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126 terms

Business Law Final

STUDY
PLAY
Natalie is a shareholder of Off-Road Vehicle Company. As a shareholder, Natalie does not have
a right to compensation
Through a certain transaction, Corporate Properties, Inc., acquires all of the shares of Downtown Realty Corporation for some of Corporate's shares. Both Corporate and Downtown continue to exist. This is
a share exchange
Frawsty Corporation distributes beverages in the greater Northwest. Frawsty's board of directors can delegate some of its functions to
Frawsty's officers
Chip is a director of Diners Restaurants, Inc. Chip would breach his duty of loyalty if he
buys a controlling interest in Picnic Parlors Corporation, a competing firm.
Niche Stores, Inc., must hold a shareholders' meeting
once a year
Cara and Dru are officers of EZ Trucking Corporation. As corporate officers, the rights of Cara and Dru are
determined by their employment contracts.
Raw Resources Corporation authorizes Stefan, its employee, to oversee its mining operation. In the course of this employment, Stefan disposes of the mine's waste illegally. Liability for this crime most likely rests with
Raw Resources and Stefan
Skyla and Terry want to form and do business as Unique Boutique Corporation. The state statute governing the formation and operation of their corporation is most likely guided by
the Revised Model Business Corporation Act
The board of directors of Integral Components Corporation consists of Frida, Gayla, and Hart. A quorum is the minimum number of these directors
who must be present to validly transact business.
Sol is chairman of the board of Tasty Foods Corporation. Uma, a consumer, falls sick after eating a Tasty product. Uma sues Tasty, and Sol individually. Tasty may pay Sal's legal fees
regardless of the outcome
Ruby Red Corporation has six shareholders, four of whom are members of the same family. All of Ruby's shareholders agree in writing to operate without shareholders' meetings. This most likely warrants
no penalties or sanctions
Niki owns O.K. Oil Corporation. Niki uses O.K.'s funds to pay her personal expenses, creates Pure Fuel Corporation to engage in the same business as O.K., transfers O.K.'s assets to Pure Fuel, and petitions O.K. into bankruptcy. This most likely warrants
a piercing of O.K.'s corporate veil
Like other corporations, Workaday Personnel Corporation can expand its operations through
a purchase of a controlling interest in another corporation.
Like the bylaws of other corporations, the bylaws of Retail Sales, Inc.,
were adopted at its first organizational meeting
Estimable Financial Corporation merges with First Bank Corporation, with Estimable Financial absorbing First Bank. After the merger
Estimable Financial is the surviving corporation
Ruff Games, Inc., wishes to acquire a controlling interest in Smart Toy Company by buying its stock. A public offer by Ruff Games to Smart Toy shareholders is
a tender offer
Realty Credit Company and Second Mortgage Corporation plan to consolidate. Most likely, the articles of consolidation will be filed with
the state's secretary of state
Carl sells Direct Marketing Enterprises, a sole proprietorship, to Erv. This is a transfer of
the ownership of the business
Fay is a member of Garden Groves LLC. Like other members of limited liability companies, Fay's liability for Garden Groves's obligations resembles the liability of
a shareholder of a corporation
Rona and Stiv do business as Treasure Island Traders. In acting on the firm's behalf in a deal with Unlimited Potential, Inc., Rona makes an honest error in overestimating the profit. To her firm, Rona is
not liable
Pricey Auto Corporation gives notice to Quint that Pricey is terminating their franchise arrangement. Winding up the business requires
returning Pricey's property
Cal sells "DownSize," a weight-reduction program, from a Web site, in competition with Eat-Less Inc.'s product "Fit 'n Trim." Eat-Less files a suit against Cal, alleging in part that he is a sole proprietor, but his enterprise should be deemed a different form of business. Cal's enterprise should most likely be considered
a sole proprietorship because Cal is a sole proprietor
Tundi is a partner in WooHoo! Amusement, a new partnership. A WooHoo! debt comes due. Tundi is
personally liable to the full extent of the debt
Dreem Land Corporation and EZ Investments Company transfer their property to Financial Managers, Inc., which manages the property and distributes the profits to Dreem and EZ. This form of a business organization is
a business trust
Mabel and Nicol do business as One World Realty. In acting on the firm's behalf in a deal with Property Acquisition Company, Mabel fails to account for the profit. To her firm, Mabel is
liable for breach of the duty of loyalty
Guy and Hanna do business as G-H Associates. If G-H is a partnership, it is governed by the Uniform Partnership Act
in the absence of an express agreement
Dunn and Etta are limited partners in Fancee Fashion Stores, a limited partnership. In terms of the firm's books, Dunn and Etta are entitled to
total access
China Bank is a foreign entity⎯a firm owned and operated by investors in a foreign country. With respect to an LLC in the United States, China Bank can
become a member
Leigh wants to go into the business of construction contracting. Among the reasons that would probably convince Leigh to set up his business as a sole proprietorship would be
its greater organizational flexibility
Vela and other farmers in Washington County form a business organization to provide, without profit, an economic service to its members. This is
a cooperative
Build-Rite Construction Corporation and Deals-R-Us, Inc., combine their efforts to build an office and retail complex. Their form of business organization is
a joint venture
Bret buys a franchise from Comida Mexicano Ltd. If their agreement is like most franchise agreements, it will specify that Comida can terminate the franchise
for cause only
Kelly, the owner of Llama Farms, a sole proprietorship, wants to obtain additional business capital but to maintain control. This can best be accomplished by
borrowing funds
A franchise agreement between Simple Software Company and Total Game, Inc., is silent on a time for termination of the franchise. Simple may
terminate on reasonable notice
Giant Lift Corporation purchases all of the assets of Heavy Hydraulics Corporation. With respect to Heavy Hydraulics's liabilities, Giant Lift is
responsible if the sale is actually a merger or consolidation
Nina is a director of Olivia's Olives, Inc. Under the standard of due care owed by directors of a corporation, Nina's decisions must be
informed and reasonable
Sonia manages a Tasty Pastry store for United Food Company. To manage the business, Sonia's authority can be implied by
an inference from the position Sonia occupies
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
may be estopped from denying that Dee had authority
Brad is an employee of Custodial Service, Inc. In deciding whether Brad acts within the scope of his employment when he commits a tort against Didi, a court will not consider whether
Brad indicated that he was acting on behalf of Custodial
Delite Candy Company hires Elton to sell Delite's products in a certain area. Delite agrees to pay Elton a salary, plus commission, for a trial period. They also agree that Elton can sell using any methods and during any hours that seem appropriate. The key factor in whether Elton is Delite's employee is
the control Delite has over the details of the work
Rita is appointed as an agent for Superior Sales, Inc. The agency agreement is silent as to the level of sales that Rita is expected to achieve. She must
use reasonable diligence and skill in selling
Bubbly Soda Company hires Carlo to work on Bubbly's shipping dock, checking outgoing loads and dispatching Bubbly's drivers. With respect to Carlo, Bubbly is most likely
a principal
Elle is an agent for Fine Cosmetics, Inc. Elle owes Fine Cosmetics the duty of
performance
Kady, an agent for Lebron, enters into a contract on Lebron's behalf with Madge that must be in writing to be enforceable under the Statute of Frauds. Kady's authority to enter into this contract is not in writing. Under the equal dignity rule, this contract is
voidable at Lebron's option
Lather Up Soap Products Company grants its agent Kathy an exclusive territory in which to sell Lather Up products. The firm cannot compete with Kathy in that territory under the principal's duty of
cooperation
Bud approves on behalf of Cody¾but without authorization¾a contract with Dik to build a new silo. Cody does not ratify the contract. Later, Dik tries to enforce the deal. This attempt will be
totally unsuccessful
Trey, an agent for Uno Music Corporation, executes an unauthorized contract with Variety Recording, Inc., that is highly advantageous to Uno. Variety withdraws from the deal before Uno ratifies the contract. The contract is
void.
Jim agrees to act on Kit's behalf, subject to Kit's control, and Kit trusts Jim to so act. This describes a relationship between
a principal and an agent
Over a forty-year period, Ewa worked in a variety of jobs. She was also occasionally unemployed, briefly hospitalized, and suffered a temporary disability. She retired last year. The key law on all of these subjects is
the Social Security Act
Fruit Packaging Corporation provides health insurance for its 150 employees, including Gladys. When Gladys takes twelve weeks' leave to care for her child, she
loses her heath insurance immediately on taking leave
Lita replaces Manny in his job at Neighborly Business Corporation (NBC).

Refer to Fact Pattern 18-2. Manny believes that he has been discriminated against on the basis of his age. For the Age Discrimination in Employment Act of 1967 to apply
Manny must be forty years of age or older
Uri is an employee of Verity Security Services. For Uri to obtain the benefits of federal wage-hour requirements, Verity must be engaged in
interstate commerce
Olly applies for a job with Petro Company. Petro does not hire Olly because of his ethnicity, or national origin. This is
disparate-treatment discrimination
Cody believes that Delta Corporation has discriminated against him on the basis of gender. Cody files a suit against Delta under Title VII. To establish a prima facie case of employment discrimination, Cody must show that
Cody is a member of a protected class
Heavy Equipment Company requires job applicants to pass certain physical tests. Only a few female applicants can pass the tests, but if they pass, they are hired. To successfully defend against a suit on this basis under Title VII, the employer must show that
passing the tests is a business necessity
Simplex Corporation terminates Tom, who sues on the basis of age discrimination. To succeed under the Age Discrimination in Employment Act, Tom must show that at the time of the discharge, he was
forty or older
Michelle, an employee of Neverquit Company, is covered by federal overtime provisions. These rules apply only after an employee has worked more than
forty hours in a week
During a union election campaign at Wayward Shipping Corporation, Wayward may not
threaten employees with the loss of their jobs if the union wins the election
United Industrial Corporation gives preferential treatment in hiring and promotion to the members of all protected classes. This treatment results in discrimination against members of the majority. This is
reverse discrimination
Unity Production Company is suspected of employing illegal immigrants. The government conducts random compliance audits and other enforcement measures against those who might violate immigration laws through
the ICE
Lew, a member of a protected class, applies for a job with Mit-E Construction Company, but fails Mit-E's employment test and is not hired. Lew believes that the test has an unintentionally discriminatory effect. If so, this is
disparate-impact discrimination
Paris knowingly divulges to Media Exposure magazine information about Randy's e-money payments to City Bank. The payments were in transmission to City Bank when Paris, without the consent of Randy or City Bank, discovered and revealed them. This may be a violation of
the Electronic Communications Privacy Act
John writes a check to Kay as payment for a DVD player but soon discovers the player is broken. He goes to the drawee bank and orally authorizes Larry, a bank officer, to stop payment on the check. This order is valid for
fourteen days
Echo takes her car to Fix-It, Inc., which repairs the car and bills Echo for $500. Echo writes out a check drawn on Capital Bank, but later, believing that Fix-It did not repair the car properly, issues a stop-payment order.
must stop payment if Capital has a reasonable time to act
Guaranty Bank receives a check drawn on the account of Get-Rich Industries, Inc., one of the bank's customers, at 3 p.m. Friday. Garry, the presenter of the check, is not one of the bank's customers. The bank uses deferred posting with a 2 p.m. cutoff hour. If it decides to dishonor the check, it must do so by midnight
Tuesday
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
not effective
Elmo pays First National Bank $1,000 plus a service fee to draw a check on itself made payable to Go Delivery Service. This is
a cashier's check
First Community Bank agrees to accept a check by setting aside sufficient funds to cover the amount. This check is considered
certified
On Monday, Eve deposits in her account at Fiscal Bank a local check for $500. After 5:00 p.m. on Friday, from these funds, Eve can withdraw no more than
$500
Steve steals one of Tricia's checks and forges her signature. Tricia's bank, Unity Bank, pays the check. Tricia can recover from
Unity Bank, which can recover from Steve
Dora writes a check for $100 drawn on Eastern Bank and presents it to Fast Cash, Inc., for payment. If the check is not backed by sufficient funds, Dora may be prosecuted for
fraud
Brendan signs a check "pay to the order of City College Bookstore" drawn on his account in Delta Bank to pay for his current semester's textbooks. The bookstore deposits the check in its account in Eagle Bank. Like most checks, this check is
a three-party instrument
Tom draws a check, on his account in State Bank in New York, payable to Digital Media, Inc., in San Francisco. Digital deposits the check in its account at First National Bank. First National deposits the check in the Federal Reserve Bank of San Francisco, which transfers it to the Federal Reserve Bank of New York. That Federal Reserve Bank sends the check to State Bank.
before midnight of the next banking day
USA Oil Corporation signs an instrument that states it is being executed "in accord with a contract for the purchase of 4,000 barrels of oil dated May 1." This instrument is
negotiable
On the back of a check payable to Nero, he writes "Pay to Odell, without recourse" and signs it. This
relieves Nero of liability on the check
Ewa signs an instrument unconditionally promising to pay to "First State Bank" $5,000 with interest in installments with the final payment due June 1, 2012.
a promissory note
State Bank receives a check drawn by Tricia. The check is received after the established "cutoff" hour. Payment can be postponed without dishonor
until the close of the next business day
Quincy draws a check payable to "Replay Stadium" to buy two season tickets to the next year's State College football games. This instrument is
an order instrument
Wilbur signs a note that includes a clause under which the note's holder can delay the date of its payment indefinitely. This is
an extension clause
Biff signs a note "payable to the order of County Credit Union." Unless Biff has a valid defense against payment, Biff's liability on this note isc
primary
Don writes a check to Eve drawn on Don's account at First Bank. Eve presents the check for payment to First Bank, which accepts it. The bank is
primarily liable for payment
Nina wants to transfer a check to Opie. The check is not defective if it
has been previously honored
Opal asks Paolo, who does not understand English, to sign what Opal says is an application to open a bank account. In fact, the "application" is a note. If sued on the note by an HDC, Paolo's best defense would be
fraud in the execution
Todd indorses a check, "Pay to Interstate Trucking if they deliver the lumber by May 1, 2010." This is
a restrictive indorsement
Owen is a holder of a promissory note obtained from Purchase Money, Inc. Regarding the defenses against payment of the note to which Purchase Money is subject, Owen, as an ordinary holder, is subject to
the same defenses
Bob writes a check on his account at County Bank to Dona, a famous singer. The person claiming to be Dona is an imposter, however, named Edy. Edy indorses the check to Frank, for whom County Bank cashes it. Ultimately, the loss will most likely fall on
bob
Citrus Groves contracts with four food companies to sell its entire crop of oranges. When half of the crop is lost to an unexpected insect infestation, Citrus must
apportion its surviving crop fairly among its customers
Garden Field Farms and Haute Gourmet Restaurant, Inc., enter into a contract for a sale of lettuce before Haute Gourmet declares bankruptcy. Garden Field can stop delivery of the goods in transit
regardless of the quantity
Mineral Resource Company contracts to provide several manufacturers with tin. When a cartel of tin-producing countries suddenly embargoes future shipments of tin to Mineral Resource so that it cannot fulfill its contracts, the distributor
is excused from the performance of its contracts
Craft Engineering, Inc., contracts for a sale of technical instruments to Detail Design Company. Before the date on which performance is due, Craft notifies Detail that it will not perform. This is
anticipatory repudiation
Timber Mills Corporation and Ur-Choice Lumberyards enter into a contract for a sale of plywood. Under a destination contract, the seller must
deliver the goods to a particular destination
Loni and Myra enter into a contract for a sale of clarinets and other wind instruments. Loni delivers, but Myra does not pay. Loni can normally recover as damages the difference between
the contract price and the market price
International Gem Corporation agrees to sell Jewel Outlets, Inc. (JOI), fifty new diamonds, but the contract does not specify a place of delivery. JOI is expected to pick up the goods. The place of delivery is
International's place of business
BBQ, Inc., makes and sells grills to Grill Mart, a retailer, which sells one of the grills to Hope, a consumer. BBQ and Grill Mart include in their contracts a limitation on consequential damages for personal injuries arising from a breach of warranty. This is prima facie unconscionable with respect to
Hope only
Hi-Tech Company contracts to sell fiber optic cable to Internet Services, Inc. Hi-Tech may bring an action to recover the purchase price and incidental damages if Internet
accepts the cable but does not pay for it
Elegant Carpets, Inc., and Fantastic Floors Stores enter into a contract for a sale of carpeting. Under a shipment contract, the seller must
place the goods into the hands of a carrier
Relax Chair Company contracts to deliver 100 chairs to Stuffy Furnishings Store on May 1 for which Stuffy agrees to pay. Relax tells Stuffy on April 15 that delivery will be delayed until June 1. Stuffy may
await performance, sue Relax, or suspend its own performance
Genuine Seed Company and Hillside Farmers Cooperative enter into a contract for a sale of hybrid seeds. Under the perfect tender rule, Genuine Seed must ship or tender seeds to Hillside that
exactly conform to the contract in every detail
Ramblin' Country Stables contracts to buy 1,000 horseshoes from Blacksmith, Inc., for $1 per shoe. When the market price decreases to 50 cents per shoe, Ramblin' refuses to go through with the deal. Blacksmith can recover
$500
Frosty's Appliance Store advertises freezers at a "Special Low Price of $299." When Garth tries to buy one of the freezers, Huey, the salesperson, tells him that they are all sold and no more are obtainable. Huey adds that Frosty's has other freezers for $2,299. This is
bait-and-switch advertising
Olga, a salesperson for Pre-owned Cars & Trucks, Inc., tells Quincy, "This is the best car I've ever seen." This statement is
puffery
Like other manufacturers and sellers, Happy Household Products Company packages its products with labels. Under federal law, such labels must be
accurate and use easily understood words
Dependable Appliances, Inc., and Elain enter into a contract for a sale of kitchen appliances. Dependable, a merchant who deals in goods of the kind sold, notes that its goods come with an implied warranty of merchantability. Under the UCC, this means that the goods are reasonably
fit for the ordinary purpose for which such goods are used
On behalf of RiteNow Collection Agency, Sid poses as a police officer in an attempt to collect payment from Tylo for a shipment of scuba equipment that she returned to Undersea Company two months earlier. This violates
the Fair Debt Collection Practices Act
Wheels & Deals Corporation is subject to the Truth-in-Lending Act, which concerns
the disclosure of credit terms in certain transactions
The brakes on a Coastal Railroad train malfunction and it rolls towards maintenance workers on the tracks. Everyone gets out of the way except Dick, who wants to show off. The train hits Dick, who sues Everest, Inc., the brakes' manufacturer. Everest can raise the defense of
assumption of risk
Paychex Loan Company extends credit in the ordinary course of its business. Under the Truth-in-Lending Act, Paychex must inform potential borrowers of
only its own credit terms
Penny Stock Company faxes ads to Quality Personnel Corporation and other businesses without the recipients' permission. This is
illegal
Furniture Depot sells Gail a bedroom suite on credit. Gail fails to make the scheduled payments for six months. Furniture Depot sends her a letter, asking for immediate payment. This is a violation of
no federal law
Open Country, Inc., makes grills, camp ovens, and other outdoor cooking appliances. Under the Restatement (Third) of Torts: Products Liability, Open Country could be liable for a warning defect if there is a foreseeable risk of harm posed by one of its products and
the omission of a warning renders the product not reasonably safe
GR8 Skates Company makes and sells a pair of skates to Hugh. GR8 fails to exercise "due care" to make the skates safe, and Hugh is injured as a result. GR8 is most likely liable for
negligence
Brad borrows $20,000 from Citizens Bank to repair his home and to buy a car. Brad buys a stereo from Deep Discount Store in a transaction financed by Deep. If these parties are subject to the Truth-in-Lending Act, Regulation Z applies to
the car loan, the home repair loan, and the retail installment sale
GR8 Fashion, Inc., complains to the Federal Trade Commission (FTC) about an ad broadcast by Hotte Clothes Company, GR8's competitor. The FTC investigates and concludes that the ad is deceptive. The FTC's next step is to
draft a formal complaint
Farm Equip, Inc., makes farming machinery. Gail discovers that her Farm Equip tractor is defective and sues the maker for product liability based on negligence. To win, Gail must show that
Gail suffered an injury caused by the defect
Kristen receives unsolicited merchandise in the mail. Kristen
may keep the merchandise without any obligation to the sender
To generate sales, Yakkity-Yak, Inc., uses phone solicitation. Under federal law and Federal Trade Commission regulations, in soliciting business, Yakkity-Yak's telemarketers must
disclose all material facts related to a sale
VuTech Company agrees to sell digital video equipment to Home & Business Stores, Inc., for Home & Business to market to its customers. Their contract will not be enforceable unless it includes
the quantity of the goods
Uri sells 100 cases of vitamins to Wanda, but before she takes physical possession, the cases are lost. Under the UCC, the parties' rights and obligations with respect to the loss depend on the concept of
risk of loss
Metro Daily and New City Newsstand enter into a contract under which Metro agrees to deliver a certain quantity of newspapers to New City each day. The contract does not include a price term. In a suit between the parties over the price, a court will
determine a reasonable price
In a dispute over a sale involving a bicycle, Dain argues that as to this deal Enya's Hobby Shop, where Dain bought the bike, is a merchant. A court may determine whether Enya's is a merchant by assessing whether
it holds itself out by occupation as having knowledge or skill unique to the bike in the transaction
Rally Corporation enters into a contract to sell ski gear to SnoSportz Company, which sells a pair of the skis to Tyra, a consumer, who later sells them to Uli, another consumer. Article 2 of the UCC applies to the sales transactions between
all of the buyers and sellers
Omni Corporation is a Pennsylvania-based firm that does business throughout the United States. With respect to this circumstance, the UCC has been adopted by, and applies in
all of the states, in whole or in part
Over the course of a year, Retail Marketers, Inc., sells goods from its inventory and one of its warehouses. In exchange, Retail receives checks and other items that substitute for cash, which Retail uses to repay a loan from Savings Bank. Article 2 of the UCC governs
the sale of the goods
Expert Stitching Corporation enters into a contract to sell denim clothing to Fine Fashion Company, which in turn sells a pair of jeans to Grady, a consumer. In contrast to standards that apply to consumers, the UCC imposes on merchants
special business standards
Office Equipment Leasing, Inc. (OEL), agrees to lease five computer workstations to Product Promotion Corporation (PPC). Before any interest in the workstations can pass from OEL to PPC, they must be
in existence and identified as the goods in the contract
A specific grade of corn that fills BioFuel Cooperative's silo is fungible. This means that the corn is
alike naturally or by agreement or trade usage