Q&A Hero

Q: Any agreement made "after a few drinks" can be avoided for lack of seriousness of intent.

Q: Imperio Caffeine Corporation makes and sells coffee under a variety of brand names. Imperio wants to merge with Java Company, its main competitor. In weighing a challenge to the deal, a court looks at the relevant product market. This most likely includes coffee and a. no other products. b. products that are not identical but are related, such as spin-offs. c. products that are sometimes substituted for coffee. d. products with identical attributes only.

Q: An offeror's subjective beliefs or assumptions determine his or her intent to contract.

Q: An advertisement that contains an endorsement by a celebrity may be deemed deceptive if the celebrity does not actually use the product.

Q: Jack owns land located outside Metro City. Jack sells the land to Quality Disposal, Inc., which establishes a hazardous waste disposal facility at the site. Quality Disposal accepts only waste transported by Regional Trucking Company exclusively from Consolidated Industries, Inc. Several years later, Quality Disposal closes its facility and sells the land to Price Rite Corporation, which builds a Price Rite Discount Store on the site. Meanwhile, some of Metro's citizens complain to the Environmental Protection Agency (EPA) that Metro's municipal water supply is pol­luted. The EPA investigates and discovers that the sources of the pollu­tion are leaks of hazardous waste from what is now the Price Rite prop­erty. The EPA cleans up the site. Who can be held liable for the cost of cleaning up the site? What standards must Metro meet regarding the water?

Q: Listen Up! Corporation books and promotes concerts and other entertainment events, for which Listen Up! also sells tickets. In weighing a challenge to Listen Up!'s "monopolistic" ticket prices, a court looks at the relevant geographic market. This encompasses a. only areas in which Listen Up! does not have monopoly power. b. only areas in which Listen Up! has monopoly power. c. the area in which Listen Up! and its competitors sell, and their customers buy, the tickets. d. the entire United States in all cases.

Q: Mouth-Waterin" Treats Company wants to sell its candy in a normal-sized package la­beled "Gigantic Size." NuFabrics, Inc., wants to advertise its sweaters as hav­ing "That Wool Feel," but does not want to specify on labels that the sweat­ers are 100 percent polyester. Can these firms market their products as they would like? If not, why not?

Q: Under the Resource Conservation and Recovery Act, before hazardous waste generated by Xtreme Industries, Inc., can be transported, the waste must be properly labeled and packaged by a. the federal Environmental Protection Agency. b. the local Resource Conservation and Recovery Committee. c. the state Environmental Regulatory Commission. d. Xtreme Industries, Inc.

Q: A promise to do some specified thing in the future is an offer.

Q: Marvin is a very good businessman. He starts Marvin's Bike Company in the small town of Wheatland, South Dakota. There is one other bike store in Wheatland. Through good business management, Marvin's Bike Company obtains a great deal of market power in Wheatland. This acquisition of monopoly power is a. a per se violation of Section 1 of the Sherman Act. b. an illegal restraint on trade. c. not an antitrust violation. d. a per se violation of Section 2 of the Sherman Act.

Q: ChemoCorp, Inc., makes and sells pesticides. If a substance is identified as harmful and the harm is imminent, the Environmental Protection Agency, among other things, can a. conduct an inspection of ChemoCorp's plant. b. declare the substance to be unregulated and allow its production. c. ignore the risk if the benefit outweighs the harm. d. order the substance to be sold in an adulterated form.

Q: Dora, an architect, markets her services through Eagle Designs, an architectural firm. For all intents and purposes, Dora is the firm. She offers to design a store for Fine Stores Corporation for $10,000. Before Fine accepts, Dora dies. Fine's officers do not learn of the death until after they accept. What is the status of the offer?

Q: Gourmet Foods, Inc., requires all distribu­tors of its products to sell them at a specified minimum price. Under the Sherman Act, this is a violation a. if the anticompetitive effects outweigh the competitive benefits. b. if the competitive benefits outweigh the anticompetitive effects. c. under any circumstances. d. under no circumstances.

Q: Fruitful Garden Company makes and sells pesticides. For the pesticides to remain on the market, the acceptable level of risk to people of developing cancer from ex­posure to the products is a. one in a hundred. b. one in a million. c. one in a thousand. d. zero.

Q: Spa Selectiva Company makes and sells beauty salon supplies. By selling its product at prices substantially below the normal cost of production, Spa Selectiva hopes to drive its competitors from the market. This is a. market power. b. predatory pricing. c. price discrimination. d. price-fixing.

Q: Under the Marine Protection, Research, and Sanctuaries Act (the Ocean Dumping Act), Bayside Chemical Company may dump its chemical waste into the ocean a. after obtaining a permit. b. before obtaining a permit. c. without a permit. d. not at all.

Q: On May 1, Brand Name Industries, Inc. (BNI), sent Carol a letter, via overnight delivery, offering to employ her to audit BNI's financial statements for the current year for $1,000. In the letter, BNI stated that Carol had ten days to accept. On May 5, Carol sent BNI a fax that stated, "The price for the audit seems too low. Would you consider paying $1,200?" BNI received the fax. The next day, Dan offered to conduct the audit for $800. On learning of Dan's offer, Carol immediately e-mailed BNI, agreeing to do the work for $1,000. BNI received this e-mail on May 7.Explain why BNI and Carol do, or do not, have a contract.

Q: A trade association a. is always a per se violation of Section 1 of the Sherman Act. b. may be legal if it is sufficiently beneficial to both the association and the public. c. is an innovative, legally efficient approach to doing business. d. always creates illegal territorial or customer restrictions.

Q: Metro City operates its own municipal public drinking water system. With regard to pollutants, this system is primarily subject to a. the migratory bird rule. b. the Oil Pollution Act. c. the Rivers and Harbors Appropriations Act. d. the Safe Drinking Water Act.

Q: Alan offers to transfer Beth's videotapes to CDs for $500. The mailbox rule will not apply if Beth accepts the offer by a. e-mail. b. messenger. c. regular mail. d. telegram.

Q: Organic Cheeses, Inc., Fine & Fresh Foods Company, and Healthy Whole Foods, Inc. organize together to exchange information and share advertising. This is an example of a a. trade association. b. resale price maintenance agreement. c. monopoly. d. territorial restriction.

Q: Hydraulic Equipment Company makes its products without required pollution control technology, causing a discharge of oily waste into the nearby Idle Lake. This activity can re­sult in a. a criminal fine or imprisonment only. b. a criminal fine, imprisonment, or an injunction only. c. a criminal fine, imprisonment, an injunction, or damages. d. an injunction only.

Q: Andy offers to sell Barb ten computers for her office. Barb sends a rejection first, then later changes her mind and sends an acceptance. Whether they have a contract is determined by a. Barb's rejection. b. Barb's acceptance. c. whether Barb's rejection or acceptance is received first. d. whether Barb's rejection or acceptance is received last.

Q: Little City Company operates a public water supply system. Little City must send to every household that it supplies with water an annual statement describing a. Little City's financial situation and material facts that affect it. b. other businesses in which Little City is involved and to what extent. c. parties who might be held liable if pollution problems arise. d. the source of the water, and any contaminants and health concerns.

Q: Lightning Cycles, Inc., makes Lightning-brand motorcycles and accessories, which are distributed to authorized dealers, including Macho Motors, Inc. Macho operates dealerships in several locations. Lightning imposes restrictions on Macho to limit the areas in which they sell the bikes and insulate other dealers from direct competition. This is a. a territorial restriction. b. a resale price maintenance agreement. c. a refusal to deal. d. a price-fixing agreement.

Q: Antonio leased a store from Melanie under a ten"‘year lease with a five"‘year renewal option. The lease required written notice of the intent to renew at least six months before the lease expired. The lease indicated that notice "may be delivered either personally or by depositing the same in United States mail." Six months and one day before the expiration of the ten-year lease, Antonio sent a fax to Melanie during regular business hours stating his intention to renew the lease for five years. Antonio received an electronic confirmation that the fax had been successfully transmitted. Based on the ruling in Case 11.3, Osprey L.L.C. v. Kelly-Moore Paint Co., under these circumstances, Antonio's fax a. was not a valid method of transmitting notice of his intention to renew the lease because personal delivery or U.S. mail delivery was required by the lease. b. was not a valid method of transmitting notice of his intention to renew the lease because a fax can never provide legally valid notice. c. was a valid method of transmitting notice of his intention to renew the lease because a fax performs the same function and serves the same purpose as personal delivery or U.S. mail delivery. d. was a valid method of transmitting notice of his intention to renew the lease because any method of transmission would have been valid under the circumstances.

Q: Some agreements are so blatantly and substantially anticompetitive that they are deemed illegal per se under Section 1 of the Sherman Act. Which of the following is not a per se violation? a. A price-fixing agreement b. A group boycott c. A trade association d. A market division

Q: Tom offers to sell United Produce Company a boxcar load of tomatoes. The offer is sent via Federal Express overnight because an acceptance is required urgently. It would be reasonable for United to accept via a. a fax, a letter, or a phone call to Tom within two weeks. b. a fax sent to Tom as soon as the offer is received. c. a letter mailed to Tom two days later. d. a phone call to Tom two weeks later.

Q: Eminent Properties, Inc., wants to fill its wetlands to build Fieldview Homes, a residential subdivision. The Clean Water Act prohibits the filling of wetlands unless a. any displaced wildlife is accommodated elsewhere. b. the Army Corps of Engineers issues a permit. c. the local community obtains a benefit. d. the party doing the filling realizes an economic profit.

Q: Oil Refining Company's plant emits hazardous air pollutants. Regarding these pollutants, the plant must use a. the all-pollution elimination technology. b. the best possible available technology. c. the maximum achievable control technology. d. the practically affordable standard technology.

Q: Edgy Engine Components, Inc., a maker of vehicle parts, refuses to sell to Fidgety Fix-It, Inc., a national vehicle service firm. Edgy Engine convinces Greasy Motor Parts Company, a competitor, to do the same. This is a. a group boycott. b. a market division. c. a joint venture. d. an exclusive-dealing contract.

Q: Kim sends an offer to Leo to cut down and remove a tree for $400. Kim says, "If you say nothing, I will consider you to have accepted my offer." If Leo does not respond, he will be deemed to a. accept the offer. b. make a counteroffer. c. reject the offer. d. none of the above.

Q: The Environmental Protection Agency (EPA) has the authority to regulate "any air pollutant." In issuing standards for the discharge of soot and other pollutants, the EPA a. does not have to take economic costs into account. b. must take into account the economic costs to businesses. c. must take into account the economic costs to government. d. must take into account the economic costs to the general public.

Q: Gulf Air, Inc., is the major wholesale distributor of software in the state of Florida. Its closest competitor is Fluid Systems Company, an­other Florida firm. The two firms agree that Gulf Air will operate in south Florida and Fluid Systems will operate in north Florida. This is a. a group boycott. b. a market division. c. a joint venture. d. an exclusive-dealing contract.

Q: Bill offers to sell his Consumer Service Center business to Dina for $100,000. Dina replies, "The price is too high. I will offer to buy it for $90,000." Dina has a. accepted the offer. b. made a counteroffer without rejecting the offer. c. rejected the offer and made a counteroffer. d. rejected the offer without making a counteroffer.

Q: Missoula, Montana, passes an ordinance to regulate waste disposal. The disposal of waste may also be regulated by a. all other levels of government. b. no other levels of government. c. the federal government only. d. the Montana state government only.

Q: Interstate Coffee Brokers, Inc. (ICBI), offers to sell Java Roasters, Inc., fifty bags of coffee beans. Java rejects the offer. The offer is a. terminated. b. valid for a reasonable time to give Java a "second chance." c. valid for the period of time prescribed by a state statute. d. valid until ICBI revokes the offer.

Q: Fact Pattern 32-1Cardio, Inc., makes and sells Drawdown, the most prescribed name-brand heart medication. Emitate Corporation has the potential to make a generic version of the same drug.Refer to Fact Pattern 32-1. A court would most likely rule that the agree­ment between Cardio and Emitate isa. a deal that neither restrains trade or harms competition.b. a legal restraint of trade.c. a per se violation of the Sherman Act.d. subject to analysis under the rule of reason.

Q: Truckers Storage Depot, a private company, wants to build a ware­house on private land. For this action, an environmental impact state­ment is a. prohibited. b. required. c. unnecessary. d. voluntary.

Q: Fact Pattern 32-1Cardio, Inc., makes and sells Drawdown, the most prescribed name-brand heart medication. Emitate Corporation has the potential to make a generic version of the same drug.Refer to Fact Pattern 32-1. Cardio pays Emitate not to sell its product. This isa. a customer restriction.b. a joint venture.c. an exclusive-dealing contract.d. a price-fixing agreement.

Q: Ace Sales Corporation plans to move to a new office. Ace offers to sell its office furniture to Beta Marketing, Inc., but does not specify a time for Beta to respond. The offer expires a. after a reasonable period of time. b. after thirty days. c. after thirty minutes. d. never.

Q: State Trucking Company mails to Transport Delivery, Inc., an offer to sell a delivery truck and to hold the offer open for five days. The five-day period begins to run when the offer is a. in transit. b. received. c. sent. d. written.

Q: Midwest Power Corporation wants to build a nuclear power plant on pri­vate land, for which a federal permit is required. For this action, an en­viron­mental impact statement is a. prohibited. b. required. c. unnecessary. d. voluntary.

Q: A court deems an agreement between Silver Saddles Saddlery and Time Tested Tack, Inc. to be a per se violation of the Sherman Act. The court is a. prevented from determining whether the agreement's benefits outweigh its anticompetitive effects. b. required to unanimously decide whether the agreement's benefits outweigh its anticompetitive effects. c. required to apply the rule of reason. d. required to issue a formal complaint against Silver Saddles and Time Tested Tack.

Q: When applying the rule of reason to determine whether an agreement violates Section 1 of the Sherman Act, a court will not consider a. the purpose of the agreement. b. the partie' market ability to implement the agreement. c. the effect of the agreement on international trade. d. the potential effect of the agreement on competition.

Q: The Environmental Protection Agency (EPA) has the authority to regulate "any air pollutant." Fresher Air Group, a private organization that supports cleaner air, can file a suit against the EPA to a. compel the EPA to act only. b. compel the EPA to act or prevent it from acting. c. neither compel the EPA to act nor prevent it from acting. d. prevent the EPA from acting only.

Q: Topp Properties, Inc. (TPI), offers to sell its warehouse to U-Store-It Center for a certain price. This offer is irrevocable a. if there are no other potential buyers. b. if TPI does not advertise the offer generally. c. if U-Store-It pays to have the offer held open. d. under no circumstances.

Q: Debris Disposal Center operates a recycling plant. Edwin and other Debris neighbors file a suit, alleging injuries from the plant. To succeed, they must show that Debris failed to use reasonable care if the suit is based on a. a negligence theory. b. a nuisance theory. c. any legal theory. d. a strict liability theory.

Q: Thermo Gas, Inc., and Uno Oil Corporation refine and sell gasoline and other petroleum products. To limit the supply of gas on the market and thereby raise prices, Thermo Gas and Uno Oil agree to buy "excess" supplies from dealers and "dispose" of it. This is a. a deal that neither restrains trade or harms competition. b. a legal restraint of trade. c. a per se violation of the Sherman Act. d. subject to analysis under the rule of reason.

Q: Bob offers to sell Carol his computer but conditions the sale on Carol accepting the offer by May 1. Bob may revoke the offer a. before Carol accepts the offer. b. before May 1, whether or not Carol has accepted the offer. c. only after Carol accepts the offer. d. only after May 1.

Q: To fall under the Sherman Act, an activity must a. substantially affect interstate commerce. b. involve monopolization. c. promote competition. d. involve international trade.

Q: Longhaul Trucking Company transports radioactive materials. Marla suffers from cancer. To succeed in a strict liability action against Longhaul, Marla must show that her injury was caused by a. Longhaul's failure to use reasonable care to prevent harm to Marla. b. Longhaul's intentional lack of regard for the general public. c. Longhaul's operation. d. radiation from any source.

Q: Quality Vehicles, Inc., offers to sell a truck to Regional Delivery Company. Before accepting the offer, Regional learns that the truck has been sold to State Trucking, Inc. Quality is a. liable to Regional for breach of contract. b. liable to State for breach of contract. c. not liable, because the sale revoked the offer to Regional. d. not liable, if Quality offers a substitute truck to Regional.

Q: North Mining Company and South Excavation Company agree to abide by the decisions of East Coast Financial Corporation as to their respective levels of production, markets, and prices, effectively reducing competition and increasing profits. This is most likely a. a common, legal, time-honored type of business arrangement. b. an illegal restraint on trade. c. an innovative, legally efficient approach to doing business. d. an outdated, but legal business trust.

Q: Fabio makes a living by farming near Gastric Combustibles, Inc., which has discharged pollutants into the area's air and water. If Fabio brings a suit asking for an injunction against Gastric on the ground of nuisance, the court is most likely to rule in Gastric's favor if a. Fabio's operation also pollutes, with pesticides and herbicides. b. Fabio's operation suffers harm distinct from the general public. c. Gastric's operation is the core of the local economy. d. Gastric's operation uses reasonable care to avoid harm to Fabio.

Q: Ed advertises a reward for the return of his lost dog. Flo, who does not know of the reward, finds and returns the dog. Flo cannot recover the reward because she a. did not confer a benefit on Ed by returning the dog. b. did not know of the reward when she found and returned the dog. c. does not need the money. d. returned the dog.

Q: Chuck decides to try to sell his vintage cars in an auction "with reserve." If Chuck changes his mind, he can withdraw his cars a. only before the auction begins. b. only before the auctioneer announces that the cars are sold. c. only before the auctioneer delivers the cars to the buyers. d. up to within thirty days after the auction.

Q: Congress enacts a statute to outlaw a specific type of anticompetitive business agreement. Like other laws that regulate economic competition, this law is referred to as a. a federal trade commission act. b. an antitrust law. c. an interstate commerce act. d. a suppressive restraint on trade.

Q: 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 a. no federal law. b. the Fair and Accurate Credit Transactions Act. c. the Fair Debt Collection Practices Act. d. the Truth-in-Lending Act.

Q: 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 a. no federal law. b. the Fair Credit Reporting Act. c. the Fair Debt Collection Practices Act. d. the Truth-in-Lending Act.

Q: Cooperative research by small-business firms is exempt from antitrust law.

Q: Royal Properties, Inc., mails a flyer to hundreds of firms, advertising a building for sale. Standard Manufacturing Company responds by saying, "We accept your offer." Between Royal and Standard, there is a. a contract for the sale of the building. b. a contract to consider the offer before any others. c. a contract to negotiate a sale of the building. d. no contract.

Q: In the ordinary course of business, EZ Funds Corporation offers credit to Fay and other consumers and reports on the loans to credit agencies. To save time and money, EZ generally does not correct or update its reported information. This is most likely to result in a. a levy of a nominal fine. b. an assessment of damages. c. an order of rescission of the loan contracts. d. no sanctions.

Q: Insurance companies are exempt from antitrust laws whenever state regulation exists.

Q: Donna and Earl sign a lease that includes a clause permitting Donna to extend the lease at an amount of rent to be agreed on at the time of the extension. The clause is a. enforceable, because it is part of a lease. b. enforceable, if the parties intend the clause to be binding. c. not enforceable, because it does not include a price term. d. not enforceable, because it is not in the right form.

Q: Labor unions can organize and bargain without violating antitrust law.

Q: Wheels & Deals Corporation is subject to the Truth-in-Lending Act, which concerns a. the credit-worthiness of certain financial institutions and lenders. b. the disclosure of credit terms in certain transactions. c. the limits on certain types of credit that a creditor may grant. d. the limits on certain types of debt that a consumer can accrue.

Q: Owen announces that he plans to sell his business, Payroll Service Company (PSC), at a price below its market value. Quality Bookkeeping, Inc., gives Owen a check for the stated amount. Owen a. is bound to sell PSC to Quality Bookkeeping. b. may refuse to accept the check, because he only expressed an intent to do something in the future. c. may refuse to accept the check, because he only expressed an opinion as to the worth of the business. d. may refuse to accept the check, because he only expressed a willingness to discuss a possibility of entering into a contract.

Q: A divestiture is an order to a company to cease, or divest itself of, its an­ticompetitive conduct.

Q: Prime Equity Company extends credit in the ordinary course of its busi­ness to consumers. Under the Truth-in-Lending Act, Prime must inform a prospective borrower of a. other lenders' credit terms. b. Prime's credit terms. c. Prime's financial situation. d. the borrower's credit score.

Q: In Case 11.1, Lucy v. Zehmer, assume that there had been reliable testimony at trial establishing the following facts: Before presenting his hand-written contract of sale to Lucy, Mr. Zehmer privately asked his wife to sign the writing. When she hesitated, Mr. Zehmer said, "Oh, go ahead and sign it. It's just a joke on Lucy, is all." If those facts had been established in the trial record, would it have been appropriate for the Supreme Court of Virginia to affirm, rather than reverse, the trial court's judgment in favor of Zehmer? a. No, because Zehmer's words and conduct with Lucy still could still be reasonably interpreted by Lucy to indicate that he intended to sell the house to Lucy. b. Yes, because the conversation between Mr. And Mrs. Zehmer indicates that Mr. Zehmer never intended to enter into the contract. c. No, because Zehmer's words to his wife are inadmissible as hearsay. d. Yes, because Lucy should have known that Zehmer was not serious about the offer.

Q: Local Delivery Service, Inc., offers to deliver computers to Micro Store's customers for a certain price. Local's intent to extend a serious offer to Micro is determined by reference to Local's a. assumptions. b. beliefs. c. intentions. d. words and conduct.

Q: Paychex Loan Company extends credit in the ordinary course of its busi­ness. Under the Truth-in-Lending Act, Paychex must inform potential borrowers of a. credit terms offered by other lenders and its own credit terms. b. only credit terms offered by other lenders. c. only its own credit terms. d. only the credit terms that will convince borrowers to "close the deal."

Q: No person may be a director for two competing corporations at the same time.

Q: 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 a. the car loan only. b. the home repair loan only. c. the retail installment sale only. d. the car loan, the home repair loan, and the retail installment sale.

Q: An officer of International Sales Corporation makes overtures to a representative of Global Distribution, Inc., regarding a business deal. Under the objective theory of contracts, the officer's words and conduct are held to mean whatever a. the officer subjectively intended them to mean. b. a reasonable person in the officer's position would think they meant. c. a reasonable person in the representative's position would think they meant. d. the representative subjectively thought they meant.

Q: Market concentration refers to the number of firms in the market.

Q: In determining the legality of a merger, a crucial consideration is market concentration.

Q: In the ordinary course of business, Xtra Charge Company sells goods to Yvon and other consumers on credit under installment sales contracts that typically require at least one year of monthly payments. Xtra does not disclose all of the credit terms to its customers. This practice is most likely to result in a. a cease-and-desist order. b. a fine. c. no sanctions. d. rescission of the contracts.

Q: If an acceptance of an offer is received after the offer has been rejected, there is no contract.