Questions and Answers of Business Law Today

Assume that your business partner, Gayanne Zokhrabov, was at the train station when a train, traveling at more than 70 mph, hit eighteen-year-old Hiroyuki Joho, who was running across the tracks. The
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Eagle Corporation began marketing software in 2001 under the mark “Eagle.” In 2012, Eagle.com, Inc., a different company selling different products, begins to use eagle as part of its URL and
What laws protect authors’ rights in the works they create?
Each year, conventional, old-fashioned crooks rob banks to the tune of about $50 million. In contrast, every year cybercrooks steal billions of dollars from the bank accounts of small and mid-size
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As noted in this chapter, increasingly the contracting process is moving online. Large and small e-commerce Web sites offer to sell millions of goods and services. The vast amount of data collected
While in business school, all of you must take basic accounting courses. Accounting generally is associated with developing balance sheets and profit-and-loss statements, but it can also be used as a
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How can business leaders encourage their companies to act ethically?
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What is a contract? What is the objective theory of contracts?
What rules guide the courts in interpreting contracts?
In what circumstances will an offer be irrevocable?
What are the elements that are necessary for an effective acceptance?
What is the Uniform Electronic Transactions Act? What are some of the major provisions of this act?
What are some examples of contracts that lack consideration?
In what circumstances might a promise be enforced despite a lack of consideration?
Sales personnel, particularly those who are paid on a commission basis, are often eager to make contracts. Sometimes, these salespersons must deal with minors and intoxicated persons, both of whom
Does an intoxicated person have the capacity to enter into an enforceable contract?
What are the differences between misrepresentation of fact and misrepresentation of law?
Ricky Wilcox contracted with Fireside Log Homes to build a house. The logs were to be delivered precut and predrilled, but they arrived unfinished. Fireside told Wilcox that cutting and drilling the
What is the difference between undue influence and duress?
Most business students must take a course in business communication. These courses cover the planning and preparation of oral and written communications, including e-mails. E-mails have become
If it is possible for a contract to be performed within one year, must it be in writing?
When will an oral promise to pay another person’s debt be enforced?
If a written contract is required, what terms must it contain?
What is parol evidence? When is it admissible to clarify the terms of a written contract?
In the United States, when a party alleges that contract performance is impossible or impracticable because of circumstances unforeseen at the time the contract was formed, a court will either
What is a condition precedent, and how does it affect a party’s duty to perform a contract?
What is substantial performance?
When is a breach considered material, and what effect does that have on the other party’s obligation to perform?
Will the courts allow parties to avoid performing their contractual duties when performance becomes extremely difficult or expensive?
What is the standard measure of compensatory damages when a contract is breached? How are damages computed differently in construction contracts?
Not every contract can be performed. If you are a contractor, you may take on a job that, for one reason or another, you cannot or do not wish to perform. Simply walking away from the job and hoping
Lyle contracts to sell his ranch to Marley, who is to take possession on June 1. Lyle delays the transfer until August 1. Marley incurs expenses in providing for cattle that he bought for the ranch.
What is the difference between compensatory damages and consequential damages? What are nominal damages, and when do courts award nominal damages?
Assignments of contractual rights and delegations of duties are common in the business world. As you discovered in this chapter, third party rights and duties stem from the law on assignments,
What rights can be assigned despite a contract clause expressly prohibiting assignment?
In what situations is the delegation of duties prohibited?
Inez has a specific set of plans to build a sailboat. The plans are detailed in nature, and any boat builder can build the boat. Inez secures bids, and the low bid is made by the Whale of a Boat
Bath Iron Works (BIW) offered a job to Thomas Devine, contingent on Devine’s passing a drug test. The testing was conducted by NorDx, a subcontractor of Roche Biomedical Laboratories. After NorDx
If intended third party beneficiaries could not sue the promisor directly to enforce a contract, what would their legal remedy be?
Gerald Lindgren, a farmer, agreed by phone to sell grain to Glacial Plains Cooperative. They reached two agreements—one for a delivery of soybeans, and one for a delivery of corn. Glacial Plains
The shipment of goods is a major aspect of commercial transactions. Many issues arise when an unforeseen event, such as fire or theft, causes damage to goods in transit. At the time of contract
What is the significance of identifying goods to a contract?
Chocolate, Inc., sells five hundred cases of cocoa mix to Dessert Company, which pays with a bad check. Chocolate does not discover that the check is bad until after Dessert sells the cocoa to Eden
Under what circumstances is a seller’s title to goods being sold void? When does a seller have voidable title?
Julian Makepeace, who had been declared mentally incompetent by a court, sold his diamond ring to Golding for value. Golding later sold the ring to Carmichael for value. Neither Golding nor
At what point does the buyer acquire an insurable interest in goods subject to a sales contract? Can both the buyer and the seller have an insurable interest in the goods simultaneously?
Real Chocolate Company makes a box of candy, which it sells to Sweet Things, Inc., a distributor. Sweet sells the box to a Tasty Candy store, where Jill buys it. Jill gives it to Ken, who breaks a
As a businessperson (and as a consumer), you will certainly be writing and receiving checks. Both activities can involve pitfalls. Checks Drawn in Blank The danger in signing a blank check is clear.
Can a manufacturer be held liable to any person who suffers an injury proximately caused by the manufacturer’s negligently made product?
Peter Gowin was an employee of a granite countertop business owned by Joann Stathis. In November 2012, Gowin signed a promissory note agreeing to pay $12,500 in order to become a co-owner of the
What three requirements must be met to create an enforceable security interest?
If two secured parties have perfected security interests in the collateral of the debtor, which party has priority to the collateral on the debtor’s default?
What rights does a secured creditor have on the debtor’s default?
Autolign Manufacturing Group, Inc., borrowed funds from Wamco 34, Ltd., to operate its auto parts business. The loan was secured by the molds that were used to form the parts. Autolign contracted
What is a suretyship, and how does it differ from a guaranty?
What is the homestead exemption, and how does it work?
Main Avenue, LLC, agreed to lease commercial property to PP Door Enterprise, Inc. if its principal officers executed personal guaranties and provided credit information. Nan Zhang signed the lease as
Write a few sentences describing the circumstances in which a creditor would resort to each of the following remedies when trying to collect on debt.1. Mechanic’s lien2. Artisan’s lien3. Writ of
What procedure does a debtor follow in a voluntary bankrupty?
What is a trustee? What does a trustee do?
In a Chapter 11 reorganization, what is the role of the debtor in possession?
Ruth Ann borrows $175,000 from Sunny Valley Bank to buy a home. What are the major terms of the mortgage that must be disclosed in the writing under the Truth-in-Lending Act?
What is a subprime mortgage? How does it differ from a standard fixed-rate mortgage?
Tanner borrows $150,000 from Southeast Credit Union to buy a home, which secures the loan. Two years into the term, Tanner stops making payments on the mortgage. After six months without payments,
When is private mortgage insurance required? Which party does it protect?
Does the Truth-in-Lending Act (TILA) apply to all mortgages? How do the TILA provisions protect borrowers and curb abusive practices by mortgage lenders?
In 2011, Frank relocates and purchases a five-year-old house for $450,000. He pays $90,000 as a down payment and finances the remaining $360,000 of the purchase price with a loan from Bank of Town.
What is a short sale? What advantages over mortgage foreclosure might it offer borrowers?
In a mortgage foreclosure, what legal rights do mortgage holders have if the sale proceeds are insufficient to pay the underlying debt?
Roderick and Linda Sharpe borrowed $51,300 secured by a mortgage on their home. About six years later, with more than $68,000 needed to pay off the mortgage, the Sharpes defaulted. The mortgage
First Brownsville Co. executed a promissory note secured by a mortgage so that it could build and operate a mini-warehouse storage business. When First Brownsville defaulted on the loan, Beach
What are three clauses commonly included in international business contracts?
Springer, who was running for Congress, instructed his campaign staff not to purchase any campaign materials without his explicit authorization. In spite of these instructions, one of his campaign
What remedies are available under Title VII of the 1964 Civil Rights Act, as amended?
What federal act prohibits discrimination based on age?
What are three defenses to claims of employment discrimination
Why has the federal government limited the application of the statutes discussed in this chapter to firms with a specified number of employees, such as fifteen or twenty? Should these laws apply to
Thirsty Bottling Company and U.S. Beverages, Inc. (USB), enter into a franchise agreement that states that the franchise may be terminated at any time “for cause.” Thirsty fails to meet USB’s
What are the most common types of franchises?
What laws govern a franchising relationship?
What terms and conditions are typically included in a franchise contract?
What is wrongful termination? In what types of situations do courts typically find that a franchisor has wrongfully terminated a franchise?
What are the three essential elements of a partnership?
What are the rights and duties of partners in an ordinary partnership?
What is meant by joint and several liability? Why is this often considered to be a disadvantage of the partnership form of business?
What advantages do limited liability partnerships offer to business persons that are not offered by general partnerships?
John, Lesa, and Trevor form a limited liability company. John contributes 60 percent of the capital, and Lesa and Trevor each contribute 20 percent. Nothing is decided about how profits will be
What advantages do limited liability companies offer to business persons that are not offered by sole proprietorships or partnerships?
What are the two options for managing limited liability companies?
What is a joint venture? How is it similar to a partnership? How is it different?
What are the essential characteristics of joint stock companies, syndicates, business trusts, and cooperatives, respectively?
What is a close corporation?
What is the difference between a de jure corporation and a de facto corporation?
What is the difference between stocks and bonds?
If you had started a business, under what circumstances would you be willing to give up a substantial percentage of its ownership to obtain venture capital financing?
Algonquin Corp. has issued and has outstanding 100,000 shares of common stock. Four stockholders own 60,000 of these shares, and for the past six years they have nominated a slate of candidates for

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