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5 Written Questions

5 Matching Questions

  1. 2. The McDonald's Corporation, a franchisor, grants a franchise to Ida, a franchisee, whereby Ida opens a McDonald's fast-food franchise restaurant in the O.C. (eh, Orange County). In the franchise agreement, McDonald's and Ida agree that Ida must place signs inside the restaurant, outside the restaurant, and on the drive-through menu which states that Ida's McDonald's restaurant is a franchise and that the McDonald's Corporation is not the principal of Ida's franchise and that McDonald's Corporation is not liable for any acts of negligence caused by the franchisee, Ida. Ida puts up all of the required signs. A month after Ida opens the franchise, Eric Cartman, a regular customer at Ida's franchise, slips on a BigMac hamburger that has fallen on the floor; Eric is terribly injured. The BigMac hamburger was on the floor for 4 hours before Eric slipped on it. Eric sues Ida and McDonald's Corporation to recover for his injuries. Is McDonald's Corporation liable?

    A. Yes, because a franchise automatically creates a principal/agency relationship
    B. Yes, because McDonald's Corporation created an apparent agency by allowing the franchisee to use its trade name and trademarks
    C. Yes, because an implied agency was created
    D. No, because a franchisor is never liable for the acts of a franchisee
    E. No, because consumers have been notified that the McDonald's Corporation is not liable for the franchisee's negligent acts
  2. 40. On August 1, 2009, Ethel qualifies for and files a voluntary petition for bankruptcy under Chapter 7. Her petition for Chapter 7 bankruptcy is accepted by the Bankruptcy Court and the Chapter 7 bankruptcy proceedings begin. On November 1, 2009, Ethel's Grandmother dies and Grandmother leaves her entire $1,000,000 fortune to Ethel. Which of the following is true?

    A. Ethel can keep all of the money
    B. The money becomes property of the bankruptcy estate
    C. One-half of the money becomes property of the bankruptcy estate
    D. One-third of the money becomes property of the bankruptcy estate
    E. None of the above
  3. 12. The Frog Inc. saga continues. Frog Inc. wants to retain its current French-socialist management during the bankruptcy proceedings. Although current management has missed the dietary changes of Americans to modern types of cuisine, management has not engaged in fraud nor wasted corporate assets. All managers agrees to obtain M.B.A. degrees from USC and become capitalist imperial dogs. They also agree to go to Charm School for one year. Management is therefore allowed to remain in place during the bankruptcy under which of the following doctrines?

    A. Reaffirmation contract
    B. Executory contract
    C. Lien release
    D. Debtor in possession
    E. Cram down
  4. 38. Dr. Phil and Dr. Kevorkian are doctors and member-owners of "Beverly Hills Liposuction, LLP," a limited liability partnership (LLP) engaged in the practice of medicine. The doctors provide liposuction surgery whereby they surgically remove excess fat from patients to make their patients look skinnier. While performing a liposuction surgical operation on J-Lo's convex butt, Dr. Phil sucks out too much fat and J-Lo becomes disfigured with a concave butt. Since Liposuction LLP has no money, J-Lo sues Dr. Phil and Dr. Kevorkian to recover monetary damages for her injuries. Which of the following statements is (are) true?

    A. Dr. Phil is liable
    B. Dr. Kevorkian is liable
    C. Dr. Kevorkian is not liable
    D. A and B
    E. A and C
  5. 30. An involuntary petition for bankruptcy may be filed under what chapter(s) of bankruptcy?

    A. Chapter 7
    B. Chapter 12
    C. Chapter 13
    D. B and C
    E. A, B, and C
  1. a A. Chapter 7
  2. b E. No, because consumers have been notified that the McDonald's Corporation is not liable for the franchisee's negligent acts
  3. c B. The money becomes property of the bankruptcy estate
  4. d E. A and C
  5. e D. Debtor in possession

5 Multiple Choice Questions

  1. B. $1,000,000
  2. D. A and C
  3. B. Nine months
  4. D. All of the above.
  5. D. Ally is not liable because she has not breached a duty of loyalty by competing with

5 True/False Questions

  1. 4. Which section of the Securities Act of 1933 imposes criminal liability on defendants?

    A. Section 11
    B. Section 12
    C. Section 10(b)
    D. Section 32
    E. Section 24
    E. Section 24


  2. 16. To keep up with the times, Frog Inc. converts its snooty high-end expensive and saucy French restaurants to French fast food restaurants serving "American Fries." However, the Depression of 2006-2012 hits and no one wants to pay to eat at fast food French restaurants. Frog Inc. is heading toward bankruptcy. This time Frog Inc. wants to surrender (hey, they are French!) and just give up and quit. This time what type of bankruptcy should Frog Inc. file?

    A. Chapter 7
    B. Chapter 9
    C. Chapter 11
    D. Chapter 12
    E. Chapter 13
    A. Chapter 7


  3. 32. Which antitrust law makes price discrimination illegal?

    A. Section 1 of the Sherman Act
    B. Section 2 of the Sherman Act
    C. Section 2 of the Clayton Act
    D. Section 3 of the Clayton Act
    E. Section 7 of the Clayton Act
    C. Section 2 of the Clayton Act


  4. 23. Planet Hollywood, Inc., a chain of over 100 restaurants worldwide, has failed to keep up with the times. Its financial statements now are now in the same shape as the restaurant chain' d├ęcor. Planet Hollywood needs time to redecorate, change its menu, and reinvent itself as a viable "going concern," Planet Hollywood files for chapter 11 Bankruptcy. Planet Hollywood has $100 million in unsecured debt but wants to come out of bankruptcy with only $40 million of unsecured debt. Planet Hollywood files a plan of reorganization in which it proposes to do away with $60 million of unsecured debt. Is this possible?

    A. Yes, under the automatic stay rule
    B. Yes, under partial discharge
    C. Yes, under executory contract
    D. No, no unsecured debt can be reduced under a Chapter 11 bankruptcy
    E. No, unless Planet Hollywood proves "undue hardship"
    C. Chapter 11


  5. 35. Under federal securities law, the Securities and Exchange Commission (SEC) can obtain a civil penalty up to _________ times the illegal profits gained by insider trading.

    A. one
    B. two
    C. three
    D. five
    E. ten
    C. three


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