Questions and Answers of Business Law Text and Cases

Flawlace, LLC, leased unfinished commercial real estate in Las Vegas, Nevada, from Francis Lin to operate a beauty salon. The lease required Flawlace to obtain a “certificate of occupancy” from
You are a college student and plan to attend classes for nine months. You sign a twelve-month lease for an apartment. Answer fully each of the following questions:1. You have a summer job in another
Eve orally agrees to rent an apartment to Nancy for a six-month term. Is this lease enforceable if it is not in writing?
Should eminent domain be used to promote private developments? Discuss your answer.
What public policies underlie the doctrine of adverse possession?
Under an agreement with the town of Monroe, North Carolina, the town of Midland began to acquire the rights to local land for the installation of a natural gas pipeline. When the owners refused to
Charles Scarborough and Mildred Rollins owned adjoining properties. Rollins believed that their common boundary ran along the far edge of a grassy area on the north side of a gravel road. Her deed
Antonio is the owner of a lakeside house and lot. He deeds the house and lot “to my wife, Angela, for life, then to my son, Charles.” Given these facts, answer the following questions: 1.
Sam owns an acre of land on Red River. The government dams the river. A lake forms behind the dam, covering Sam’s land. Does the government owe Sam anything? If so, what? If not, why?
Eve and Frank own twenty acres of land. On the land, there is a warehouse surrounded by a fence. What is the most important factor in determining whether the fence is a fixture?
What standard of care over bailed property should be expected of bailees?
John Wasniewski opened a brokerage account with Quick and Reilly, Inc., in his son James’s name. Twelve years later, when the balance was $52,085, the account was closed, and the funds were
Jennifer Koerner adopted a dog—the Stig—from the Anti-Cruelty Society in Chicago, Illinois, for $95. Koerner wrote a poem and presented it to Kent Nielsen, her live-in boyfriend. In the poem, she
Calvin is an executive on a business trip to the West Coast. He has driven his car on this trip and checks into the Hotel Ritz. The hotel has a guarded underground parking lot. Calvin gives his car
Bob leaves his clothes with Corner Dry Cleaners to be cleaned. When the clothes are returned, some are missing, and others are greasy and smell bad. Is Corner liable? Why or why not?
Dave and Paul share ownership rights in a multimedia computer. When they acquired the computer, they agreed in writing that if one dies, the other inherits his interest. Are Dave and Paul tenants in
James Bubenik, a dentist, had medical malpractice insurance with Medical Protective Co. (MPC). The policy required MPC to defend Bubenik against any malpractice claim and required Bubenik to
Should an insurance agent be held to a duty to advise applicants about coverage? Why or why not?
Donald Breeden and Willie Buchanan were married in Marion County, Mississippi. They lived in a home in Sandy Hook. Nationwide Property & Casualty Insurance Co. insured the home under a policy
Shelley is the chief financial officer for Ready Auto Parts Corporation. Shelley also heads the corporate IT department, which is responsible for managing the company’s inventory to closely time
What are some of the factors that might be considered in deciding whether a debtor should be allowed to declare bankruptcy?
Caroline McAfee loaned $400,000 to Carter Oaks Crossing. Joseph Harman, Carter’s president, signed a personal guaranty for the loan. Later, Harman obtained a discharge in bankruptcy under Chapter 7
At the beginning of a new year, Paulo starts a greenhouse and nursery business. In February, Quail Springs Nursery Supply extends credit to Paulo. Because Paulo is short of capital, he uses all of
Darin is experiencing personal financial problems. The amount of income he receives from his corporation is barely sufficient to cover his living expenses, the payments due on his mortgage, various
Al’s Retail Store is a sole proprietorship. Smith & Jones is an advertising partnership. Roth & Associates, Inc., is a professional corporation. First State Savings & Loan is a savings
73-75 Main Avenue, LLC, agreed to lease commercial property to PP Door Enterprise, Inc., which was owned by Ping Ying Li. A signed lease and guaranty agreement were faxed to 73-75. When the monthly
Should a promise of collateral signed by a corporate officer to secure a corporate debt always create personal liability? Explain your answer.
In what circumstances would a creditor resort to each of the following remedies when trying to collect on a debt?1. Mechanic’s lien.2. Artisan’s lien.3. Writ of attachment.4. Writ of execution.5.
Al owes Don $5,000 and refuses to pay. Don obtains a garnishment order and serves it on Al’s employer. If the employer complies with the order and Al stays on the job, is one order enough to
James Cavazos bought a Mercedes S550 from Mercedes-Benz of Sugar Land with funds that he borrowed from JPMorgan Chase Bank. Chase perfected a security interest in the car. Cavazos forged a release of
Does the potential harm of allowing a creditor to repossess collateral on a debtor’s default, without going to court, outweigh the benefit? Discuss.
PRA Aviation, LLC, borrowed $3 million from Center Capital Corp. to buy a Gates Learjet 55B. Center perfected a security interest in the plane. Later, PRA defaulted on the loan, and Center obtained
Edward owned a retail sporting goods shop. A new ski resort was being created in his area, and to take advantage of the potential business, Edward decided to expand his operations. He borrowed a
First National Bank loans $5,000 to Gail to buy a car, which is used as collateral to secure the loan. Gail has paid less than 50 percent of the loan when she defaults. First National could repossess
Adam needs $500 to buy textbooks and other supplies. Beth agrees to loan Adam $500, accepting as collateral Adam’s iPad. They put their agreement in writing. How can Beth let other creditors know
Robert Henrichs was elected the chairman of the board of Chugach Alaska Corp. During his term, Henrichs held board meetings with only his supporters present. He also refused to follow bylaws that
Under what circumstances might a director’s sale of corporate property to himself or herself be justified?
Should state corporation laws allow board of directors’ meetings to be held in cyberspace? Discuss.
Bill McCann was the president and chief executive officer of McCann Ranch & Livestock Co. He and his brother Ron each owned 36.7 percent of the stock, but Ron had been removed from the board of
Starboard, Inc., has a board of directors consisting of three members, Ellsworth, Green, and Morino. The corporation has approximately five hundred shareholders. At a regular meeting of the board,
Dmitri has acquired one share of common stock of a multi-million-dollar corporation with more than 500,000 shareholders. Dmitri’s ownership is so small that he is questioning what his rights are
Joe is a director and officer of United Products, Inc. Joe makes a decision about the marketing of United’s products that results in a dramatic decrease in profits for United and its shareholders.
Glen is a director and shareholder of Diamond Corporation and of Emerald, Inc. If a resolution comes before the Emerald board to compete with Diamond, what is Glen’s responsibility?
Why should courts be reluctant to order the dissolution of a corporation?
Why should shareholders be required to approve certain types of corporate actions?
In one situation, Bennett Corporation combines with Corbett Enterprises, Inc. Bennett ceases to exist, and Corbett is the surviving firm. In another scenario, Global Corporation and Hometown Company
James Williford, Patricia Mosser, Marquetta Smith, and Michael Floyd formed Bluewater Logistics, LLC, to bid on construction contracts. The operating agreement provided for a “super majority” 75
Why should partnership agreements be in writing?
Hal and Gretchen are partners in a delivery business. When business is slow, without Gretchen’s knowledge, Hal leases out the delivery vehicles as moving vans. The vehicles would otherwise be
Sam plans to open a sporting goods store and to hire Gil and Art. Sam will invest only his own capital. He does not expect to make a profit for at least eighteen months and to make little profit for
Should an employer’s e-mail system be considered part of the workplace? Discuss your answer.
Should English-only policies in the workplace be considered a form of national-origin discrimination? Explain.
McNeill Pediatrics is a subsidiary of Johnson & Johnson (J&J). Patty Smith was a McNeill senior professional sales representative. Her position required her to visit prescribing physicians to
Should workers’ compensation be denied to a worker who is injured off the employer’s premises, regardless of the reason the worker is off the premises? Why or why not?
Galvin Strang worked for a tractor company in one of its factories. Near his work station, there was a conveyor belt that ran through a large industrial oven. Sometimes, the workers would use the
Are there situations in which the duty of loyalty could conflict with other duties? Explain your answer.
Michael Mosely works as a purchasing agent for Suharto Coal Supply, a partnership. Mosely has authority to purchase the coal needed by Suharto to satisfy the needs of its customers. While Mosely is
Iliana is a traveling sales agent. Iliana not only solicits orders but also delivers the goods and collects payments from her customers. Iliana places all payments in her private checking account and
Marie, owner of the Consumer Goods Company, employs Rachel as an administrative assistant. In Marie’s absence, and without authority, Rachel represents herself as Marie and signs a promissory note
Able Corporation wants to build a new mall on a specific tract of land. Able contracts with Sheila to buy the property. When Sheila learns of the difference between the price that Able is willing to
New York City resident Esther Braunstein worked as an usher at the Lincoln Center, held an administrative position with Citibank, was a school crossing guard, and assisted disabled persons and others
Why should a customer have to report a forged or unauthorized signature on a paid check within a certain time to recover the amount of the payment?
Lynn draws a check for $900 payable to the order of Jan. Jan indorses the check in blank and transfers it to Owen. Owen presents the check to First National Bank, the drawee bank, for payment. If the
In the wake of Hurricane Katrina, many businesses in New Orleans struggled, contending with lost files and other effects of the storm. During this period, Pyramid Title, LLC, which handled real
Should a bank that acts in “bad faith” be precluded from raising the fictitious payee rule as a defense? Explain your answer.
Damion and Kiya Carmichael took out a loan from Ameriquest Mortgage Co. to refinance their mortgage and signed a note to make monthly payments on the loan. Later, Deutsche Bank National Trust Co.
Why is good faith required to attain holder-in-due-course status?
New Houston Gold Exchange, Inc., (HGE) issued a $3,500 check to Shelly McKee to buy a purportedly genuine Rolex watch. The check was postdated—that is, assigned a date later than the actual one.
Fox purchased a used car from Emerson for $1,000. Fox paid for the car with a check, written in pencil, payable to Emerson for $1,000. Emerson, through careful erasure and alterations, changed the
Roy signs corporate checks for Standard Corporation. Roy makes a check payable to U-All Company, to whom Standard owes no money. Roy signs the check, forges U-All’s indorsement, and cashes the
Adam issues a $500 note to Bill due six months from the date issued. One month later, Bill negotiates the note to Carol for $250 in cash and a check for $250. To what extent is Carol a holder in due
National City Bank loaned money to Reger Development, LLC, to fund development opportunities. Reger signed a promissory note that required the borrower to “pay this loan in full immediately upon
Should the requirements for negotiability be strictly enforced? Explain your answer
Eligio Gaitan borrowed the funds to buy real property at 4520 W. Washington St. in Downers Grove, Illinois, and signed a note payable to Encore Credit Corp. Encore indorsed the note in blank. When
The following note is written by Muriel Evans on the back of an envelope: “I, Muriel Evans, promise to pay Karen Marvin or bearer $100 on demand.” Is this a negotiable instrument? Discuss fully.
Jack Caldwell gets his paycheck from his employer, indorses the back of the check by signing his name, and goes to cash it at his credit union. On the way, he loses the check. Paige finds the check.
Jim owes Sherry $700. Sherry asks Jim to sign a negotiable instrument regarding the debt. Which of the following, if included on that instrument, would make it negotiable: “I.O.U. $700,” “I
Brian Cleary filed a suit against cigarette maker Philip Morris USA, Inc., claiming deceptive advertising. Cleary asserted that “light” cigarettes, such as Marlboro Lights, were advertised as
James McCoy held a credit card issued by Chase Bank USA, N.A. McCoy’s cardholder agreement with Chase stated that he would receive preferred rates (lower interest rates) if he met certain
Should consumer protection laws be strictly enforced when consumers abuse those laws? Explain your answer.
Innovative Marketing, Inc. (IMI), sold “scareware”—computer security software. IMI’s ads advised consumers that a scan of their computers had detected dangerous files—viruses, spyware, and
Sweet Candy Company wants to sell its candy in a normal-sized package labeled “Gigantic Size.” Fine Fabrics, Inc., wants to advertise its sweaters as having “That Wool Feel,” but does not
Top Electronics, Inc., advertises GEM computers at a low price. Top keeps only a few in stock and tells its sales staff to switch consumers attracted by the price to more expensive brands. Top tells
Before using an Executive Tans tanning booth made by Sun Ergoline, Inc., Savannah Boles signed a release. The form stated that the use of the booth is “at my own risk,” with no liability on the
Do pharmacists have a duty to warn customers about the side effects of drugs?
Should gun manufacturers be required to warn of the dangers associated with gun use? Why or why not?
Sam, a farmer, needs to place a two-thousand-pound piece of equipment in his barn. The equipment must be lifted thirty feet into a hayloft. Sam goes to Durham Hardware and tells Durham that he needs
Tandy purchased a washing machine from Marshall Appliances. The sales contract included a provision explicitly disclaiming all express or implied warranties, including the implied warranty of
Anchor, Inc., makes prewrapped mattress springs. Through an employee’s carelessness, an improperly wrapped spring is sold to Bloom Company, which uses it in the manufacture of a mattress. Bloom
How does the doctrine of commercial impracticability attempt to balance the rights of both parties to a contract?
Ames contracts to ship one hundred Model Z TVs to Curley. The terms of delivery are F.O.B. Ames’s city, by Green Truck Lines, with delivery on or before April 30. On April 15, Ames discovers that
Pic Post-Stars agrees to sell Ace Novelty five thousand posters of celebrities, to be delivered on April 1. On March 1, Pic tells Ace, “The deal’s off.” Ace says, “I expect you to deliver.
Mike agrees to sell one thousand espresso makers to Jenny to be delivered on May 1. Due to a strike, Mike can only deliver the espresso makers two hundred at a time over a period of ten days, with
If the parties to a contract do not specify when the risk of loss passes, the risk generally rests with the party who has possession of the goods or the right to their possession. Why is this the
In the following situations, two parties lay claim to the same goods sold. Discuss which of the parties would prevail in each situation. (See Identification.)1. Terry steals Dom’s television set
Paula boards her horse, Blaze, at Gold Spur Stables. She sells the horse to George and calls Gold Spur to say, “I sold Blaze to George.” Gold Spur says, “Okay.” That night, Blaze is kicked in
Daniel Fox owned Fox & Lamberth Enterprises, Inc., a kitchen remodeling business. Fox leased a building from Carl Hussong. When Fox planned to close his business, Craftsmen Home Improvement,
Continental Insurance Co. issued a policy to cover shipments by Oakley Fertilizer, Inc. Oakley agreed to ship three thousand tons of fertilizer to Ameropa North America on barges. Oakley sent Ameropa
Should merchants be required to act in good faith? Why or why not?
Kendall Gardner agreed to buy from James Bowen and Richard Cagle—doing business as B&C Shavings—a specially built shaving mill to produce wood shavings for poultry processors. B&C sent an

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