Hospitality Law Practice Exam
Course Introduction
Hospitality Law provides an in-depth examination of the legal principles and regulations governing the hospitality industry. Students explore topics such as contracts, liability, guest rights, employee relations, safety and security, intellectual property, licensing, and government regulations as they pertain to hotels, restaurants, and related businesses. The course emphasizes the practical application of legal concepts, risk management strategies, and ethical considerations, preparing students to navigate the complex legal environment encountered by hospitality professionals.
Recommended Textbook Essentials of Business Law 4th Edition by Jeffrey F. Beatty
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Chapter 1: Introduction to Law
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Q1) Identify and explain the parts of the following case name: Palsgraf v.Long Island Railroad Co.,248 N.Y.339,162 N.E.99,New York Court of Appeals.
Answer: the case name is Palsgraf v.Long Island Railroad Co.Palsgraf and the Long Island Railroad Co.are the parties to the lawsuit.the order of the names does not necessarily identify which party initially brought the lawsuit.the part stating "248 N.Y.339,162 N.E.99" is the legal citation,which indicates where to find the case in a law library.the first part of the citation means the Palsgraf case can be found on page 339 of the 248th volume of the official court reporter of the state of New York.the decision is also reported starting on page 99 of the 162nd volume of the Northeast Reporter,a regional reporter.the reported case was heard by the New York Court of Appeals.
Q2) If the title of an appellate court case appears as Jones v.Smith:
A)Jones is the plaintiff and Smith is the defendant.
B)Smith won the trial court decision.
C)you cannot determine which party is the plaintiff, because when a defendant loses a trial and files an appeal, some courts (but not all) reverse the names of the parties.
D)the trial judge was Jones and the appellate judge is Smith.
Answer: C
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Page 3
Chapter 2: Business Ethics and Social Responsibility
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Q1) Define and discuss the concept of stakeholder.
Answer: Stakeholders are all the people potentially affected by the decision.that list might include subordinates,bosses,shareholders,suppliers,customers,members of the community in which the business operates,society as a whole,or even more remote stakeholders,such as future generations.the interests of these stakeholders often conflict.for example,current shareholders may benefit from a company's decision to manufacture a product harmful for the environment whereas future generations are left to contend with a potential environmental nightmare.
Q2) The behavior of top executives regarding ethical issues has little effect on the behavior of the employees of the organization.
A)True
B)False
Answer: False
Q3) Stakeholders include:
A)Members of the community.
B)Customers.
C)Managers.
D)All of the above.
Answer: D
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Page 4
Chapter 3: Dispute Resolution
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Q1) When an appellate court hears a case,it may:
A)affirm the decision.
B)reverse the decision.
C)modify the decision.
D)All the above are correct.
Answer: D
Q2) Primary methods of alternative dispute resolution include litigation and mediation.
A)True
B)False
Answer: False
Q3) Summary judgment is appropriate when essential facts are disputed. A)True
B)False Answer: False
Q4) The decision issued by an arbitrator is binding upon the parties. A)True
B)False
Answer: True
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Page 5
Chapter 4: Common Law, statutory Law, and Administrative Law
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Q1) Luke had his driver's license suspended by the state department of transportation.He believes his constitutional due process rights were violated by the administrative agency and wishes to file a claim.Which of the following statements is true:
A)A state court has the jurisdiction to immediately review an agency's alleged unconstitutional action.
B)Luke must file a claim in a federal court - not a state court.
C)Luke must first utilize the administrative agency's procedures to review the suspension before he seeks judicial review by a court.
D)A court of law does not have jurisdiction to review an administrative agency's actions.
Q2) What is the major distinction between executive and independent agencies?
A)Executive agencies govern business issues while independent agencies regulate individual matters.
B)The President has greater control over executive agencies.
C)The Administrative Procedure Act regulates independent agencies but not executive agencies.
D)Subpoenas may be issued by independent agencies; executive agencies do not have subpoena power.
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Page 6
Chapter 5: Constitutional Law
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Q1) Hall was arrested for burning the United States' flag in a protest of governmental policy.His action is protected under the First Amendment's guarantee of free speech because the flag burning is considered symbolic speech.
A)True
B)False
Q2) If Oregon passed a statute that prohibited liquor stores from engaging in any kind of advertising,that statute would be:
A)valid as an exercise of police power.
B)valid, as alcohol is illegal for minors.
C)invalid as a violation of the Commerce Clause.
D)invalid as an unreasonable restriction of free speech.
Q3) Generally,constitutional protections do NOT apply to:
A)acts of the federal government.
B)acts of state government.
C)acts of administrative agencies.
D)acts of privately owned businesses.
Q4) Identify the basic job of a President of the United States,the source of executive power,and three key powers associated with the position of President.
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Chapter 6: Torts
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Q1) In order for a plaintiff to prevail in a suit for slander,the plaintiff generally must prove some injury.
A)True
B)False
Q2) Lori works for Big Corporation as an "at will" employee.Richard,owner of a small store,offers to pay Lori much more money if she will leave Big Corp and work for his store.When Lori starts to work for Richard,Big Corp correctly claims Richard is liable for tortuous interference with a contract.
A)True
B)False
Q3) Arturo drove through an intersection without looking and hit Vincent's car that he had driven into the intersection without obeying a stop sign.Arturo sued Vincent.The jury found that Arturo's fault contributed 20 percent to the collision and determined that his total loss was $100,000.Under comparative negligence,the jury should award Arturo:
A)$20,000.
B)$80,000.
C)$100,000.
D)nothing.
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Chapter 7: Crime
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Q1) The Fifth Amendment declares that a person cannot be tried twice for the same criminal offense.
A)True
B)False
Q2) Compare and contrast money laundering and embezzlement.Give an example of each.
Q3) Under the laws of most states,a corporation cannot be held criminally responsible.
A)True
B)False
Q4) The fraudulent conversion of property which is already in the defendant's possession is:
A)money laundering.
B)exclusion.
C)embezzlement.
D)trespassory taking.
Q5) Discuss the growing problem of identity theft,including how thieves get personal information,what they do with this information,and how a victim should respond.
Q6) List and discuss the protections afforded criminal defendants by the Bill of Rights.
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Chapter 8: International Law
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Q1) Jones Oil,a small United States oil company,started doing business in a foreign country.The foreign country later decided to take over the oil industry,including Jones Oil's operation.The foreign country paid Jones adequate compensation in United States dollars.The foreign country's action is called:
A)confiscation.
B)repatriation.
C)expropriation.
D)retribution.
Q2) Zebra Toy Company,located in Chicago,sells $500,000 worth of toys to a London,England,wholesaler.This contract could be governed by:
A)Illinois's Uniform Commercial Code.
B)English law.
C)the CISG.
D)All the above are correct.
Q3) If the United States sets a limit on the number of cars that can be imported,this action is a form of tariff.
A)True
B)False
Q4) Explain the origin and purpose of the World Trade Organization.
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Chapter 9: Introduction to Contracts
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Q1) LarsonSoft,Inc.is a software producer that entered into a verbal agreement with XYZ Corporation wherein XYZ agreed to buy LarsonSoft's newly developed software.The agreement also provided that LarsonSoft would supply training personnel,as well as technical personnel,to work with XYZ employees in installing and learning the software.What law governs this agreement?
Q2) Which of the following types of property would be goods under the Uniform Commercial Code?
A)A promissory note.
B)A stock.
C)A patent.
D)A computer.
Q3) Mike made the following offer to Mick: "I will pay you $500 if you agree to paint my house." Mick replied that he would.At this point,the contract is an:
A)executed, bilateral, express contract.
B)executory, bilateral, implied-in-law contract.
C)executory, unilateral, express contract.
D)executory, bilateral, express contract.
Q4) Explain what the Restatement of Contracts is and describe the role it plays in contract law.
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Chapter 10: Agreement
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Q1) David and George have a contract wherein George agrees to buy sporting goods and equipment.Since the goods are not to be delivered for several months,they left the price open.Under the UCC,which of the following will be true?
A)The price will be the reasonable price based on fair market value of the goods at the time of delivery.
B)David has the freedom to set any price he wants considering George was foolish enough to enter into a contract without a price established.
C)George has the right to establish a price because he is the buyer.David should have taken steps to protect his sales interest.
D)None of the above.The contract is not valid because the terms are not definite and certain.
Q2) Farrell Tires makes tires for bicycles.At the beginning of the year,it sends out a price list addressing each type of tire,"To our valued customers." Horner Cycles,a bicycle store,orders a variety of tires at the prices quoted on the price list.Farrell Tires must sell the tires to Horner for the prices quoted on the list.
A)True
B)False
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Page 12
Chapter 11: Consideration
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Q1) Emily agrees to sell Clowns R Us some balloons.The contract states that Clowns may buy as many balloons as it wishes.This agreement is:
A)a requirements contract.
B)an output contract.
C)an option contract.
D)an illusory contract.
Q2) Consideration means that there is a bargaining that leads to an exchange between the parties.
A)True
B)False
Q3) Which of the following statements describes a requirements contract?
A)The seller guarantees to sell 100% of its production to one buyer.
B)The buyer agrees to buy 100% of the seller's production.
C)The buyer agrees to purchase 100% of her goods from one seller.
D)It is usually not valid due to lack of consideration.
Q4) Benny's Furniture Company promised in a written agreement to purchase all the oak wood it needs Forestry Products,Inc.If Benny's purchased oak wood from Milton Wood Co.and Forestry Products sued,what is the likely result?
Q5) Discuss the concept of consideration.
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Chapter 12: Legality
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Q1) Jane and Aaron were friends.Aaron has always loved dangerous sports and activities.Jane has always thought that he wasn't long for this life.Jane purchased a life insurance policy on her friend's life.One day,as he was rock climbing,Aaron fell 100 feet and died.Since Jane and Aaron were friends,Jane had an insurable interest in his life and will be entitled to the insurance proceeds.
A)True
B)False
Q2) Mabel,an 85-year-old widow who is in poor health,signs a contract with the only nursing home in Anytown (the nearest alternative facility is 75 miles away).The contract obligates Mabel to pay $4,000 per month for the rest of her life and for her estate to pay the same amount for the period of time that the unit sits empty upon her death.Mabel's daughter believes this agreement amounts to an adhesion contract.What is an adhesion contract? What factors will a court look at in determining whether an adhesion contract exists?
Q3) Roger parked his car at a garage that has a large sign at the entrance saying,"This garage is not liable for items stolen from a car." This type of notice is referred to as an exculpatory clause.
A)True
B)False
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Page 14
Chapter 13: Capacity and Consent
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Q1) All states allow the remedy of rescinding a contract for the sale of goods while still allowing the remedy of suing for damages.
A)True
B)False
Q2) Seth had too much to drink during his birthday celebration.Luke realized that Seth was so intoxicated that he wouldn't know what he was doing,so he made him sign a promise to sell Lukehis baseball card collection for $20.When Seth gets sober,he may void the contract.
A)True
B)False
Q3) When a party to a contract makes a unilateral mistake,the contract:
A)generally can be rescinded by the mistaken party. B)is void.
C)can be rescinded by either party.
D)generally cannot be rescinded by the mistaken party unless the contract is unconscionable or it is proven that the nonmistaken party knew of the error.
Q4) Discuss the concept of a "material fact" in fraud situations.
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Chapter 14: Written Contracts
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Q1) On October 24th,Jake applied for a job at a store.On October 27th,he receives a call from Martin,the owner of the store,offering him the job.Martin says: "you will work for us for one year.If you agree,you will start on November 1st and will receive a salary of $500 per week".Jake answers: "Thank you.I accept!" Three months after starting the job Jake was fired without cause.Will Jake be successful in an action brought against the employer for breach of contract?
Q2) Under the statute of frauds,the writing must: be signed by the defendant; and must state with reasonable certainty the name of each party,the subject matter of the agreement,and all of the essential terms and promises.
A)True
B)False
Q3) Which of the following promises ordinarily must be in writing to be enforceable?
A)Promises made as a part of a prenuptial agreement.
B)The agreement to sell a car for $1500.
C)The promise by an executor of an estate to pay a debt of the decedent.
D)All of the above.
Q4) Explain the reason behind having a statute of frauds and give arguments for and against having such a statute.
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Page 16
Chapter 15: Third Parties
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Q1) Linda assigns to Ben a right to receive rent payments.The law implies the following warranty on Linda's part:
A)the tenant is solvent.
B)Linda actually has a right to the rental payments.
C)the tenant will actually pay.
D)No warranties are implied by law in an assignment.
Q2) Susan took out a life insurance policy on herself,paying all of the premium payments.She named her daughter,Jessica,as the beneficiary under the policy.Jessica has not given anything in consideration for the policy.Jessica is:
A)a donee beneficiary who has rights to enforce the policy once Susan dies.
B)a creditor beneficiary who has rights to enforce the policy once Susan dies.
C)an incidental beneficiary because Jessica did not give any consideration for the policy and therefore cannot enforce the policy even when Susan dies.
D)None of the above.
Q3) An assignment is effective from the moment it is made,provided the assignor notifies the obligor.
A)True
B)False
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Chapter 16: Performance and Discharge
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Q1) Mary contracted to buy 100 table lamps.Under the terms of the agreement,Mary is to pay for the lamps upon delivery.This is an example of:
A)a condition precedent.
B)a concurrent condition.
C)a condition subsequent.
D)a service condition.
Q2) Dodger bought an insurance contract from Liberty Farm Co.The policy contained a clause stating that all claims for losses had to be reported within 45 days after the date of the loss or the claim would be barred.Time is stated to be of the essence.Dodger sustained a covered farm loss,but did not report it to Liberty Farm until 50 days later.Liberty Farm denied coverage for the claim.If Dodger sues,who wins?
A)Dodger wins; the contract was substantially performed.
B)Liberty Farm wins; there was failure of a condition subsequent.
C)Dodger wins; courts will not enforce a time-of-the-essence clause.
D)Liberty Farm wins; the impossibility doctrine applies.
Q3) The UCC recognizes commercial impracticability as a ground for discharge of a contract.
A)True
B)False
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Page 18
Chapter 17: Remedies
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Q1) Compensatory damages are typically assessed against the breaching party:
A)as a penalty for breaching the contract.
B)when the non-breaching party did not suffer actual loss.
C)to put the non-breaching party in the position it would have been in if the contract hadn't been breached.
D)to cover the minor costs that the injured party suffers when responding to the breach.
Q2) In a construction contract,there is a $1000 per day estimate of damages for each day that the contract runs over the completion date.The contractor is 30 days late when the job is completed,resulting in a prospective damage award of $30,000.What is this type of clause,and when will it be enforced?
Q3) Identify and describe the four principal contract interests a court may seek to protect.
Q4) In the case Orkin Exterminating Company,Inc.v.Jeter,the Court awarded Jeter:
A)nominal damages.
B)both compensatory and punitive damages.
C)reliance damages.
D)liquidated damages.
Q5) Discuss the remedy of specific performance.
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Chapter 18: Introduction to Sales
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Q1) Price's Department Store contracted to buy 1,000 drop-waist velour dresses in heather gray from TriColor.Subsequently,TriColor called and asked to ship mink-colored dresses instead of heather gray.Price agreed,in writing,to the change.Which statement is correct?
A)The modification is not enforceable since there was no consideration for the change.
B)The modification is not enforceable since the parties are merchants.
C)The modification is enforceable.
D)Whether the modification is enforceable depends on the gap-filler rule.
Q2) Section 2-207 of the UCC:
A)provides for a strict application of the mirror image rule.
B)allows for additional or different terms to become part of a contract for the sale of goods.
C)prohibits merchants from leaving the price term open.
D)defines the obligations of the merchant buyer.
Q3) The UCC imposes a duty of good faith in the performance of all contracts.
A)True
B)False
Q4) Discuss open price under the UCC.
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Page 20
Chapter 19: Ownership and Risk
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Q1) Jamie purchased a compound bow from Tyler.Jamie can prove he is a BFP by showing only that he gave value and acted in good faith.
A)True
B)False
Q2) Which of the following statements about identification is correct?
A)It permits the buyer to obtain insurance on the goods.
B)For unborn animals, it takes place when they are conceived.
C)It must occur before title can pass.
D)All of the above.
Q3) George's Grocery orders two dozen live lobsters from Sea Food Flyers.George's is to keep the lobsters happy by keeping them in a tank following certain instructions to keep the water at the right temperature,etc.The sale is made on a trial basis and George's may return all unsold lobsters at the end of 10 days.This contract is a:
A)contract to sell future goods.
B)conditional sale.
C)sale or return.
D)sale on approval.
Q4) Discuss the concept of insurable interests.
Q5) Discuss the concept of entrustment.
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Chapter 20: Warranties and Product Liability
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Q1) Express warranties must be in writing.
A)True
B)False
Q2) In the case Goodman v.Wenco Foods,Inc.,the Supreme Court of North Carolina addressed the issue of:
A)Implied warranty of title.
B)Implied warranty of merchantability.
C)Implied warranty of fitness for a particular purpose.
D)Strict product liability.
Q3) Under which of the following warranties must the seller be a merchant?
A)Express warranties.
B)Implied warranty of merchantability.
C)Implied warranty of fitness for a particular purpose.
D)Both b and c.
Q4) Privacy is required in strict product liability cases.
A)True
B)False
Q5) Under the UCC,no warranty of title arises unless the contract is in writing.
A)True
B)False
22
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Chapter 21: Performance and Remedies
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Q1) If a buyer does not receive goods by the contract deadline,remedies available include:
A)incidental and consequential damages.
B)cover.
C)damages for non-delivery.
D)All of the above.
Q2) A buyer may revoke an acceptance of goods if:
A)the nonconformity does not impair the value of the goods.
B)the buyer had a legitimate reason for the initial acceptance.
C)the buyer knew the nonconformity could not be cured.
D)the buyer thought they could easily cover.
Q3) Tender means to make conforming goods available to the buyer.
A)True
B)False
Q4) Can the buyer revoke his acceptance? If so,under what circumstances?
Q5) If Chuck buys cheese from Cheese Inc.,then fails to inspect the cheese within a reasonable amount of time and does not reject the shipment,Chuck has accepted the shipment even if there is non-conformity.
A)True
B)False
Page 23
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Chapter 22: Creating a Negotiable Instrument
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Q1) Kent Weston wrote a check for $500 payable to the order of Chester Jones.Chester indorsed the back of the check as follows: "Chester Jones." The check is now:
A)order paper.
B)bearer paper.
C)a cashier's check.
D)special paper.
Q2) Maia wrote a check which said,"Pay to the order of Kevin Mathews $10.97." The next line of the check stated,"One thousand ninety-seven Dollars." In applying the rules of interpretation,how much should the drawee pay?
A)Nothing; when the instrument is ambiguous it is declared non-negotiable.
B)Ten dollars and 97 cents.Numbers control over words.
C)One thousand, ninety-seven dollars or $1,097.00.Words control over numbers.
D)parole evidence would be needed to determine the purpose of the check.
Q3) A possessor of non-negotiable paper has the same rights as the person who made the original contract.
A)True
B)False
Q4) Explain the shelter rule.
Q5) Define commercial paper and explain what it is used for.
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Chapter 23: Liability for Negotiable Instruments
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Q1) Soiya is a holder in due course of a check.Soiya goes to the drawee bank,Last Chance Bank,to cash the check.What is the liability of Last Chance?
A)Last Chance Bank is primarily liable on the check.
B)Last Chance Bank is not primarily liable on the check until it accepts the check.
C)Last Chance Bank is secondarily liable on the check.
D)Last Chance Bank is not secondarily liable on the check until it accepts the check.
Q2) The accidental destruction of a negotiable instrument will result in its cancellation.
A)True
B)False
Q3) Negotiable instruments are usually not issued to fulfill a contract.
A)True
B)False
Q4) At the time a check is issued,primary liability falls on:
A)the maker.
B)the drawer.
C)the drawee.
D)None of the above.
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Chapter 24: Liability for Negotiable Instruments: Banks and Their Customers
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Q1) The Electronic Fund Transfer Act was passed to protect:
A)consumers.
B)financial institutions.
C)businesses.
D)all of the above.
Q2) On May 10,Klaus received his bank statement.Explain why Klaus should examine the bank statement within 30 days.
Q3) Without notifying his bank,Shabah wrote a postdated check to State University for his tuition.Which statement is correct?
A)Shabah's bank will be liable if it cashes the check before its date unless it gets permission from Shabah.
B)Shabah's bank will not be liable if it cashes the check before its date.
C)Shabah's bank cannot cash the check.
D)Shabah's bank can only make provisional credit available until the check's date.
Q4) Article 4 of the UCC governs bank deposits and collections.
A)True
B)False
Q5) Discuss a bank's liability for both stale checks and post-dated checks.
Page 26
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Chapter 25: Secured Transactions
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Q1) Wedney,Inc.sold a meat processing machine to Yoro Chickens,taking a security interest in the machine.Yoro Chickens defaulted on the loan.Wedney repossessed the machine.Wedney would like to retain the machine to use as a model.Which of the following statements is correct?
A)Wedney must notify the debtor that it intends to retain the machine and give Yoro 20 days to object.
B)By taking possession, Wedney automatically foreclosed on the collateral.Wedney has valid title and need do nothing else.
C)Since the machine is equipment, Wedney cannot retain the machine.Wedney must dispose of the collateral in a commercially reasonable manner.
D)Wedney can retain the machine but must pay Yoro the surplus, the difference between the fair market value of the machine and the amount of the debt.
Q2) Faith owns a copyright in a book she recently wrote.She applies for a $10,000 loan through Cumberland Bank and wants to use the copyright as collateral.Explain if and how the bank can perfect a security interest in such collateral.
Q3) Discuss the concept of software under Article 9.
Q4) Explain the difference between attachment and perfection.
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Chapter 26: Bankruptcy
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Q1) In a Chapter 13 bankruptcy,creditors cannot force a debtor into bankruptcy; nor can they vote to confirm or reject a plan of reorganization.
A)True
B)False
Q2) Forever Yours,Inc.has a secured and perfected security interest in Sally's big-screen TV.On the filing date of Sally's Chapter 7 petition,the balance of the debt owed to Forever Yours is $2,000.The value of the TV is estimated at $1,500.This means that Forever Yours: A)is secured for the entire debt, $2,000. B)is unsecured for $500, the excess of the debt over the value of the TV.
C)has a high priority claim of $500.This means that Forever Yours, Inc.will be allowed $500 worth of other unsecured property before other unsecured creditors get anything. D)is unsecured for the entire debt.
Q3) Generally,filing bankruptcy stops the collection activity of creditors.
A)True
B)False
Q4) What is a voidable preference? What requirements must be met in order for a preference to be voided?
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Chapter 27: Agency
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Q1) Which of the following obligations is part of the principal's duty to cooperate?
A)He must furnish the agent with the opportunity to work.
B)He cannot unreasonably interfere with the agent's ability to accomplish his task.
C)He must perform his part of the contract.
D)All of the above.
Q2) An agent must obey any and all instructions of the principal.
A)True
B)False
Q3) The duties that the principal owes to his agent include which of the following?
A)Duty to reimburse.
B)Duty to provide information.
C)Duty of care.
D)All of the above.
Q4) If Denise is hired to work as a cashier,she has the implied authority to do acts reasonably necessary to carry out her job.
A)True
B)False
Q5) What are the requirements for and the effect of a ratification of an agent's unauthorized act?
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Chapter 28: Employment Law
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Q1) Jessica was a former employee of Mark.When potential employers called Mark for a reference about Jessica,he stated she was not a very good worker and had been fired for excessive absences.He said he believed Jessica was on drugs,but he did not know for sure.Jessica learned what Mark was saying and sued him.In most states:
A)it was legal for Mark to say what he said if it was true and Mark was not motivated by ill will.
B)it was legal for Mark to say what he said, since courts have consistently ruled that former employers are immune from lawsuits for giving references.
C)it was not proper for Mark to say what he said, since courts have consistently ruled that former employers should not give references over the telephone or in writing without the former employee's written authorization.
D)though it was proper for Mark to talk about Jessica's work-related history, he acted improperly when he said he thought she was on drugs.
Q2) Firing an employee for her refusal to violate the law would raise a claim of wrongful discharge.
A)True
B)False
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Page 30
Chapter 29: Starting a Business: Llcs and Other Options
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Q1) John,his parents,and three brothers own all the stock of their family farm corporation.This corporation,which is taxed as a corporation,is probably:
A)an S corporation.
B)a C corporation.
C)a close corporation.
D)an LLC.
Q2) Businesses often operate in the legal form of a business trust.
A)True
B)False
Q3) The advantage of a corporation over a partnership is:
A)shares are easily transferable to another person.
B)perpetual existence.
C)it is easier to raise funds.
D)All the above.
Q4) Which of the following characteristics is that of a closely held corporation?
A)the shares are not publicly traded.
B)the corporation can typically operate without a board of directors.
C)the shareholders usually restrict share transfer.
D)all of the above
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Chapter 30: Corporations
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Q1) Shareholders have the authority to manage the corporate business.
A)True
B)False
Q2) Identify four circumstances that might persuade a court to pierce the corporate veil.
Q3) Jerry works for a SpringBrook nursing home.He signs a contract on behalf of the nursing home with Sunny Floral to have fresh flowers delivered every week.No one at SpringBrook knows that,with three other family members,Jerry owns Sunny Floral.This is an issue of:
A)violation by Jerry of his duty of care.
B)violation of the business judgment rule.
C)self dealing.
D)fraud.
Q4) Sara decided to incorporate her business under the name Loro,Inc.Before Loro was incorporated,Sara signed a contract in the name of Loro,Inc.to lease a storefront.Sara did not tell the other party that Loro was not yet formed.Sara is personally liable on the lease.
A)True
B)False
Q5) What is the business judgment rule and what is its purpose?
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Chapter 31: Securities Regulation
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Q1) The Stonebridge Investment Partners,LLC v.Scientific-Atlanta,Inc.case discusses liability under Section 10(b)of the 1934 Act.
A)True
B)False
Q2) The 1933 Act exempts all but which of the following from its registration requirements?
A)Short-term notes.
B)Long-term notes.
C)Government securities.
D)Annuity contracts.
Q3) The Foreign Corrupt Practices Act makes it a crime:
A)for U.S.companies to sell unregistered stock in other countries.
B)for non-U.S.companies to sell unregistered securities in the U.S.
C)to "bribe" foreign governments or officials.
D)to conspire to defraud stock purchasers in other countries.
Q4) What is the purpose of a registration statement and what information must be contained in it?
Q5) The SEC regulates the securities industry but cannot create law.
A)True
B)False
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Chapter 32: Property
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Q1) Laverne knew that her house was infested with termites.Nevertheless,Laverne listed her house for sale by owner.Shirley had been looking for the perfect house for months now.She was about to give up the search when she decided to stop at Laverne's open house one Sunday afternoon.Shirley fell in love with the house,the yard,and the neighborhood.Shirley was so excited about buying this house that she did not bother to hire an attorney,hire a company to conduct a termite inspection,or talk to the neighbors about the condition of the house.Within six months after buying the house,the front porch started to crumble,exposing the rotten wood destroyed by termites.The neighbors confirmed that Laverne had mentioned that the house was infested with termites.Shirley wants out of the deal or money to repair the termite damage.Shirley's claim against Laverne would most likely be based on:
A)a duty to disclose defects.
B)the implied warranty of habitability.
C)eminent domain.
D)profit.
Q2) An easement is a nonpossessory interest.
A)True
B)False
Q3) Identify and explain the different types of tenancy.
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Page 34
Chapter 33: Cyberlaw
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Q1) Rob works for a federal governmental agency.No policy statements have been reported to the employees regarding their privacy rights or regarding their use of workplace computers for personal business.Rob's supervisor has reason to suspect that Rob has used his workplace computer to order an illegal substance.Which of the following is true?
A)Rob's employer may search Rob's computer at any time since it was provided by the employer.
B)Even if Rob's employer tries to search Rob's computer, if Rob has deleted any incriminating information, the employer will be able to find nothing on his computer to prove Rob was engaged in illegal activity.
C)The Fourth Amendment prohibits unreasonable searches and seizures by the government, but this amendment does not apply to computers.
D)If Rob has a legitimate expectation of privacy in the information on his computer, his employer would have to obtain a search warrant in order to conduct a search of the computer.
Q2) Spam is governed by federal law.
A)True
B)False
Q3) Discuss the European Directive on the protection of personal Data.
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Page 35
Chapter 34: Intellectual Property
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Q1) Victoria registered a trademark under the Lanham Act.Six years later Don noticed Victoria's trademark and filed a lawsuit to enjoin her from using it.He proved he had registered the mark in several states more than ten years before Victoria obtained her trademark.Will Don prevail?
A)Yes.Victoria should have conducted a better search of trademarks registered under state laws.
B)Yes.Federal law specifically states a federal trademark is not valid for any lawful owner of the same mark under state law.
C)No.Don will not prevail and Victoria can continue to use the mark because of the time involved.
D)None of the above.
Q2) Which of the following words could be registered as a trademark?
A)Crunchy peanut butter.
B)White garbage bags.
C)Orange Juice.
D)Jones Soy Milk.
Q3) A design patent protects the appearance of an item and is valid for 14 years.
A)True
B)False
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