Q1) Jim is an appliance salesperson.To make a sale,he asserts that a certain model of a Kitchen Helper refrigerator is the "best one ever made." This is
A)fraud if the statement is the truth.
B)fraud if Jim believes that this statement is not true.
C)fraud if Jim is stating his opinion,not the facts.
D)not fraud.
Q2) Leon files a suit against Moira,a medical doctor,alleging negligence.As a physician,Moira is held to the standard of A)a blameless individual.
B) a faultless ordinary person.
C)a reliable professional.
D)a reasonable physician.
Q3) Clyde enters Desert Decathlon,an athletic competition in which Clyde has often competed.Regarding the risk of injury,Clyde assumes the risks A)attributable to the Decathlon in any way.
B)different from the risks normally associated with the Decathlon.
C)greater than the risks normally associated with the Decathlon.
D)normally associated with the Decathlon.
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Chapter 5: Intellectual Property and Internet Law
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Q1) A collective mark distinguishes products that are likely to be of interest to collectors.
A)True
B)False
Q2) The Madrid Protocol concerns trademarks.
A)True
B)False
Q3) A patent applicant must demonstrate that the invention,discovery,or design is commercially practicable to receive a patent.
A)True
B)False
Q4) There are no registration requirements for trade secrets.
A)True
B)False
Q5) A certification mark distinguishes products approved,or "certified," by the government.
A)True
B)False
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Chapter 6: Criminal Law and Cyber Crime
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Q1) The intent to return the embezzled property is a defense to the crime of embezzlement.
A)True
B)False
Q2) Only blue-collar crimes are prosecuted under RICO.
A)True
B)False
Q3) At a criminal trial,the burden of proof is on an accused person to prove his or her innocence.
A)True
B)False
Q4) A crime can be committed only against persons.
A)True
B)False
Q5) Mary,who is charged with a crime,claims that Nick,a government agent,entrapped her.For entrapment to be a valid defense
A)Mary must not have been predisposed to commit the crime.
B)Nick must have pressured Mary into committing the crime.
C)Nick must have suggested that the crime be committed.
D)all of the choices.
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Chapter 7: Nature and Classification
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Q1) An offer to form a unilateral contract is accepted by a promise to perform.
A)True
B)False
Q2) Cole drives into Dino's Service Station and asks Erin,the attendant,to fill the tank in Cole's hybrid vehicle.After Erin fills the tank,but before Cole pays for the gas,any contract between Cole and Dino's is
A)executed.
B)executory.
C)quasi.
D)unenforceable.
Q3) An otherwise valid contract may be unenforceable if it is not in writing.
A)True
B)False
Q4) One of the requirements of a valid contract is its acceptance.
A)True
B)False
Q5) To be valid,a contract must be enforceable by all of the parties to it.
A)True
B)False
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Chapter 8: Agreement in Traditional and E-Contracts
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Q1) Tomato Farms (TF)offers to sell United Grocers,Inc. ,a boxcar load of tomatoes.The offer is sent via fax.An acceptance is required urgently.It would be most reasonable for United to accept via
A)a fax,a letter,or a phone call to TF within two weeks.
B)a fax sent to TF as soon as the offer is received.
C)a letter mailed to TF within two days.
D)a phone call to TF within five business days.
Q2) Order Processing Corporation and Pinpoint Data,Inc. ,enter into a contract online in a state that has enacted an unmodified version of the UETA.With regard to the E-SIGN Act
A)the E-SIGN Act does not preempt this version of the UETA.
B)the E-SIGN Act preempts this version of the UETA.
C)the "fit" between the acts is an issue for a court to determine.
D)the two acts "cancel" each other's application.
Q3) Dino and Elle engage in a transaction that involves e-documents.The E-SIGN Act applies if those documents include
A)a divorce decree or a prenuptial agreement.
B)a health-insurance termination.
C)an agreement subject to Article 2 of the Uniform Commercial Code.
D)an eviction or a foreclosure.
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Page 10
Chapter 9: Consideration,capacity,and Legality
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Q1) A minor may disaffirm a contract only if the subject matter is illegal.
A)True
B)False
Q2) Ken relinquishes the right to his son Lee's control,care,custody,and earnings.This act is
A)a disaffirmance.
B)an emancipation.
C)a ratification.
D)restitution.
Q3) Cielo is fifteen.In most states,Cielo would be considered a minor because she is under the age of A)sixteen.
B)eighteen.
C)twenty.
D)twenty-one.
Q4) An adult may avoid any contract with a minor.
A)True
B)False
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11
Chapter 10: Defenses to Contract Enforceability
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Q1) Ralph offers to sell Sophie,who is seventeen years of age,a car about which Ralph intentionally misrepresents several material facts.In reliance on the misrepresentations,Sophie buys the car.To prove fraud in this transaction,Sophie would have to show that
A)Ralph intentionally deceived Sophie.
B)Ralph made statements that were obviously exaggerated.
C)Sophie does not know anything about cars.
D)Sophie is under eighteen years of age.
Q2) Lem buys a used MP3 player for $50 and a new laptop for $1,500,and signs a one-year employment contract for a $4,000 monthly salary to start at the beginning of the next month.The Statute of Frauds covers
A)the employment contract,and the laptop and MP3 purchases.
B)the employment contract and the laptop purchase only.
C)the employment contract only.
D)the laptop and MP3 purchases only.
Q3) Under the Statute of Frauds,all contracts induced by fraud must be in writing to be enforceable.
A)True
B)False
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Page 12
Chapter 11: Third Party Rights and Discharge
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Q1) An "assignment of all rights" absolves the assignor of all liability under the contract that created the rights.
A)True
B)False
Q2) Concurrent conditions occur only when the parties to a contract are required to perform their respective duties simultaneously.
A)True
B)False
Q3) Roy and Sheila are parties to a contract.They subsequently agree that Tony should take Roy's place and assume all of his rights and duties under the contract.This is A)a novation.
B)an accord and satisfaction.
C)an assignment.
D)a modification.
Q4) If a contract requires performance to the personal satisfaction of a party,the party must in all cases be personally satisfied.
A)True
B)False
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Chapter 12: Breach and Remedies
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Q1) A party seeking to recover in quasi contract must show that he or she has been unjustly enriched.
A)True
B)False
Q2) Karson orally agrees to pay Jaime to plant and harvest a quarter of Karson's farm acreage for four corn-planting seasons.After Jaime prepares the land and plants the first crop,Karson says that their deal is off.Jaime can most likely recover
A)in quasi contract.
B)in reformation.
C)in restitution.
D)on the parties' existing contract.
Q3) Nominal damages normally establish that the defendant acted wrongly.
A)True
B)False
Q4) Compensatory damages are foreseeable damages that arise from a party's breach of a contract.
A)True
B)False
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Chapter 13: The Formation of Sales and Lease Contracts
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Q1) An unconscionable contract is a contract so one-sided and unfair at the time it is made that enforcing it would be unreasonable.
A)True
B)False
Q2) Under the UCC,a contract for a sale of goods that includes open terms is void.
A)True
B)False
Q3) Identification takes place when specific goods are designated as the subject matter of a sales or lease contract.
A)True
B)False
Q4) Doctors Medical Clinic orders 1,000 bandages from Emergency Supplies Company but fails to specify the sizes.The bandages are delivered in an assortment of sizes.Doctors Medical Clinic may
A)accept the bandages "as is" only.
B)accept the bandages "as is" or reject the entire shipment only.
C)accept only the bandages that it wants and reject the rest.
D)reject the entire shipment only.
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15
Chapter 14: Performance Breach of Sales Lease Contracts
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Q1) Text Publishers,Inc. ,contracts for a sale of textbooks to University Bookstores,Inc.Vital Shipping Corporation,the carrier,transports the books to Warehouse Storage Company.Text's right to stop delivery is lost when University's rights to the goods are acknowledged by
A)the appropriate government agency only.
B)Vital Shipping only.
C)Vital Shipping or Warehouse Storage.
D)Warehouse Storage only.
Q2) If a lessee wrongfully refuses to accept goods that conform to a contract,the lessor must tender substitute goods.
A)True
B)False
Q3) Summit Supply Company contracts for a sale of medical equipment to Valley Immediate Care Corporation.Summit can enforce its right to payment
A)only after Valley has actually inspected the goods.
B)only after Valley has had an opportunity to inspect the goods.
C)only before Valley has inspected the goods.
D)whether or not Valley has had the chance to inspect the goods.
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Chapter 15: Warranties and Product Liability
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Q1) A product is not so unreasonably dangerous as to support the imposition of liability in a strict product liability suit solely because a less dangerous alternative was commercially feasible but was not produced.
A)True
B)False
Q2) A public policy underlying the imposition of strict product liability is that consumers should be protected against unsafe products.
A)True
B)False
Q3) To succeed in a strict product liability suit,an injured plaintiff must show that a product's defect was the proximate cause of the injury.
A)True
B)False
Q4) A seller must use words such as "warrant" to make an express warranty.
A)True
B)False
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Chapter 16: Negotiability,transferability,and Liability
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Q1) On May 1,Dooley signs a check that is payable to the order of Extra Credit Corporation and that is dated July 1.This check is A)negotiable.
B)nonnegotiable,because it is payable to Extra Credit Corporation.
C)nonnegotiable,because it is postdated.
D)nonnegotiable,because it is signed by Dooley.
Q2) An order stating "I wish you would pay" is sufficient to create a negotiable instrument.
A)True
B)False
Q3) An instrument is not defective simply because it is overdue. A)True
B)False
Q4) A certificate of deposit may be negotiable even if it does not contain an express promise to pay.
A)True
B)False
Q5) The dishonor of an instrument relieves secondary parties of liability. A)True
B)False
18
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Chapter 17: Checks and Banking in the Digital Age
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Q1) An oral stop payment order is valid for thirty days.
A)True
B)False
Q2) Brandy forges Caleb's signature on a check "payable to the order of Brandy" drawn on Caleb's account in Downtown Bank.Caleb's forged signature is
A)effective if an innocent third party accepts the check.
B)effective to the degree that it matches Caleb's genuine signature.
C)effective to the extent that Downtown Bank debits Caleb's account.
D)not effective.
Q3) A bank is subject to a civil suit if its customer writes a bad check.
A)True
B)False
Q4) First Community Bank agrees to accept a check by setting aside sufficient funds to cover the amount.This check is considered
A)cashed.
B)certified.
C)deposited.
D)provisionally credited.
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19
Chapter 18: Security Interests in Personal Property
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Q1) The state office in which a financing statement should be filed depends on the creditor's location.
A)True
B)False
Q2) To create an enforceable security interest,the secured party must give value.
A)True
B)False
Q3) For a creditor to have an enforceable security interest,the debtor must have title to the collateral.
A)True
B)False
Q4) The person who owes the payment of a secured obligation is the secured party.
A)True
B)False
Q5) Refer to Fact Pattern 18-1.A car in Fine's possession is probably A)a consumer good.
B)an accession.
C)equipment.
D)inventory.
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Chapter 19: Creditors Rights and Bankruptcy
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Q1) Delilah files a petition in bankruptcy.The proceeding is governed by the Bankruptcy Code,which is part of
A)state law.
B)federal law.
C)the U.S.Constitution.
D)international law.
Q2) Urbana performs a contract with Virgil to add a sun porch to Virgil's house,but Virgil does not pay.In most states,Urbana can create a lien and place it on Virgil's property by filing
A)a written guaranty contract.
B)a writ of attachment.
C)a writ of execution.
D)a written notice of lien.
Q3) Thirty-one days before filing a petition in bankruptcy,Frida transfers property and makes payments that favor one creditor over another.These are
A)affirmation agreements.
B)preferences.
C)secured interests.
D)unsecured debts.
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Page 21
Chapter 20: Mortgages Foreclosures After the Recession
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Q1) Hubert borrows $100,000 from Integrity Mortgage Mart to buy a home.Soon after obtaining the mortgage,Integrity convinces Hubert to refinance.This is
A)a short sale.
B) a subprime mortgage.
C)loan flipping.
D)steering and targeting.
Q2) Foreclosure is the postponement,for a limited time,of part or all of the payments on a loan in jeopardy of repossession and sale.
A)True
B)False
Q3) Community Trust Bank provides Devlin with a mortgage to buy a home.The rate of interest is fixed for seven years.At the end of that period,a large payment for the entire balance of the mortgage loan is due.This is
A)a balloon mortgage.
B)a hybrid mortgage.
C)a reverse mortgage.
D)a violation of the law.
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22
Chapter 21: Agency Relationships
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Q1) Home Development Company employs llya to buy property for a future residential development.Ilya secretly buys some of the property and sells it to Home Development at a profit.Ilya has breached
A)no duty.
B)the duty of accounting.
C)the duty of loyalty.
D)the duty of notification.
Q2) Based on Bluto's conduct,Cass reasonably believes that Dee has the authority to act on Bluto's behalf even though Dee does not have the actual authority to do so.Cass makes a payment to Dee for Bluto.Dee keeps the money and disappears.Bluto
A)can demand that Cass make a repayment directly to Bluto.
B)can obtain damages from Cass for Dee's misconduct.
C)may be estopped from denying that Dee had authority.
D)must repudiate Dee's misconduct to avoid liability.
Q3) A principal owes an agent a duty of ratification.
A)True
B)False
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Page 23
Chapter 21: Management Perspective:
Independent-Contractor Negligence
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Q1) The Warehouse Workers Union represents Valley Transfer Company's employees in collective bargaining negotiations over a new contract.In a memo to the employees,Valley's president Uri accuses the union of delaying tactics.Later,Troy,a Valley employee,tells Stella,his supervisor,that Uri is "a m * * * * * f * * * * r." Stella fires Troy for violating a company rule against "threats." Troy files a suit against Valley.Under the holding in Media General Operations,Inc.v.National Labor Relations Board,the court will most likely conclude that the National Labor Relations Act
A)did not protect Troy from discharge.
B)does not apply to the use of profanity.
C)protected Troy from discharge.
D)requires Troy's immediate arrest.
Q2) According to the dissent's opinion in Media General Operations,Inc.v.National Labor Relations Board,in determining whether a discharge for an employee's "outburst" in violation of a workplace rule violates the NLRA,the court should focus on whether
A)the arrest of the employee is warranted.
B)the NLRA generally protects the employee from discharge.
C)the remark undermines workplace discipline.
D)the rule is fair and justifiable.
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Chapter 22: Employment, immigration, and Labor Law
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Q1) Hong,Ivan,and Juana apply to work for King Meatpacking Company.These individuals' identities and eligibility to work must be verified by A)the employer.
B)the individuals.
C)the individuals' countries of origin.
D)the U.S.Citizenship and Immigration Services.
Q2) Olly applies for a job with Petro Company.Petro does not hire Olly because of his ethnicity,or national origin.This is
A)desperate-measure discrimination.
B)disparate-impact discrimination.
C)disparate-treatment discrimination.
D)not discrimination.
Q3) Southwestern Foods Corporation operates a packaging plant near the border between the United States and Mexico.Due to the location,it would be easier for Southwestern to employ noncitizens.It is legal for a U.S.employer to
A)hire persons not authorized to work in the United States.
B)recruit persons not authorized to work in the United States.
C)refer for a fee persons not authorized to work in the United States.
D)none of the choices.
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Page 25
Chapter 23: Sole Proprietorships, partnerships, Limited Liability Co
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Q1) In many states,an operating agreement is not required for a limited liability company to exist.
A)True
B)False
Q2) Sally and Tom decide to go into business,selling discounted merchandise through their Web site "e-Buy." They sign a partnership agreement that requires Sally to contribute $12,000 and Tom to contribute $8,000 in capital to start the firm.The agreement also states that only Sally will have the authority to bind the partnership in deals with third parties,but the agreement says nothing about the management of the firm or a division of profits.Without Sally's knowledge,Tom tells United Computer Products,Inc. ,that he represents the firm and signs a contract with United to buy hard drives for resale on e-Buy.In the first year,e-Buy makes a profit of $50,000.What are the partners' rights with respect to the management of the firm? Is the partnership bound to the contract with United? Do the partners split the first year's profits? If so,how much is each entitled to?
Q3) Under no circumstances can a non-partner be regarded as an agent whose acts are binding on the partnership.
A)True
B)False
Page 26
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Chapter 24: Corporate Formation, financing, and Termination
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Q1) Common stock provides a proportionate interest in the corporation with regard to net assets.
A)True
B)False
Q2) Once a dissenting shareholder elects appraisal rights,the shareholder loses his or her shareholder status.
A)True
B)False
Q3) Refer to Fact Pattern 24-2.A reasonable purpose for a stock transfer restriction in a closely held corporation,like the agreement between Bertram,Claudia,and Dynah,is
A)a desire to limit the participation of outsiders in the firm.
B)a goal to restrain insiders from taking advantage of their position.
C)an attempt to restrain the free flow of commerce among investors.
D)a wish to restrict the transfer of the shareholders' physical assets.
Q4) A merger involves the legal combination of two or more corporations,only one of which continues to exist.
A)True
B)False
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Chapter 25: Corporate Directors, officers, Shareholders
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Q1) Guy is Hot Java Company's majority shareholder.Guy decides to sell his Hot Java stock.The sale will be an effective transfer of the control of the company.Does Guy owe a duty to Hot Java or its minority shareholders in this situation?
Q2) A director usually serves on a corporation's board for a life term.
A)True
B)False
Q3) Heidi and Ian are directors and shareholders of Globe Software,Inc.Heidi's written authorization to Ian to vote Heidi's shares at a Globe shareholders' meeting is
A)a violation of the duty of loyalty.
B)a preemptive right.
C)a proxy.
D)a quorum.
Q4) Cumulative voting refers to the accumulation of proposals presented annually for a shareholders' vote.
A)True
B)False
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Chapter 26: Investor Protection, insider Trading, Corp Gov
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Q1) Refer to Fact Pattern 26-2.Regarding Sid's profits on the purchase and sale of Tech stock,under Section 16(b)of the Securities Exchange Act of 1934 Tech may recapture A)all of Sid's profits.
B)half of Sid's profits.
C)10 percent of Sid's profits.
D)none of Sid's profits.
Q2) "Forward-looking" financial forecasts are prohibited under SEC Rule 10b-5.
A)True
B)False
Q3) Riley,an engineer for Shur-2-Gro Seed Corporation,learns that Shur-2-Gro has developed a corn hybrid to triple the output of any farm.Riley buys 20,000 shares of Shur-2-Gro stock.He tells Tess,who buys 15,000 shares.After the new hybrid is announced publicly,the price of Shur-2-Gro stock increases.Riley and Tess sell their shares for a profit.Under the Securities Exchange Act of 1934,liability may be imposed on A)none of these parties.
B)Riley and Tess only.
C)Riley only.
D)Riley,Shur-2-Gro,and Tess.
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Chapter 27: Personal Property and Bailments
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Q1) Klondike and Leola own 10,000 shares of stock in My-T Gro Corporation.On the death of ether owner,that owner's interest in the stock passes to the surviving owner.This is
A)a joint tenancy.
B)a tenancy by the entirety.
C)a tenancy in common.
D)ownership in fee simple absolute.
Q2) Personal property is sometimes referred to as personalty or chattel.
A)True
B)False
Q3) Refer to Fact Pattern 27-1.These facts give rise to
A)a presumption of intentional or negligent conversion by TTC.
B)a presumption of theft by a third party.
C)a presumption of theft by TTC.
D)Unlimited Sales's liability for the container's loss.
Q4) All bailments include a bailee's right to use the bailed property.
A)True
B)False
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Chapter 28: Real Property and Landlord-Tenant Law
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Q1) Life tenants are persons who share ownership rights simultaneously.
A)True
B)False
Q2) Lucky owns Mud Flats Ranch,which is situated on certain Nevada acreage.The exterior boundaries of the land extend
A)100 feet into the earth and 100 feet into the atmosphere.
B)one mile into the earth and one mile into the atmosphere.
C)to infinity and beyond.
D)to the center of the earth and up to the farthest reaches of the atmosphere.
Q3) For a party to take by adverse possession,the party's possession must not be open,visible,or notorious.
A)True
B)False
Q4) To acquire the ownership of a mountain cabin by adverse possession,Cody must occupy the cabin exclusively,continuously,and peaceably for a specified period of time
A)in an,open,hostile,and adverse manner.
B)until the owner files a suit.
C)without the owner's knowledge.
D)with the state's permission.
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Chapter 29: Insurance, wills, and Trusts
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Q1) To execute a valid will,a testator must remember the "natural objects of his or her bounty."
A)True
B)False
Q2) Haya obtains an insurance policy from Inviolable Insurance Corporation (IIC).IIC may cancel,or refuse to renew,the policy because of A)Haya's appearance as a witness against IIC.
B)Haya's gender.
C)Haya's natjonal origin.
D)none of the choices.
Q3) An insured's lack of an insurable interest is an absolute defense against payment.
A)True
B)False
Q4) If a life insurance applicant pays a premium but dies before the physical exam,there is obviously no coverage.
A)True
B)False
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Chapter 30: Liability of Accountants Other Professionals
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Q1) Rex,an accountant,enters into a contract to provide services to Sofi.Rex does not finish the work within the contract's deadline.Sofi pays a penalty as a result of the missed deadline and hires Trey to complete the job.Rex is most likely liable for A)nothing.
B)Sofi's penalty and the cost to hire Trey.
C)Sofi's penalty only.
D)the cost to hire Trey only.
Q2) Each state establishes rules that govern the conduct of attorneys
A)True
B)False
Q3) Toby is an accountant whose clients include U-All Company.If Toby is negligent in his work for U-All,most courts would hold him liable to U-All and A)any third party.
B)no third party.
C)third parties who are foreseen users of the work.
D)third parties who are reasonably foreseeable users of the work.
Q4) Malpractice is professional negligence.
A)True
B)False
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Chapter 31: International Law in a Global Economy
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Q1) Tariffs are imposed only on exports.
A)True
B)False
Q2) Vieux Carré S.A. ,a French firm,imports its goods into the United States and offers those goods for sale at "less than fair value." "Fair value" is the price of A)comparable goods in a select "basket" of other countries.
B)Vieux Carré's goods in France.
C)Vieux Carré's goods in the United States.
D)Vieux Carré's goods on the world market.
Q3) A U.S.citizen can bring a civil suit in a U.S.court against a U.S.entity for a tort allegedly committed overseas.
A)True
B)False
Q4) The Foreign Sovereign Immunities Act spells out the particulars of what constitutes a commercial activity.
A)True
B)False
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Chapter 32: Adapting the Law to the Online Environment:
The Supreme Court Upholds a Law That Prohibits Pandering
Virtual Child Pornography
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Q1) Business Credit Company files a suit against City Developers,Inc. ,and seeks,as part of discovery,certain electronic documents in City Developers's possession.City Developers did not preserve the requested data-e-mail messages among employees.The court is not likely to sanction City Developers if
A)the data was not saved because there was no reasonable anticipation of litigation.
B)the e-documents were destroyed when the suit was filed.
C)the e-mail messages were trashed when the discovery request was made.
D)the e-mail system was wiped clean to avoid revealing incriminating evidence.
Q2) In Smartphone Games Inc.'s suit against Thermopylae Apps Corporation,Thermopylae seeks to discover electronically stored information (ESI)that should be in Smartphone's possession.If Smartphone did not preserve the ESI despite a clear duty to do so,the company should most likely
A)ask the court to sanction Thermopylae for an unreasonable request.
B)reconstruct the ESI to the best of its ability.
C)refuse to provide the ESI on the ground that it is confidential.
D)settle the dispute.
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Chapter 33: Adapting the Law to the Online Environment:
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Q1) OmniChem Corporation applies for a patent for a certain chemical compound.Meanwhile,OmniChem licenses its products,including the compound,to Pharmo,Inc. ,which uses the compound to make an anti-cancer prescription drug.Under the terms of the license,Pharmo agrees to pay royalties on OmniChem's "patented" products.When a patent is granted on the compound,OmniChem asks Pharmo to pay royalties on the sales of the anti-cancer drug or stop selling it.Pharmo files a challenge to the validity of OmniChem's patent.Both firms assert their claims less from an interest in profit than a belief in the "rightness" of their respective causes.This position might arguably be
A)illegal.
B)optimal.
C)socially irresponsible.
D)unethical.
Q2) According to the dissent in MedImmune,Inc. ,v.Genentech,Inc.case,a patent licensee can challenge the validity of a licensed patent
A)only after breaching the license agreement.
B)only before breaching the license agreement.
C)without breaching the license agreement.
D)under no circumstances.
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Chapter 35: Management Perspective: E-Mailed
Credit-Card Receipts
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Q1) The truncation (shortening)requirement of the Fair and Accurate Credit Transactions Act of 2003 applies only to receipts that are "electronically printed." Eagle Motorcycle Rents accepts reservations on-site and online.On-site customers are given tangible paper receipts.Online customers are sent an online confirmation.The truncation requirement applies to
A)Eagle's online confirmations only.
B)Eagle's tangible paper receipts only.
C)Eagle's online confirmations and tangible receipts.
D)none of Eagle's confirmations or receipts.
Q2) In the Braddock case,in weighing the facts that made up the elements of the plaintiff's claim,the majority cited as a significant factor
A)assurances that were not incorporated into written documents.
B)the arms' length business transactions between the parties.
C)the expectation of the good faith of a family member.
D)the plaintiff's business and professional experience in the industry.
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Chapter 34: Case Study With Dissenting Opinion: Prestridge
V Bank of Jena
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Q1) More than thirty days after Rhett receives his account statement from Silverado Bank,he notifies the bank that Thalia forged Rhett's name on some of the checks that the bank has cashed.The majority in Prestridge v.Bank of Jena would most likely hold Silverado liable for A)all checks.
B)checks that were cashed less than thirty days after the statement. C)checks that were cashed more than thirty days after the statement. D)no checks.
Q2) In the situation set out in either of the previous questions,the dissent in the Prestridge case would most likely hold Silverado liable for A)all checks.
B)checks that were cashed less than thirty days after the statement. C)checks that were cashed more than thirty days after the statement. D)no checks.
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Chapter 36: Adapting the Law to the Online Environment:
The Thorny Issue of Taxing Internet Sales
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Q1) Iowa enacts a statute that requires a label on a video game to warn parents when "the range of options available to a player include killing and maiming the image of a human being." Gamemakers file a suit against the state to block the statute's enforcement.Based on the decision of a California court in a case involving a similar statute,the court in this case is most likely to rule that the statute
A)extends restrictions on sex-based content to violence in video games.
B)violates the First Amendment's guarantee of freedom of speech.
C)imposes market-share liability on makers of violent video games.
D)replaces the voluntary rating system currently in use.
Q2) According to the dissent in Casserlie v.Shell Oil Co. ,an inquiry into a seller's motive in setting prices is necessary to determine if the seller acted
A)in good faith.
B)with the motive of driving competitors out of business.
C)with the intent of making the most profit in the least time.
D)to set commercially unreasonable and discriminatory prices.
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The Debt That Never Goes Awayits Discharged in
but Still on the Debtors Credit Report
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Q1) Orly's debts are discharged in a liquidation bankruptcy.Pester & Recover,Inc. ,buys the discharged debt obligations.With respect to these debts,Pester A)can do nothing.
B)can pressure Orly into paying them.
C)must give Orly additional help to rebuild her life after the discharge.
D)must report the debts to credit reporting agencies as "discharged."
Q2) In the facts of the previous question,according to the court in the Central case,a party that would prefer a different result should seek relief from A)Congress.
B)the courts.
C)the president.
D)the students of WSU and other state schools.
Q3) In the facts of the first question,according to the reasoning of the dissent in the Central case,the prevailing party would be A)both Vance and WSU.
B)neither Vance nor WSU.
C)Vance.
D)WSU.
Page 40
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Chapter
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Q1) Sayer is an employee of Thorny Foliage Eradication,Inc.Sayer tweets messages about Thorny Foliage to employees and outside interested parties,including investors and others.According to the Securities and Exchange Commission,Sayer's messages are subject to
A)federal securities laws.
B)international communications regulations.
C)state blog and tweet rules.
D)no law.
Q2) Ren is a shareholder of Star Corporation.Ren wants to amend Star's bylaws to require it to publish the names of shareholder-nominated candidates for positions on the board of directors.Under the Securities and Exchange Commission's "notice and access" e-proxy rules,Ren can solicit proxies from other Star shareholders on this proposal by posting proxy materials on a publicly accessible Web site and sending a paper notice to A)any Star shareholder Ren selects.
B)each Star shareholder.
C)Star Corporation.
D)the Securities and Exchange Commission.
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Chapter 39: Case Study With Dissenting Opinion: Kovarik V
Kovarik
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Q1) In the facts in the previous question,according to the dissent in the Kavarik case,with respect to Glen and Heidi's marital estate,the CDs are
A)not included because Heidi's parents did not intend to give them to her.
B)not included because Irene cashed them without sharing the proceeds.
C)included because Glen and Heidi were married when the CDs were acquired.
D)included because Heidi's parents gave up control when the CDs were placed in the names of Heidi and Irene.
Q2) In the facts in the previous question,if the CDs are seen as the property of Heidi and Irene,the sisters are most likely
A)joint tenants.
B)tenants at sufferance.
C)tenants by the entirety.
D)tenants in common.
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42
Chapter 40: Unit Case Study With Dissenting Opinion: Dole
Food Co V Patrickson
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Q1) In the facts of the previous questions,a U.S.court might pierce Amigos and Bueno's corporate status to impose liability on their owners,including the government of Chile,if the firms failed to follow or be involved in
A)business activities.
B)corporate formalities.
C)ethical practices.
D)foreign affairs
Q2) Amigos,Ltd. ,and Bueno,S.A. ,are Chilean firms.Amigos owns a majority of the shares of Bueno.The government of Chile owns a few shares of Amigos.Under the decision in Dole Food Co.v.Patrickson,parties who are immune from suit in U.S.courts under the Foreign Sovereign Immunities Act,as instrumentalities of foreign states,would include
A)Amigos and Bueno.
B)neither Amigos nor Bueno.
C)only Amigos.
D)only Bueno.
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Page 43