Which is the most accurate statement about the resolution of this lawsuit?


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  • The unsecured creditors prevail due to the “piercing the corporate veil” doctrine.
  • The brothers prevail since they had a security interest in the corporation's property




1.Dan, a doctor, renders aid to Eve, who is injured. Dan can recover the cost from Eve

  • even if Eve was not aware of Dan’s help under quasi-contract.
  • only if Eve was aware of Dan’s help.
  • only if Eve was not aware of Dan’s help.
  • under no circumstances.



The city of Lancaster, California, was attempting to develop its local economy. Costco, the giant retailer, wanted to expand its store into the next-door space occupied by the 99 Cents Only Store, which leased the premises. Costco informed the city that it would move to another neighboring city if it could not expand. So Lancaster attempted to buy out the lease of the 99 Cents Only Store, but the store refused. Consequently, Lancaster used its eminent domain power to condemn the 99 Cents Only Store property in order to turn the property over to Costco. The city explained that blight might ensue if Costco left. The city also noted that the 99 Cents Only Store had generated only about $40,000 a year in sales taxes, whereas Costco had generated more than $400,000. The city is willing to pay fair market value for the property. Whereupon, the 99 Cents Only Store sued the city to block the taking, arguing that the city was acting unconstitutionally. What is the most accurate statement regarding this lawsuit?

A.The city prevails since preventing blight, enhancing development, and increasing the tax base are legitimate rationales according to the Supreme Court for the government to exercise eminent domain.

B.The city prevails since a city or any government entity can seize private property for any purpose so long as just compensation is paid.

C.The 99 Cents Only Store prevails since eminent domain can only be used by government to seize property for airport construction or expansion.

D.The 99 Cents Only Store prevails since anti-trust law will prevent a large “big-box” retailer from driving out a small business from a community.



Curt, personnel director for Digital Products, Inc., prefers to hire Asian Americans, because “they’re smarter and work harder” than other minorities. This is pro¬hibited by

  • the Age Discrimination in Employment Act of 1967.
  • the Americans with Disabilities Act of 1990.
  • Title VII of the Civil Rights Act of 1964.
  • none of the above.



At one time, Office Depot merged with Staples, leaving Office Max as a very small remaining competitor. This merger was deemed to be illegal pursuant to the Clayton Act because:

  • The market was defined broadly to include all stores that sell office supplies.
  • The market was defined narrowly to include just office supply “super-stores.”
  • There was the probability of a substantial lessening of competition in the market.
  • B and C.



Frankie attempts to incorporate his company as Frankie’s Pizza Co., Inc. However, when he sends the articles of incorporation to the state for approval, he carelessly forgets to list the name and address of the registered agent for the corporation, which is a statutory requirement to incorporation. The articles of incorporation otherwise is fine, but the state rejects the document due to the missing information, and tells Frankie to submit the document again. However, in the meantime, Frankie, mistakenly thinking that he had a corporation formed, had been doing business as Frankie’s Pizza Co., Inc, and, unfortunately, one of Frankie’s delivery persons, while making a pizza delivery, negligently caused an automobile accident, injuring a third party. The third party sues Frankie personally for damages for the injuries sustained in the accident, contending that his corporation does not exist. Frankie’s best defense to such a lawsuit in most states would be:

a.The “piercing the corporate veil” doctrine

b.The de facto corporation doctrine

c.The de jure corporation doctrine

d.The corporation by estoppel doctrine.



Juan, Alberto, and Eduardo are brothers who form a corporation to build swimming pools. They file the articles of incorporation. They are the sole shareholders, members of the board of directors, and officers of the corporation. No meetings are held, no bylaws or shares of stock are issued, and corporate trucks are put to personal use on weekends. In addition, the brothers lend the corporation money, taking a security interest in the corporate property when they cannot obtain unsecured credit from lenders due to previous unsecured indebtedness. The corporation becomes insolvent, and the brothers claim they have priority over unsecured creditors on the basis of their security interest. The unsecured creditors claim in a lawsuit that the brothers are personally liable. Which is the most accurate statement about the resolution of this lawsuit?

A.The unsecured creditors prevail due to the “piercing the corporate veil” doctrine.

B.The brothers prevail since they filed the articles of incorporation.

C.The unsecured creditors prevail since the brothers acted in a fraudulent manner by lending the corporation money.

D.The brothers prevail since they had a security interest in the corporation’s property.



Marianne and Craig form a contract for the sale of certain goods. The contract is otherwise fine but it has a clause for the price term that says: “Agreement to Agree: The parties to this contract agree that they will agree to a reasonable price in the future.” A controversy between the parties develops as to contract performance. Marianne contends the contract is not valid and thus she has no obligation to perform. Her position legally is best described as:

  • Correct since a key contract term is too vague.
  • Correct so long as the contract was signed by both parties and witnessed.
  • Incorrect since an agreement to agree on price is permissible under the Uniform Commercial Code.
  • Correct since the contract is permeated by fraud and deceit.



Stephanie and Silvano are entrepreneurs who are contemplating forming a small business; and they are trying to decide whether to use the Limited Liability Company form of business organization. The advantages of an LLC for them would be:

  • Ease of creation and management compared to a corporation.
  • Limited liability compared to a partnership.
  • Favorable tax treatment compared to a corporation.
  • All of the above.



Juanita runs into Freddie’s Fast Food Restaurant one day and slips and falls on a wet floor that had just been mopped by one of Freddie’s employees, who neglected to put up a “Caution – Wet Floor” warning sign. The employee did not mean any harm; he just forgot to put up the sign. Juanita, however, is injured and sues Freddie. At trial, Freddie demonstrates that Juanita ran into the store wearing high heel shoes and dark glasses; and thus Freddie alleges that because of her own conduct Juanita was in part responsible for her slip and fall and subsequent injuries. Freddie is attempting to use what legal defense?

a.Res Ipsa Loquitur

b.Comparative Negligence

c.Breach of Warranty




Juanita walks into Freddie’s Fast Food Restaurant one day and slips and falls on a wet floor that had just been mopped by one of Freddie’s employees, who neglected to put up a “Caution – Wet Floor” warning sign. The employee did not mean any harm; he just forgot to put up the sign. Juanita, however, is injured and sues Freddie. Her lawsuit is:

a.Breach of warranty-based.

b.Strict liability-based.

c.Intentional tort-based.




Bernstein owns a lot and wants to build a house according to a specific set of plans and specifications. She solicits bids from building contractors and receives the following three bids: one from Chavez for $60,000, one from Freda for $58,000, and one from Samir for $55,000. She accepts Samir’s bid. One month after construction of the house begun, Samir contacts Bernstein and informs her that because of inflation and a recent price hike in materials, he will not finish the house unless Bernstein agrees to pay an extra $2,000. Bernstein reluctantly agrees to pay the additional sum. After the house is finished, however, Bernstein refuses to pay the additional $2000. Whereupon Samir brings a lawsuit in order to require Bernstein to pay the additional amount. What is the best answer regarding the resolution of the lawsuit?

A.Samir prevails and Bernstein must pay because Bernstein agreed to pay the additional amount.

B.Bernstein prevails and need not pay the additional amount due to the pre-existing duty rule of consideration law.

C.Bernstein prevails and need not pay the additional amount due to the “impossibility of performance” doctrine.

D.Samir prevails since he made a mistake in his bid.



Procedures used in South Dakota and other states in making government decisions to take life, liberty, or property are the focus of constitutional provisions covering

  • equal protection.
  • procedural due process.
  • substantive due process.
  • the right to privacy.



Shaquille is hired as a clerk in a “check-cashing store.” He receives a notice in the mail to attend “jury duty.” His boss tells him that he MUST work and can NOT attend jury duty because he is needed at work. Nonetheless, Shaquille goes to jury duty and is picked as a juror. Eventually, after a five day trial, he returns to work. His boss then fires him for being absent even though Shaquille called each day to inform his boss that he was on jury duty. When Shaquille informs his boss that he intends to sue him for “wrongful discharge,” the boss laughs and tells Shaquille that he cannot sue because he is only an employee at-will. Which of the following is the most accurate statement?

a.The boss is right since an employee at-will can be fired for virtually anything.

b.The boss is right since everyone who is absent from work can be fired.

c.The boss is wrong since there was an implied contract that Shaquille could remain at his job for a reasonable amount of time.

d.The boss is wrong because being fired under these circumstances is likely a violation of the Public Policy doctrine.



Bonnie and Clyde own a piece of investment property together as tenants in common. An issue arises as to whether they have formed a partnership. A key factor in determining whether their relationship rises to the level of a partnership is:

a.The fact that they shared any profits or losses from the rental or sale of the property.

b.The fact that they jointly owned the property.

c.The fact that they shared any gross receipts from the rental of the property.

d.The fact they did not have an express formal partnership agreement prepared by an attorney.



Frank, an officer of Gamma, Inc. learns that Gamma has developed a new source of energy. Frank tells Gail, an outsider. They each buy Gamma stock. When the development is announced, the stock price increases and they each immediately sell their stock. Subject to liability for insider trading is or are:

  • Frank and Gail.
  • Frank only.
  • Gail only.
  • neither Frank nor Gail.



American Sales Company and B2C Corporation enter into a contract over the Internet. The contract says nothing about the UETA. The UETA applies to

  • none of the contract.
  • only the part of the contract that does not involve computer information.
  • only the part of the contract that involves computer information.
  • the entire contract.



Pat the plumber is hired by homeowner to put in a new kitchen sink. During the project, Pat realizes that a new value is also needed right way or else the sink will leak. Pat does not have one, so she drives back to the plumbing company warehouse to get the value. In order to save time and prevent more leaking, Pat speeds back and forth, and in so doing she negligently rear-ends Thomas’ vehicle. Thomas sues Pat and homeowner. The likely result of such a lawsuit will be:

  • Pat and homeowner are liable.
  • Homeowner is liable since he employed Pat and the part was for his project.
  • Pat is liable but homeowner is not since Pat was an independent contractor.
  • Thomas cannot sue anyone since this was an emergency plumbing situation and Thomas likely had auto insurance.



Tomas is a business student with a very good business idea for academia. Tomas, with the help of his school’s entrepreneurship center, then develops a detailed business plan for an academic online course registration system. The faculty at the entrepreneurship center thinks that Tomas’ concept and plan have economic potential and thus are quite marketable. Tomas places on his business plan a Confidentiality statement, and also when he “shops” his plan to potential investors and school administrators he asks them to sign a Non-Disclosure Agreement. Based on the aforementioned facts, which statement is likely TRUE?

a.Tomas has protected his business plan by means of federal patent law.

b.Tomas has protected his business plan by means of federal copyright law.

c.Tomas has failed to protect his business plan by trade secret law since a plan, concept, or idea is too “soft” information, as opposed to a “hard” formula or device, for legal trade secret protection.

d.Tomas has protected his business plan by means of state trade secret law.



Driving a car negligently, Adam crashes into a phone pole. The pole falls, smashing through the roof of a house, killing Beth. But for Adam’s negligence, Beth would not have died. Regarding the death, the crash is the

  • cause in fact.
  • intervening cause
  • unforeseeable cause
  • superseding cause



Dave and Earl decide to open a restaurant and operate the business as a corporation. At the directors’ initial meeting, the directors may

  • adopt articles of incorporation only.
  • adopt bylaws only.
  • choose a corporate name only.
  • adopt articles of incorporation and bylaws and choose a corporate name.



A problem with the Last Resort principle when applied to business is:

  • Does business have the capability to help and to aid the community and local charities?
  • Is business the last real alternative to help and to aid the community and local charities?
  • Are there potential legal liability issues for helping, aiding, and rescuing?
  • All of the above.


Regarding the values of legality, morality, and social responsibility, which of the following is/are TRUE:

a.One can be sued for acting illegally.

b.One cannot be sued for “merely” acting immorally unless some law is also violated.

c.One cannot be sued for “merely” being socially irresponsible or non-responsive unless some law is also violated.

d.All of the above are true.



Whistleblowing, that is, disclosure of wrongdoing, by corporate employees can be described today as:

a.Morally required if the whistleblower is the last real alternative to disclose the wrongdoing and the other parts of the Principle of Last Resort are applicable.

b.Legally protected under the Sarbanes-Oxley Act if the whistleblowing is by an employee of a publicly traded company regulated by the Securities and Exchange Commission and concerns some type of securities fraud or fraud against the shareholders.

c.Only legally protected under those states that have private sector Whistleblower Protection Statutes if the whistleblowing is made to an appropriate government agency.

d.All of the above.



International Manufacturing Corporation’s “side payments” to government officials in exchange for favorable business contracts in foreign countries over more deserving competitors are likely to be considered in the United States as

  • Illegal only
  • Unethical only
  • Illegal and unethical
  • None of the above.



As to why a company should be a socially responsible one and get involved in civic and charitable affairs, Socrates would likely argue:

  • Justice is the will of the stronger.
  • Money comes from virtue.
  • Ignorance of the law is no excuse.
  • Virtue comes from money.



Susan Sharpe, an amateur but very smart stock trader, by means of properly analyzing public sources of information and using her native intelligence and keen deductive powers correctly reasons that Big Oil Company has discovered oil in its holdings off Vietnam. In fact, the company has discovered oil, a lot of oil, but that information is kept highly confidential in the company. Susan buys shares of stock in Big Oil based on her deductions alone. She is correct in her deductions and as a result makes a great deal of money when the oil discovery is announced by Big Oil and its stock prices soar. Susan can best be described as acting:

a.Illegally since she is a misappropriator of insider information who wrongfully purchased stock based on the inside information.

b.Illegally since the level-playing-field theory is the prevailing legal theory of insider trading and obviously Susan had more and better information than the people she purchased the stock from.

c.Legally since she is a very smart, and perhaps a bit lucky, trader.

d.Immorally pursuant to Machiavellian ethics since she took advantage of someone who was ignorant and thus she committed a traditional bad act.



Pursuant to Aristotle’s Doctrine of the Mean, a modern business corporation should be socially responsible:

a.Only when the express, written law requires and compels it with criminal sanctions for social non-responsibility.

b.To a very generous and beneficent extent, regardless of the consequences to the shareholders

c.Not at all, telling the local community, civic, and charitable leaders to “Get a life and go to government for help”

d.To a prudent, smart, moderate, middle-of-the-road degree premised on current societal expectations.



The managers of Beta, Inc in marketing Beta’s products, attempt to strike a balance among profitability, legality, ethical obligations, and corporate social responsibility. The profits that Beta can realize within these limits are best characterized as

  • Maximum
  • Minimum
  • Non-existent
  • Prudent.



What is true about advertising?

a.A deceptive ad will generally be deemed to be illegal pursuant to FTC legal standards as well as immoral pursuant to Kantian ethics.

b.A “half-truth” ad will always be legal and moral since something is only missing, and no intentional affirmative misrepresentation is made.

c.Suggestive ads are always illegal and immoral since they are clearly deceitful, coercive, and manipulative.

d.Companies and advertisers today need not worry at all about any socially responsible aspects to advertising, since, so long as the ads are not outright falsehoods and lies, they will not be called into account.



Private sector employer monitoring, surveillance, and searches of employees is:

a.Legal constitutionally when the employer is a private sector one and not a government employer.

b.A legal invasion of privacy and thus an intentional tort if conducted in a very intrusive manner which infringes on the personal privacy of the employees.

c.A moral wrong according to Kant if conducted in a disrespectful and demeaning manner.

d.All of the above.

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