Get questions and answers for Business Law


1 Million+ Step-by-step solutions
math books
To say that an organization is “taxed as a partnership” or “not a taxable entity” is simply a euphemism for saying that it is not taxed at all. Some commentators argue that organizations receive valuable privileges— such as limited liability—and should, in return, pay taxes. Do you agree?

1. Did Drs. Shawe and Badawy misappropriate trade secrets from PID?
2. What did the defendants take from PID?
3. Can a list of patients be a trade secret?

But does it make sense for some forms of organizations, such as C corporations, to pay taxes while S corporations and LLCs do not?

1. What did Pollack have to do to qualify his patient list as a trade secret?
2. Had Pollack done this?

Traditionally, law firms and accounting firms were partnerships in which each partner faced unlimited liability for the partnership’s debts. The partnerships themselves were not taxable entities. With LLCs and LLPs, the liability burden is much lighter but the tax burden is no heavier. Is this fair?

Did Perry violate the Uniform Trade Secrets Act?

1. What was Morlife trying to protect?
2. Why shouldn’t Perry be allowed to compete with his former employer?
3. What does one have to do to protect trade secrets?

Are Costello and Giordano personally liable to Ridgaway’s estate?

1. Did Morlife meet these two criteria?
2. If, rather than taking the business cards with him, Perry had memorized the customers’ names and phone numbers, would the court have allowed him to use the information?
3. Was there anything Perry could have done to gain access to this information legally?
4. So what is the moral of this story?

Match the following terms with their definitions:
___ A. Easement
___ B. Fee simple defeasible
___ C. Adverse possession
___ D. Fixture
___ E. License
1. Temporary permission to enter upon another’s property, for example, to attend a concert
2. Gives one person the right to enter land belonging to another and make a limited use of it
3. Goods that have become attached to real property
4. A type of ownership that may terminate upon the occurrence of some limiting event
5. A chance to own land without ever paying for it

1. Are members of an LLC personally liable for the debts of the business.
2. Isn’t it obvious, then, that the court should grant the motion for summary judgment?
3. Isn’t the whole point of an LLC to protect personal assets from business liabilities? Why would the court deny the motion for summary judgment?

True or False:
1. The owner of a fee simple absolute could lose the property if she uses it in a prohibited manner.
2. If one joint tenant dies, his interest in the property passes to surviving joint tenants, not to his heirs.
3. If you sell the oil rights in your property while keeping the surface rights, the oil company has purchased a profit.
4. In the sale of a house, a seller may not make false statements about conditions, but is under no obligation to mention defective conditions unless the buyer asks about them.
5. The federal government has the power to take private property for public use, but local governments have no such power.

1. CPA QUESTION: On July 1, 1992, Quick, Onyx, and Nash were deeded a piece of land as tenants in common. The deed provided that Quick owned one half the property and Onyx and Nash owned one quarter each. If Nash dies, the property will be owned as follows:
A. Quick 1/2, Onyx 1/2
B. Quick 5/8, Onyx 3/8
C. Quick 1/3, Onyx 1/3, Nash’s heirs 1/3
D. Quick 1/2, Onyx 1/4, Nash’s heirs 1/4

2. Marta places a large, prefabricated plastic greenhouse in her backyard, with the steel frame bolted into concrete that she poured specially for that purpose. She attaches gas heating ducts and builds a brick walkway around the greenhouse. Now the town wants to raise her real property taxes, claiming that her property has been improved. Marta argues that the greenhouse is not part of the real property. Is it?
A. The greenhouse is not part of the real property because it was prefabricated.
B. The greenhouse is not part of the real property because it could be removed.
C. The greenhouse cannot be part of the real property if Marta owns a fee simple absolute.
D. The greenhouse is a fixture and is part of the real property.
E. The greenhouse is an easement, and is part of the real property.

3. A pro football team ejects five fans for rowdy behavior. The team is
A. Revoking an easement
B. Reserving an easement
C. Terminating a profit
D. Revoking a license
E. Condemning certain use

4. Takeoff Construction is struggling financially, and to save money, has “cut corners” in two construction projects: a three-story office building and a large house. In both buildings, the company used cheap structural supports, pipes, and insulation, which it knows will not last long. Both properties sell, and neither buyer asks about those specific materials. Six months later, both buyers sue, based on Takeoff ’s shabby material and workmanship.
A. The homeowner will win but the office buyer will lose.
B. The office buyer will win but the homeowner will lose.
C. Both the homeowner and office buyer will win.
D. Both the homeowner and office buyer will lose.
E. In both cases, a jury will decide whether Takeoff “adequately responded to all questions the buyer posed.”

5. A common security interest in real property is
A. A profit
B. A license
C. An easement
D. A mortgage
E. A warranty

1. Were the two defendants negligent that night?
2. What could the defendants have done to protect themselves against suit?
3. Is their status as LLC members useless?

In 1944, W. E. Collins conveyed land to the Church of God of Prophecy. The deed said: “This deed is made with the full understanding that should the property fail to be used for the Church of God, it is to be null and void and property to revert to W. E. Collins or heirs.” In the late 1980s, the church wished to move to another property and sought a judicial ruling that it had the right to sell the land. The trial court ruled that the church owned a fee simple absolute and had the right to sell the property. Comment.

Mark Wasser negotiated to purchase a 67-year-old apartment building from Michael and Anna Sasoni. The Sasonis told Wasser that the building was “a very good building” and “an excellent deal.” The contract stated that the Wassers took the building “as is” and that there were no express or implied warranties or representations. After Wasser took over the building, he discovered that it needed major structural repairs. He sued the Sasonis, claiming that they had failed to disclose defects. Who wins? (Slow down before answering.) Ethically, who should win? Why?

Is a member personally liable for a debt of an LLC that was caused by his own negligence?

Was the cattle scale a fixture?

1. Why did the Gladstone law firm sign a promissory note to Anthony?
2. Was Blum personally liable for his malpractice?

1. What is a fixture?
2. What could Freeman have done to avoid this?

The manufacturer of the scale testified that the scale was designed to be moveable, why was this not enough for the court to find that the scale was not a fixture?

Then why isn’t Blum liable to Anthony in this case?

What facts did the court rely on the show the scale had been adapted to become a permanent part of the property?

1. Did Red Bluff violate the terms of the grants, so that the property must now revert to Walton?
2. The court says nothing about the property's worth. How do we know it was valuable?

Does Lieberman have a right to any financial data about

How could Red Bluff have avoided losing its land?

1. Does Mr. Lieberman want to be a part of this LLC any longer?
2. This seems like a crazy result: forcing a person to remain a member of an LLC but not allowing that person to receive the value of his equity share. How could this result have been avoided?

Did the easements relieve AP&L from liability for flooding?

1. The plaintiffs presented an affidavit from a water control expert, Dr. Daryl B. Simmons, stating that AP&L operated the dams in an unreasonable, negligent manner, did not properly monitor the water levels on the two lakes, and failed to coordinate the opening of the floodgates on the respective dams. What was the jury's impression of the expert's opinion?

2. How can it be fair to decide this case without even considering the opinion of an expert who said the defendants were negligent?

According to the court, why can’t Mr. Lieberman withdraw from

1. Why does it not matter whether AP&L was negligent?
2. The landowners also argued that what AP&L really had were exculpatory clauses. What is an exculpatory clause?

The landowners argued that the law often disfavors exculpatory clauses as a matter of public policy, and the court should therefore refuse to enforce these agreements. Comment.

Does the corporate doctrine of piercing the corporate veil apply to LLC’s? Should Hardie be personally liable for TPO’s debts?

1. How would you rule?
2. What issues might arise in enforcing the injunction?
3. Are the Johnsons allowed to park a tall mobile home or bus on the easement property?

Does this mean that the Tropes have to tear down their house?

If Hardy was the only member of the LLC, why does it matter that he used LLC money to pay for his personal expenses?

Did the Hersheys adequately inspect the house? Was a warranty of habitability in effect 12 years after construction?

Piercing the corporate veil is a very difficult argument to win and courts usually warranted in extraordinary circumstances. Why do you think that is so?

1. How was Rich Rosen supposed to notify the Hersheys about the defective stucco, when there had been no problems?
2. Why is Rosen liable?
3. Rosen never met the Hersheys or spoke with them. How can he possibly have warranted the house?
4. What does the implied part of the warranty indicate?

Most states now impose an implied warranty of habitability on a builder who sells a new home. Is such a warranty fair?

Why would anyone choose to form a partnership?

What steps should a builder take to avoid liability on new houses?

Should the legislature pass this bill? Why shouldn't the buyer be expected to do some intelligent checking on her own?

If a partnership (or any other nontaxable entity) with three partners (or members) earns $60,000 in a year, how much will each partner “take home”? What if, instead of being partners, they were shareholders in a corporation?

Isn't it unrealistic to expect a seller to disclose information that may decrease the selling price?

Did Gentry violate his fiduciary duty when he bought partnership property without telling his partner?

Explain the difference between the duty to disclose and the implied warranty of habitability.

Was there sufficient evidence that Brooks breached his duty to disclose?

1. Why didn’t Gentry tell Marsh he wanted to purchase the two horses?
2. Marsh agreed to the price for the private sale of Excitable Lady. Why would Marsh care whether he sold to a partner or to a stranger?

Did the Rays acquire title by adverse possession?

1. This case is based on the doctrine of adverse possession. What is that?
2. This is crazy! Why should someone get title to land by cheating?
3. This case perfectly proves the merit of the policy. How?

1. What damages would Gentry be required to pay?
2. How would you measure profits in this case?

1. What did these two partners want the court to do?
2. Did they ask the court to dissolve the partnership?
3. What did the court decide?

1. Does the court have the right to do that, when neither partner has asked for a dissolution?
2. So what is the moral of the story?

1. In theory, are Andersen partners personally liable for the debts that Andersen incurred in connection with the Enron case?
2. If you were a creditor of Andersen, what case would you make that some (if not all) of the partners should be liable?

Were Gaus and West personally liable for payments due under Smith & West’s lease?

Smith & West registered as an LLP once. Why does it matter that it didn’t continue to renew its registration?

1. What is the difference between a limited partnership and a limited liability limited partnership?
2. Have any states yet passed the revised version of the Uniform Limited Partnership Act that permits limited liability limited partnerships?

Twenty years ago, the accounting partnership of Stevens, Thomas & Ginsburg became a professional corporation. They were the first in their area to make this change, and they sometimes bragged about how farsighted they were. Recently, their state passed an LLC statute. Many accountants are becoming LLCs, but not Stevens, Thomas & Ginsburg. What is holding this farsighted firm back?

Match the following terms with their definitions:
___ A. Duty of loyalty
___ B. Duty of care
___ C. Promoter
___ D. Incorporator
___ E. Registered agent
1. Requires managers to act in the best interests of the corporation
2. The company’s representative in its state of incorporation
3. Someone who organizes a corporation
4. The person who prepares and files the charter
5. Prohibits managers from making a decision that benefits them at the expense of the corporation

True or False:
1. A corporation can be formed in any state or under the federal corporate code.
2. Shareholders and stockholders are the same thing.
3. Most companies use a very broad purpose clause in their charter.
4. Shareholders have the right to manage the corporate business.
5. To be elected to the board of directors, nominees must receive a majority of the votes cast.

Multiple-Choice Questions

1. A promoter is liable for any contract he signs on behalf of a corporation before it is formed, unless:

A. The corporation adopts the contract.

B. The promoter notifies the other party that the corporation has not yet been formed.

C. The promoter signs the contract on behalf of the corporation.

D. The promoter forms the corporation within 72 hours of signing the contract.

E. The other party agrees to a novation.

2. CPA QUESTION: A corporate stockholder is entitled to which of the following rights?

A. Elect officers

B. Receive annual dividends

C. Approve dissolution

D. Prevent corporate borrowing

3. CPA QUESTION: Generally, a corporation’s articles of incorporation must include all of the following except:

A. The name of the corporation’s registered agent

B. The name of each incorporator

C. The number of authorized shares

D. Quorum requirements

4. Generally, a corporation’s bylaws include all of the following except:

A. Par value of the stock

B. The date of the shareholders meeting

C. The number of directors

D. The titles of officers

E. The date of the fiscal year

5. Under the duty of care, directors will be liable if they:

A. Make a decision that has a rational business purpose

B. Use the same care as an ordinarily prudent person

C. Make informed decisions

D. Engage in illegal behavior that is profitable to the company

E. Make an informed decision that ultimately harms the company

Michael Ferns incorporated Erin Homes, Inc., to manufacture mobile homes. He issued himself a stock certificate for 100 shares for which he made no payment. He and his wife served as officers and directors of the organization, but, during the eight years of its existence, the corporation held only one meeting. Erin always had its own checking account, and all proceeds from the sales of mobile homes were deposited there. It filed federal income tax returns each year, using its own federal identification number. John and Thelma Laya paid $17,500 to purchase a mobile home from Erin, but the company never delivered it to them. The Layas sued Erin Homes and Michael Ferns, individually. Should the court “pierce the corporate veil” and hold Ferns personally liable?

Davis Ajouelo signed an employment contract with William Wilkerson. The contract stated: “. . . whatever company, partnership, or corporation that Wilkerson may form for the purpose of manufacturing shall succeed Wilkerson and exercise the rights and assume all of Wilkerson’s obligations as fixed by this contract.” Two months later, Wilkerson formed Auto-Soler Company. Ajouelo entered into a new contract with Auto-Soler providing that the company was liable for Wilkerson’s obligations under the old contract. Neither Wilkerson nor the company ever paid Ajouelo the sums owed him under the contracts. Ajouelo sued Wilkerson personally. Does Wilkerson have any obligations to Ajouelo?

Edgar Bronfman, Jr., dropped out of high school to go to Hollywood and write songs and produce movies. Eventually, he left Hollywood to work in the family business—the Bronfmans owned 36 percent of Seagram Co., a liquor and beverage conglomerate. Promoted to president of the company at the age of 32, Bronfman seized a second chance to live his dream. Seagram received 70 percent of its earnings from its 24 percent ownership of DuPont Co. Bronfman sold this stock at less than market value to purchase (at an inflated price) 80 percent of MCA, a movie and music company that had been a financial disaster for its prior owners. Some observers thought Bronfman had gone Hollywood, others that he had gone crazy. After the deal was announced, the price of Seagram shares fell 18 percent. Was there anything Seagram shareholders could have done to prevent what to them was not a dream but a nightmare? Apart from legal issues, was Bronfman’s decision ethical? What ethical obligations did he owe Seagram’s shareholders?

Angelica is planning to start a home security business in McGehee, Arkansas. She plans to start modestly but hopes to expand her business within 5 years to neighboring towns and, perhaps, within 10 years, to neighboring states. Her inclination is to incorporate her business in Delaware. Is her inclination correct?

Is Hardy personally liable on the contract with Southwestern Bell?

1. What does d/b/a mean?
2. What could Hardy have done, at the time he entered into the contract to have avoided personal liability?

1. Do you think Hardy ever intended to for a corporation?
2. Then how is this result fair?

If you asked your students to do the interview project (listed above under Suggested Additional Assignments), now is a good time to find out their results. You might want to put a chart on the board, listing the different states. What conclusions can you draw?

Was Ergon Energy Corporation’s name too similar to Ergon, Inc.?

What about federal trademark law? Under trademark law, no one can use a mark which “is likely to cause confusion, or to cause mistake or to deceive.”

1. So what is the moral of this story?
2. If you asked your students to complete the first research project (listed above under Suggested Additional Assignments), ask them now what they found out about written consents.

What issues should Lou and Dora consider?

Why does this issue matter?

Can Brooks pierce the corporate veil? Is Becker personally liable for the debts of the corporation?

1. Why is piercing the corporate veil an “extraordinary remedy?”
2. What happened to the assets of Becker Interiors?

But if Becker is the sole officer, shareholder, and director, isn’t Becker Interiors sort of like a sole proprietorship? So, shouldn’t Becker be able to use the money that way?

1. Joel Ross was held personally liable for his failure to pay employees’ union dues. Would his wife have been personally liable if she were a shareholder of the company, but was not involved in management?
2. In the Oriental Fireworks case, would Mrs. Chou have been personally liable to Rice?

Why the difference?

Were the payments to Allen protected by the business judgment rule?

What are the requirements?

But the rule requires the possessor to demonstrate continuous possession for the statutory period. This family only showed up in fair weather, for a month.

Are such ordinances good or bad?

Match the following terms with their definitions:
___ A. Warranty of habitability
___ B. Tenancy at sufferance
___ C. Periodic tenancy
___ D. Constructive eviction
___ E. Tenancy at will
1. Landlord’s substantial interference with a tenant’s use and enjoyment of the premises
2. A tenancy without fixed duration, which either party may terminate at any time
3. Tenant remains on premises after expiration of true tenancy
4. A tenancy that automatically renews unless one party terminates it
5. Requires a landlord to meet state building code standards

True or False:
1. A landlord must maintain an apartment in compliance with the state’s building code, unless the lease specifically exempts that particular unit.
2. A landlord could be liable for a constructive eviction even if he never asked the tenant to leave.
3. A nonrenewable lease of a store, for six months, establishes a tenancy for years.
4. A landlord may charge a tenant for normal wear and tear on an apartment, but the charges must be reasonable.
5. A landlord is generally liable for personal injuries sustained within an apartment, but cannot be liable for criminal attacks that occur there.

1. CPA QUESTION: Which of the following forms of tenancy will be created if a tenant stays in possession of the leased premises without the landlord’s consent, after the tenant’s one-year written lease expires?
A. Tenancy at will
B. Tenancy for years
C. Tenancy from period to period
D. Tenancy at sufferance

2. CPA QUESTION: To be enforceable, a residential real estate lease must:
A. Require the tenant to obtain liability insurance
B. Entitle the tenant to exclusive possession of the leased property
C. Specify a due date for rent
D. Be in writing

3. CPA QUESTION: A tenant renting an apartment under a three-year written lease that does not contain any specific restrictions may be evicted for:
A. Counterfeiting money in the apartment
B. Keeping a dog in the apartment
C. Failing to maintain a liability insurance policy on the apartment
D. Making structural repairs to the apartment
4. In May, Sharon and Joanne, both sophomores, are looking for an apartment to share beginning in September. They find the perfect unit which Ralph, the landlord, is working on right then. The parties agree on a rent of $1,000 per month, for 12 months. “Come back in late August, when I’m finished working,” says Ralph. “I’ll have a lease ready, I’ll take your deposit, and you can move right in.” The young women return in August to discover that Ralph has rented the apartment for $1,500 to other students. When they sue Ralph, Sharon and Joanne will
A. Win $12,000
B. Win $18,000
C. Win possession of the apartment
D. Win the difference between $12,000 and whatever they are forced to spend for a similar apartment
E. Lose

5. Michael signs a lease for an apartment. The lease establishes a periodic tenancy for one year, starting September 1 and ending the following August 31. Rent is $800 per month. As August 31 approaches, Michael decides he would like to stay another year. He phones the landlord to tell him this, but the landlord is on holiday and Michael leaves a message. Michael sends in the September rent, but on September 15, the landlord tells him the rent is going up to $900 per month. He gives Michael the choice of paying the higher rent or leaving. Michael refuses to leave and continues to send checks for $800. The landlord sues. Landlord will
A. Win possession of the apartment because the lease expired
B. Win possession of the apartment because Michael did not renew it in writing
C. Win possession of the apartment because he has the right to evict Michael at any time, for any reason
D. Win $1,200 (12 months times $100)
E. Lose

Lisa Preece rented an apartment from Turman Realty, paying a $300 security deposit.
Georgia law states: “Any landlord who fails to return any part of a security deposit which is required to be returned to a tenant pursuant to this article shall be liable to the tenant in the amount of three times the sum improperly withheld plus reasonable attorney’s fees.” When Preece moved out, Turman did not return her security deposit, and she sued for triple damages plus attorney’s fees, totaling $1,800. Turman offered evidence that its failure to return the deposit was inadvertent and that it had procedures reasonably designed to avoid such errors. Is Preece entitled to triple damages?
Attorney’s fees? What is the rationale behind a statute that requires triple damages? Is it ethical to force a landlord to pay $1,800 for a $300 debt?

Philip Schwachman owned a commercial building and leased space to Davis Radio Corp. for use as a retail store. In the same building, Schwachman leased other retail space to Pampered Pet, a dog grooming shop.
Davis Radio complained repeatedly to Schwachman that foul odors from Pampered Pet entered its store and drove away customers and workers. Davis abandoned the premises, leaving many months’ rent unpaid. Schwachman sued for unpaid rent and moved for summary judgment. What ruling would you make on the summary judgment motion?

Were the occupants tenants at will, entitled to a 30-day notice to quit before eviction?

1. The court discusses “squatter” status, a tenancy at will, and a tenancy at sufferance. Who cares which applies here?
2. What can the Utseys acquire?
3. What does it mean that a tenancy at will can be created by implication?

What is a notice to quit?

The court says that these occupants cannot in fact be tenants at sufferance. Why not?

1. What conduct here created the tenancy at will?
2. The Utseys never paid any rent. How can they be tenants?
3. Does this mean anyone can live rent free?

Was Barnett-Zauner obligated to give reasons for evicting the Ahrenses?

1. Were the tenants entitled to such large damages?
2. Other than that, was the landlord a pretty decent guy?

How can the landlord be defaulted when in fact he was in court, arguing the case?

Name some or all of the rules of law that this landlord broke.

1. What are the rules of Boulevard Shoppes?
2. What is the moral of this case?

1. Was Lawrence entitled to double damages and attorney fees based on Regent’s failure to pay interest on the pet deposit?
2. Why such a harsh penalty?

Showing 300 - 400 of 32162
Join SolutionInn Study Help for
1 Million+ Textbook Solutions
Learn the step-by-step answers to your textbook problems, just enter our Solution Library containing more than 1 Million+ textbooks solutions and help guides from over 1300 courses.
24/7 Online Tutors
Tune up your concepts by asking our tutors any time around the clock and get prompt responses.