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Law
Q:
A limited liability company is not a citizen of any state.
Q:
In Case 8.1, The Coca-Cola Co. v. The Koke Co. of America, the United States Supreme Court upheld an injunction prohibiting competing beverage companies from calling their products "Koke."
Q:
A limited liability company (LLC) formed in one state but doing business in another state is referred to in the second state as a foreign LLC.
Q:
Foreign investors are not allowed to become limited liability company members.
Q:
When a sale of assets amounts to what in effect is a consolidation, the acquiring corporation does not inherit the selling corporation's liabilities.
Q:
Jean owns five acres of land in an area of single-family homes on mostly one-acre plots. Jean's property contains her house and three outbuildings. Among the animals housed in the outbuildings are Kennel, a dog, and Louis, a tiger. Mary, a neighbor, is jogging past Jean's property. Under what circumstance is Jean strictly liable if Kennel bites Mary? Under what circumstance is Jean strictly liable if Louis bites Mary?
Q:
Shareholder approval is required when a corporation buys all of the assets of another company.
Q:
Dan, a driver for EZ Delivery Company, leaves the truck's motor running in neutral and carelessly forgets to set the parking brake while he makes a delivery. The truck rolls and crashes into a nearby gas station pump, igniting a fire that spreads quickly to a construction site a block away. A burned wall collapses onto a crane, which falls on, and injures, a bystander, Flo. What must Flo show to recover damages from Dan?
Q:
A limited liability company can sue or be sued, enter into contracts, and hold title to property.
Q:
The members of a limited liability company enjoy limited liability.
Q:
Appraisal rights are often the only recourse for shareholders who object to a parent-subsidiary merger.
Q:
Appraisal rights are normally available in sales of substantially all corporate assets not in the ordinary course of business.
Q:
Gary is standing on a defective stool when it collapses, causing Gary to fall and suffer an injury. Gary files a suit against Interstate Stools, Inc., the manufacturer. A significant application of the doctrine of strict liability is in the area of
a. constitutional law.
b. ethics.
c. negligence.
d. product liability.
Q:
State limited liability company statutes are uniform.
Q:
General Construction Company engages in blasting in its operations. This is subject to strict liability because
a. blasting is an abnormally dangerous activity.
b. blasting is a negligent activity.
c. construction can be done without blasting.
d. General is a construction company.
Q:
A limited liability company is operated in compliance with state law.
Q:
In a merger, only the surviving corporation's shareholders are entitled to appraisal rights.
Q:
Britney uses dynamite in her remote silver mine. Carl stores household cleaners in his suburban garage. Most likely liable under the doctrine of strict liability for any injury caused by an abnormally dangerous activity is
a. Britney and Carl.
b. Britney only.
c. Carl only.
d. neither Britney nor Carl.
Q:
Jade, Kelly, and Lila organize a nonprofit business'JKL Markets, Inc.to buy groceries from wholesalers and sell them to consumers who buy a membership in JKL. Because the firm is a nonprofit entity, it is able to sell the groceries for less than a commercial grocer could. What form of business organization is JKL Markets? Is it significant that JKL is incorporated?
Q:
In a short-form merger, neither corporation's shareholders need to approve the merger.
Q:
Marta owns National Demolition Company. During a demolition by Marta's crew, Owen, a passerby, is injured. Under the theory of strict liability, Marta must pay for the injury
a. only if the crew intended to injure Owen.
b. only if the crew was at fault.
c under no circumstances.
d. whether or not the crew was at fault.
Q:
In most cases, merging corporations' officers and employees do not need to approve the merger.
Q:
Petra, Queenie, and Randall want to form Sales-to-Infinity, LLC (limited liÂability company). What should they provide in their operating agreement? If they fail to include some important operating details, what determines these details?
Q:
Amber pushes Brad into the path of an oncoming car driven by Carol. Don tries to rescue Brad, but the car hits both of them. Amber is liable for the injuries of
a. Brad and Don.
b. Brad only.
c. Don only.
d. neither Brad nor Don.
Q:
Buyers Club is an incorporated cooperative. Like other incorporated coopÂeratives, Buyers Club distributes profits to its owners on the basis of
a. the amount of capital they contribute.
b. the degree to which they participate in management.
c. their transactions with the cooperative.
d. the requirements of the state in which it was incorporated.
Q:
In a share exchange, neither corporation's directors need to approve the exchange.
Q:
After a consolidation, there is only one surviving corporation.
Q:
A state statute requires machinery in food processing plants to include automatic shut-off switches accessible to each employee working on the machine. Fruit Company's (FC's) equipment does not have the switches. Greg, an FC employee, suffers an injury that an accessible shut-off switch would have prevented. Greg's best ground for recovery is that FC committed
a. a dram shop act.
b. a violation of the "danger invites rescue" doctrine.
c. negligence per se.
d. res ipsa loquitur.
Q:
Big Valu Grocery Stores is an unincorporated cooperative. Big Valu and other unincorporated cooperatives are generally treated like
a. business trusts.
b. corporations.
c. joint stock companies.
d. partnerships.
Q:
Frank is injured when he slips and falls in Gail's Harbor Tour Boat. Frank files a suit against Gail's for $50,000. If Frank is 20 percent at fault and Gail's is 80 percent, under "50 percent rule" comparative negligence principles, Frank would recover
a. $0.
b. $25,000.
c. $40,000.
d. $50,000.
Q:
Neverend Music Company and Monotonous Metronome Corporation form a joint stock company. A joint stock company can be formed for, at the most,
a. an implied duration of not more than six months.
b. a perpetual existence.
c. a single activity or transaction.
d. a stated duration of not more than one year.
Q:
National Capital Corporation and International Investments, Inc., form a joint stock company. The ownership of a joint stock company is repreÂsented by
a. partnership certificates.
b. shares of stock.
c. title documents.
d. trust certificates.
Q:
Eve is injured when she slips and falls in Finest Discount Warehouse. Eve files a suit against Finest for $50,000. Under a "pure" comparative negligence rule, Eve could recover damages from Finest
a. only if Eve and Finest were equally at fault.
b. only if Eve was less at fault than Finest.
c. only if Eve was more at fault than Finest.
d. whether Eve was less, more, or equally at fault.
Q:
In a consolidation, the consolidating corporations become subsidiaries of the new corporation.
Q:
After a merger, a disappearing corporation's preexisting rights disappear.
Q:
Dreem Land Corporation and EZ Investments Company transfer their property to Financial Managers, Inc., which manages the property and distributes the profits to Dreem and EZ. This form of a business organization is
a. a business trust.
b. a joint stock company.
c. a joint venture.
d. a syndicate.
Q:
Bob is injured in a car accident and files a suit against Mary, whom Bob alleges was driving negligently. Mary claims that Bob was driving more carelessly than she was. Comparative negligence in tort cases may reduce a plaintiff's recovery
a. only if the plaintiff was more at fault than the defendant.
b. only if the plaintiff and defendant were equally at fault.
c. only if the plaintiff was less at fault than the defendant.
d. even if the plaintiff was only a small fraction at fault.
Q:
Owen, Paula, Quinn, and Rita combine to finance the building of Super Stores, a shopping mall. Their selected form of business organization is an inÂvestment group, or
a. a business trust.
b. a joint stock company.
c. a joint venture.
d. a syndicate.
Q:
Ira is injured when he slips and falls in Jolly Breakfast Cafe. Ira files a suit against Jolly for $50,000. If Ira is 20 percent at fault and Jolly is 80 percent, under a contributory negligence doctrine, Ira would recover
a. $0.
b. $25,000.
c. $40,000.
d. $50,000.
Q:
Exotic Stuff Company and First Pier, Inc., form a business organizaÂtion to engage in importing and exporting. Its property is held in the names of the members and its shareholders have personal liability. This business orÂganization is
a. a business trust.
b. a joint stock company.
c. a joint venture.
d. a syndicate.
Q:
Any person who buys preferred stock has priority over a holder of common stock to payment on the corporation's dissolution.
Q:
Marie, a driver for National Transport Company, causes a five-car accident on an interstate highway. Marie and National are liable to
a. all those who are injured.
b. only those whose injuries could reasonably have been foreseen.
c. only those whose cars were immediately ahead and behind Marie's vehicle.
d. only those who do not have insurance.
Q:
Consumers in Delta City form a business organization to provide, without profit, an economic service to its members. This is
a. a business trust.
b. a cooperative.
c. a corporation.
d. a joint stock company.
Q:
Any person who buys common stock acquires voting rights in a corporation.
Q:
An elderly woman was having a difficult time climbing the steps on to a Greyhound Bus at the Greyhound Bus station in Seattle. Sam, the bus driver, got off the bus and started pushing the woman up the bus's steps in an effort to help her. As the driver pushed her up the steps, the woman dropped a large bag containing an oxygen device that the woman used when she had trouble breathing. An oxygen canister rolled away from the bus, and another bus ran over the canister. The canister exploded, causing the large bus tire that had crushed the canister to explode also. Some of the rubber from the exploding bus tire hit and severely injured Jim Stevenson, who was boarding another bus about twenty yards away. Based on the court's reasoning in Case 7.2, Palsgraf v. Long Island Railroad Co., if Stevenson sues Greyhound for negligence, he will probably
a. lose, because Greyhound did not set in motion the events that led to his injury.
b. win, because Sam's pushing the elderly woman on to the bus was negligent.
c. lose, because Stevenson's injury was not a reasonably foreseeable consequence of Sam's conduct.
d. win, because Sam's conduct was the proximate cause of Stevenson's injury.
Q:
As the beneficiary of a business trust, Kevin's liability for trust debts and obligations is
a. limited to his capital investment in the trust.
b. limited to his personal assets.
c. nothing.
d. unlimited.
Q:
Pat files a successful suit against Quality Stores based on Quality's negligence. Normally, an award in such a suit consists of
a. comparative damages.
b. compensatory damages.
c. contributory damages.
d. punitive damages.
Q:
"Piercing the corporate veil" means revealing to shareholders the internal rules of corporate management.
Q:
A business that holds itself out as being a corporation may not be able to deny corporate status, even if it makes no attempt to incorporate.
Q:
As the trustee of a business trust, Dwight is required to
a. manage the trust and distribute its profits.
b. assume liability for the trust's debts.
c. draft a written trust agreement.
d. none of the choices.
Q:
Jin, Karlo, and other consumers form Metro Purchasing Cooperative. This form of business organization makes it possible for these individuals to
a. avoid personal liability for the acts of the cooperative.
b. obtain an exemption from state laws governing corporations.
c. pay no taxes on their business income.
d. pool their resources to gain an advantage in the market.
Q:
Molly shoots Norm with Opal's pistol. The proximate cause of Norm being shot is most likely attributable to
a. Molly and Opal.
b. Molly only.
c. Opal only.
d. neither Molly nor Opal.
Q:
Express powers of a corporation can be found in the corporate bylaws.
Q:
Peyton, Qiana, and River form a syndicate to buy a professional basketball franchise. This syndicate could be set up as
a. a joint venture.
b. a corporation.
c. a sole proprietorship.
d. a limited liability company.
Q:
Dirk is driving a sport utility vehicle in which Elin is a passenger when they are involved in a traffic accident, and Elin is injured. Liability may be imposed on Dirk for Elin's injury if Dirk's driving is
a. neither the causation in fact nor the proximate cause of the injury.
b. only the causation in fact of the injury.
c. only the proximate cause of the injury.
d. the causation in fact and the proximate cause of the injury.
Q:
Express powers of a corporation can be found in the law of the state of incorporation.
Q:
Shae's Café and Tommy's Grill form a joint venture. Shae can participate in the venture's management
a. only to the extent that she assumes liability for the venture's debts.
b. only to the extent of her investment in the venture.
c. to any extent.
d. to no extent.
Q:
Lana hires Mike, an architect, to design a warehouse. Lana is dissatisfied with the look of the new building and sues Mike, alleging negligence. Mike can successfully defend against the suit by proving that
a. he is not familiar with every principle of art.
b. his design is as attractive as an ordinary person's.
c. Lana could not have designed a more attractive building.
d. Lana was not injured in any way.
Q:
Ann shops in a Big Mart store. Enticed by a Big Mart display, Ann takes an item to examine it and, when she is done, places it on the floor. Carl, a consumer enticed by the same display, does not see the item on the floor, trips over it, falls, and suffers an injury. According to the reasoning in Case 7.1, Martin v. Wal-Mart Stores, Inc., with respect to the danger, Big Mart had
a. actual notice.
b. constructive notice.
c. mishandled notice.
d. no notice.
Q:
A state constitution may resolve a conflict among documents involving a corporation.
Q:
Rafaela Art Gallery and Sequoia Exhibitions form a joint venture. When a dispute arises, Rafaela files a suit against Sequoia. The court is most likely to apply the same principles to this joint venture as it applies to
a. business trusts.
b. cooperatives.
c. corporations.
d. partnerships.
Q:
A corporation has perpetual existence in most states unless the articles of incorporation state otherwise.
Q:
To protect its customers and other business invitees, Supreme Retail Corporation must warn them of
a. all dangers.
b. concealed dangers.
c. open dangers.
d. no dangers.
Q:
Build-Rite Construction Corporation and Deals-R-Us, Inc., combine their efforts to build an office and retail complex. Their form of business organization is
a. a business trust.
b. a joint stock company.
c. a joint venture.
d. a syndicate.
Q:
Dependable Appliances, a retail store, must use reasonable care on its premises to warn its patrons of
a. all risks.
b. hidden risks.
c. obvious risks.
d. no risks.
Q:
A corporation's internal management structure is described in its articles or bylaws.
Q:
Chocolate Sundry LLC's members and managers are Devlin, Effie, and Flavia. After Devlin's relationship to the firm ends, Effie and Flavia agree to discontinue the business. This is
a. illegal.
b. optional.
c. required.
d. wrongful.
Q:
Kelly is injured when she slips and falls on Lee's sidewalk. To determine whether Lee owed a duty of care to Kelly, Lee is subject to the standard of
a. a realistic person.
b. a reasonable person.
c. a recognizable person.
d. a reliable person.
Q:
Promoters, not incorporators, must execute the articles of incorporation.
Q:
The choice of a corporate name is subject to state approval.
Q:
Flip is a member of Great States Trucking LLC. Flip's relationship to Great States ends, but the firm continues to do business. This is
a. dissociation.
b. dissolution.
c. winding up.
d. wrongful.
Q:
Cecilia's Day Spa, LLC, is a member-managed limited liability company. If the law in Cecilia's state is like the law in most states, unless the members have agreed otherwise, voting rights are apportioned according to
a. capital contributions.
b. participation in management.
c. the number of members.
d. transactions with the firm.
Q:
A person who keeps a domestic animal is always strictly liable for any harm that the animal inflicts.
Q:
Strict liability is imposed for reasons other than fault.
Q:
Simone is a manager of Rolling Hills Resort LLC, a limited liability company. Rolling Hills is formed in a state that does not explicitly create fiduciary duties for LLC managers but does require the exercise of good business judgment. Unless a court rules otherwise, Simone owes fiduciary duties to
a. Rolling Hills's members.
b. Rolling Hills's suppliers.
c. Rolling Hills's customers.
d. none of the choices.
Q:
A shareholder in a professional corporation can be liable for malpractice arising from the rendering of professional services.
Q:
The doctrine of strict liability does not apply to abnormally dangerous activities.
Q:
A close corporation cannot operate as an S corporation.
Q:
Kirby is a manager of Jumpstart Fitness LLC, a limited liability company. Jumpstart is formed in a state that imposes fiduciary duties on LLC managers. Kirby owes these duties to
a. Jumpstart's members.
b. Jumpstart's suppliers.
c. Jumpstart's customers.
d. none of the choices.
Q:
The basis for applying strict liability is determining who is at fault.