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Law
Q:
International Exports, L.P., is a limited partnership, with $100,000 in declared but unpaid profits. International's creditors include Friendly Credit Corporation for $5,000 and Gwen, one of International's limited partners, also for $5,000. When Harry, one of International's general partners, decides to retire, the other general partners vote to liquidate and dissolve the firm. The limited partners, who are not asked their opinions, want International to continue in business and file a suit against the general partners to compel this result. Can the court order International to continue? If not, what is the priority of the distribution of International's assets on its dissolution?
Q:
Ann believes that Burt is about to hit her. To prevent harmful contact in this situation, Ann may use
a. any force.
b. any force, except force that is likely to cause death.
c. force that is reasonably necessary.
d. no force.
Q:
Withdrawal from a partnership for a term prematurely does not constitute a breach of the partnership agreement.
Q:
Sally and Tom decide to go into business, selling discounted merchandise through their Web site "e-Buy." They sign a partnership agreement that requires Sally to contribute $12,000 and Tom to contribute $8,000 in capital to start the firm. The agreement also states that only Sally will have the authority to bind the partnership in deals with third parties, but the agreement says nothing about the management of the firm or a division of profits. Without Sally's knowledge, Tom tells United Computer Products, Inc., that he represents the firm and signs a contract with United to buy hard drives for resale on e-Buy. In the first year, e-Buy makes a profit of $50,000. What are the partners' rights with respect to the management of the firm? Is the partnership bound to the contract with United? Do the partners split the first year's profits? If so, how much is each entitled to?
Q:
Federal law prohibits sending unsolicited commercial e-mail to randomly generated e-mail addresses.
Q:
A partnership agreement can include almost any terms that the partners wish.
Q:
A partner's profit from a partnership is taxed as income to the firm.
Q:
Bret is a general partner in Capitol Realty, LLLP, a limited liability limited partnership, which cannot pay its debts. Bret is personally liable for the debts
a. in proportion to the number of partners in the firm.
b. to no extent.
c. to the extent of his capital contribution.
d. to the full extent.
Q:
An Internet service provider (ISP) is not normally liable for its users' defamatory remarks.
Q:
An oral agreement to form a partnership can never be enforced.
Q:
Energy Unlimited, LP, is a limited partnership to which its partners, including Fink, have contributed capital. Energy's creditors include Graves Engineering, Inc. On Energy's dissolution, its assets will be distributed to pay
a. Fink and Graves proportionately.
b. Fink first.
c. Graves first.
d. neither Fink nor Graves.
Q:
Connie, Drew, and Ellen are the general partners of Foreign Auto Repair, a limited partnership. Connie dies. The partnership can
a. continue only after a distribution of its assets.
b. continue only as a general partnership.
c. continue only if Drew and Ellen consent.
d. not continue because Connie's death dissolves the firm.
Q:
Publishing false information about another's product is trade libel.
Q:
There is no defense (except innocence) to a charge of conversion.
Q:
For federal income tax purposes, a partnership is not a tax-paying entity.
Q:
Dunn and Etta are limited partners in Fancee Fashion Stores, a limited partnership. In terms of the firm's books, Dunn and Etta are entitled to
a. access in proportion to their participation in management of the firm.
b. access to the parts that directly relate to their capital contributions.
c. no access.
d. total access.
Q:
Publishing false information about another's product, alleging that it is not what its seller claims, constitutes the tort of conversion.
Q:
A sharing of both profits and losses is the only requirement of a partnership.
Q:
For most purposes, the law recognizes a partnership as an independent entity.
Q:
If it can be shown that a trespass to personal property was warranted, a complete defense exists.
Q:
Venture Capital, LP, is a limited partnership. A Venture limited partner loses his or her limited liability if he or she
a. acts as the firm's manager.
b. has full awareness of the firm's business activities.
c. invests in the firm's competitor.
d. votes on the firm's sale or dissolution.
Q:
Lucy is a limited partner in Metro Contractors, a limited partnership, which cannot pay its debts. Lucy is personally liable for the debts
a. in proportion to the number of partners in the firm.
b. to no extent.
c. to the extent of her capital contribution.
d. to the full extent.
Q:
Federal law permits a partnership to be treated as an entity in suits in federal courts.
Q:
To commit trespass to land, a person does not need to harm the land.
Q:
Rick and Sandy are limited partners in Total Profit Enterprises, a limited partnership. To avoid personal liability for partnership obligations, they must not
a. acquire an interest in the firm.
b. contribute property to the firm.
c. engage in activities independent of the firm's business.
d. participate in the firm's management.
Q:
Each partner is deemed to be an agent of the other partners and of the partnerships.
Q:
Any lawful contract can form the potential basis for an action based on wrongful interference with a contractual relationship.
Q:
Fern and Gray want to form a limited partnership to manage two restaurants: Café Latte and Deli Delite. In most states, a limited partnership will be created when
a. a certificate of limited partnership is filed.
b. a partnership agreement is executed.
c. the business for which the firm is formed actually begins.
d. the partners make their capital contributions.
Q:
Doc's Sports Club enters into a franchise agreement with Elite Fitness Centers that provides for termination at any time for "cause." Doc's fails to meet Elite's "Friends and Family" membership sales quota. Is this "cause" for termination? Explain.
Q:
Puffery is fraud.
Q:
Owen plans to open Owen's Pets Store, a pet sales and pet supplies outlet, and to hire Quimby and Ruth. Owen will invest only his own money. He does not exÂpect to make any profit for at least two years and to make almost no profit for the first three years, but he hopes to expand eventually. Which form of business organization would be most appropriate? What are the chief characteristics, advantages, and disadvantages of this form of busiÂness organization? If Owen wants to obtain additional capital to expand the business, but does not want to lose control of the firm, what is his best option?
Q:
Gallop Western Ranch is a family limited liability partnership (FLLP). In an FLLP, all of the partners must be
a. natural persons only.
b. natural persons or persons acting as fiduciaries for natural persons.
c. persons acting as fiduciaries for natural persons only.
d. related.
Q:
The use of a person's likeness for commercial purposes without permission is not an invasion of privacy.
Q:
Jack buys a Kitchens, Inc., franchise, which the franchisor later termiÂnates. In determining whether the termination was proper, a court will generally
a. balance the rights of both parties.
b. emphasize the right of Kitchens, Inc., to its business operation.
c. focus on the right of Jack to be dealt with fairly.
d. underscore the interest of consumers in affordability.
Q:
Jack and Kyra are partners in Law Firm, LLP, a limited liability partnership. Jack supervises Kyra, who negligently fails to appear in court on behalf of Milo, a client. Liability to Milo rests with
a. Jack and Kyra.
b. Jack only.
c. Kyra only.
d. neither Jack nor Kyra.
Q:
Defamation involves wrongfully hurting a person's good reputation.
Q:
A written defamatory statement must be communicated to a third party to be actionable.
Q:
Bob operated a pet grooming shop under a franchise agreement with Clean Pets Corp (CPC). The agreement allowed CPC to terminate the franchise if Bob was fined for cruelty to animals. After an investigation initiated by a customer complaint, Bob was fined for cruelty. CPC termiÂnated the franchise. Bob filed a suit against CPC for wrongful terminaÂtion. The court will most likely rule in favor of
a. Bob, because CPC had no good cause to terminate the franchise.
b. Bob, because the fine for cruelty was based on a customer complaint.
c. CPC, because a franchisor can terminate a franchise at any time.
d. CPC, because the franchise was terÂminated for good cause.
Q:
Jay is considering forms of business organization for Jay's Designs, an architectural firm. An advantage of a limited liability partnership is that partners can avoid personal liability for
a. any partnership obligation.
b. only other partners' wrongdoing.
c. only partnership obligations that exceed capital contributions.
d. only partnership obligations that fall within capital contributions.
Q:
Kelly, Lars, and Mona agree to be partners in Neighborhood Delivery Service (NDS), splitting the profits equally. Kelly contributes 67 percent of the capital. When NDS is dissolved, its liabilities are greater than its assets. The losses are paid by
a. all of the partners in proportion to their capital contributions.
b. all of the partners in proportion to their shares of the profits.
c. Kelly because she contributed most of the capital.
d. Lars and Mona because they contributed the least of the capital.
Q:
Slander involves the oral communication of defamatory language.
Q:
Bret buys a franchise from Comida Mexicano Ltd. If their agreement is like most franchise agreeÂments, it will specify that Comida can terÂminate the franchise
a. at will.
b. for any reason.
c. for cause only.
d. for no reason.
Q:
Mead, Nero, and Olen do business as Pipe & Plumbing Services. After Mead's relationship to the firm ends, Nero and Olen agree to discontinue the business. This is
a. dissociation.
b. dissolution.
c. gross negligence.
d. simple misconduct.
Q:
A store manager may delay a suspected shoplifter if the manager has probable cause to justify delaying the suspect.
Q:
Star Resorts Corporation wants to terminate its franchise arrangement with Tony. Their contract does not provide for notice of termination or set a time for winding up the business. This means that to wind up, Tony
a. has a reasonable time, with notice.
b. has whatever time A determines, with or without notice.
c. is entitled to notice, but nothing more.
d. must close immediately.
Q:
A franchise agreement between Simple Software Company and Total Game, Inc., is silent on a time for termination of the franchise. Simple may
a. never terminate.
b. terminate at any time.
c. terminate on reasonable notice.
d. terminate on three days notice.
Q:
Jim and Kyle are partners in J&K Sales, which exports technical equipment under a three-year partnership agreement. The U.S. government declares that the equipment can no longer be exported. J&K
a. dissolves as soon as the stated term expires.
b. dissolves as soon as the partners agree to dissolve it.
c. dissolves immediately unless the partners change its business.
d. does not dissolve.
Q:
Defamation is one person's use of another's name without permission.
Q:
Rita buys a Super Grill franchise. Super Grill requires that its franÂchiÂsees buy its products for every phase of their opÂerations. BeÂcause Rita wishes to buy less expensive products, she challenges the reÂquirement. Her best argument is probably that the reÂquirement violates
a. the commerce clause.
b. the Equal Protection Clause.
c. the federal antitrust laws.
d. the First Amendment.
Q:
Clu, Dolf, and Elton do business as Fertile Valley Farm. Clu's relationship to the firm ends, but it continues to do business. This is
a. dissociation.
b. dissolution.
c. winding up.
d. wrongful.
Q:
Libel involves the written communication of defamatory language.
Q:
Fact Pattern 27-2Brad, Carlos, and Dora are general partners in Eastside Physicians, a medical clinic.Refer to Fact Pattern 27-2. The partners decide to dissolve Eastside. Dora collects and distributes the firm's assets. This results ina. nothing with respect to the firm's existence.b. the continuation of the firm's business.c. the termination of the firm's legal existence.d. the temporary suspension of the firm's business.
Q:
Pricey Auto Corporation gives notice to Quint that Pricey is terminating their franchise arrangement. Winding up the business requires
a. a new franchise agreement.
b. nothing more than closing immediately.
c. Quint's death, disability, or insolvency.
d. the return of Pricey's property.
Q:
Sweet Styles, Inc., a franchisor of clothing stores, wishes to standardize the pricing practices of its franchisees that have engaged in price-cutting to increase their respective shares of the market. The most prudent action might be for Sweet to
a. mandate the prices at which its franchisees sell their products.
b. suggest the prices at which its franchisees sell their products.
c. require its franchisees to buy inventory exclusively from Sweet.
d. threaten its franchisees with a material breach of contract.
Q:
The apprehension that an assault will occur need not be reasonable.
Q:
An assault may be committed when a person acts in a way so as to create an apprehension of offensive contact in the distant future.
Q:
Pronto Tacos LLC grants a franchise to Omar to open and operate a Pronto Tacos restaurant. Pronto will likely charge Omar
a. an initial fee or lump sum price for the franchise license.
b. a percentage of Omar's weekly payroll expense.
c. an amount of Omar's monthly overhead savings, if any.
d. none of the choices.
Q:
Gage buys from Fishing Guide Corporation the exclusive right to sell Fishing Guide rods and reels in a certain area. Their franchise agreement requires Gage to pay certain administrative expenses. Their agreement may also require Gage to pay a percentage of the franchisor's
a. advertising costs.
b. personal expenses.
c. retirement income.
d. none of the choices.
Q:
To commit an intentional tort, a person need not act with a harmful motive.
Q:
Fact Pattern 27-2 (Questions 18"20 apply)
Brad, Carlos, and Dora are general partners in Eastside Physicians, a medical clinic.
Refer to Fact Pattern 27-2. Brad's dissociation from the firm results in
a. the automatic termination of the firm's legal existence.
b. the partnership's buyout of Brad's interest in the firm.
c. the immediate maturity of all partnership debts.
d. the temporary suspension of the partnership's business.
Q:
Flip Gymnastics & Karate, Inc., grants a franchise to Gibby to operate a Flip gym. Flip may require Gibby to pay the franchisor a percentage of his
a. annual sales or volume of business.
b. weekly payroll expense.
c. monthly overhead savings.
d. none of the choices.
Q:
Some torts are crimes.
Q:
Fact Pattern 27-2 (Questions 18"20 apply)
Brad, Carlos, and Dora are general partners in Eastside Physicians, a medical clinic.
Refer to Fact Pattern 27-2. Brad, Carlos, and Dora decide to admit Faisal as a new partner in Eastside Physicians. Faisal's liability for partnership debts incurred before his admission is
a. limited to his capital contribution to the firm.
b. limited to his personal assets.
c. nothing.
d. unlimited.
Q:
After two years of research and an investment of a substantial amount of money, Coast-to-Coast Company (CC) develops a new product that it hopes will produce substantial profits. CC learns that a competitor, National Sales, Inc., has made and begun to sell a nearly identical product. CC learns from a reliable source that National paid a CC employee to obtain the plans for CC's product when it was in development. What legal recourse does CC have against National?
Q:
Fern contracts to buy a franchise from Gooseberry Grocers, Inc. The contract is silent on the issue of territorial rights. Gooseberry allows a competing franchise to be established near Fern's store, which suffers a significant loss in profits. This is most likely a violation of
a. no law.
b. the ban on certain types of anticompetitive agreements.
c. the Federal Trade Commission's Franchise Rule.
d. the implied covenant of good faith and fair dealing.
Q:
Echo enters into an agreement with Deep Pan Pies, Inc., to operate a franchise in Centre City. Later, Deep grants franchises to others within the city. Echo files a suit to close them. If the court rules in Echo's favor it will most likely be on the ground that
a. Deep violated the anÂtitrust laws.
b. Deep violated the implied covenant of good faith and fair dealing.
c. Echo paid a franchise fee.
d. Echo was the first Deep franchisee in Centre City.
Q:
Fay is admitted to Global Associates, an existing partnership. A partnership debt incurred before the date of her admission comes due. Fay is
a. not liable for the debt.
b. only liable for the debt up to the amount of his capital contribution.
c. personally liable only to the extent the other partners do not pay.
d. personally liable to the full extent of the debt.
Q:
Alpha Engineering Corporation has a contract with Beta Mart Stores to provide customized software for Beta's inventory control system. Discount Outlets, Inc, Beta's competitor, induces Tom, an Alpha subcontractor who is writing code for the Beta software, to delay delivery of the code for one week. As a result, Alpha's delivery of the software is delayed, and Beta sustains $500,000 in lost profits. On what ground could Beta recover damages from Discount Outlets?
Q:
Cluckee Chickn Corporation provides its prospective franchisees with projected earnings figures based on actual data. Cluckee Chickn must also disclose
a. the number and percentage of franchisees that achieved the figures.
b. hypothetical examples of potential earnings.
c. an answer to the entrepreneur's question, "How much will I make?"
d. none of the choices.
Q:
Tundi is a partner in YooHoo! Amusement, a new partnership. A YooHoo! debt comes due. Tundi is
a. not liable for the debt.
b. only liable for the debt up to the amount of his capital contribution.
c. personally liable only to the extent the other partners do not pay.
d. personally liable to the full extent of the debt.
Q:
Direct Marketing, Inc., floods the e-mail boxes of the employees of Eagle Products Corporation with unsolicited ads to the extent that the employees cannot e-mail each other. Direct has committed
a. assault.
b. conversion.
c. trespass to personal property.
d. none of the above.
Q:
Pilar is interested in buying a franchise from Quixotic Travel & Tours Corporation. Quixotic must disclose material facts that Pilar needs to make an informed decision concerning this purchase, according to
a. no law.
b. the Petroleum Marketing Practices Act of 1979.
c. the Federal Trade Commission's Franchise Rule.
d. the Uniform Commercial Code.
Q:
Beta Services (BS) is an Internet service provider. On a BS online bulletin board, Carl, a BS customer, posts a defamatory remark about Delta Company. Delta could successfully file a suit against
a. BS only.
b. Carl only.
c. BS or Carl.
d. none of the above.
Q:
Fact Pattern 27-1 (Questions 14"15 apply)
Hal, Ira, and Jill are partners in Kappa Accessories, a computer peripherals firm.
Refer to Fact Pattern 27-1. Ira dissociates from Kappa. Jill signs a contract with Micro Drives, a wholesale component supplier, allegedly on Kappa's behalf. Micro knows of Ira's dissociation. The contract is binding on
a. Hal, Jill, and Kappa only.
b. Jill only.
c. Kappa only.
d. no one.
Q:
In-Home Maid Service Company uses a Web site to provide downloadable information to prospective franchises. This online information is the equivalent of an offer that must comply with
a. the Automobile Dealer' Franchise Act of 1965.
b. no law.
c. the Federal Trade Commission's Franchise Rule.
d. the state Franchise Disclosure Document, or FDD.
Q:
Sue writes a defamatory article about Tony. The article is disseminated through the print media, via newspapers, and online, via an Internet service provider (ISP). Most likely to be held liable for the article are Sue and
a. the ISP only.
b. the newspapers only.
c. the ISP and the newspapers.
d. none of the above.
Q:
Fact Pattern 27-1 (Questions 14"15 apply)
Hal, Ira, and Jill are partners in Kappa Accessories, a computer peripherals firm.
Refer to Fact Pattern 27-1. Hal signs a contract with Lycra Chips, a retail component supplier, allegedly on Kappa's behalf. The contract is binding on
a. Hal, Ira, Jill, and Kappa.
b. Hal only.
c. Kappa only.
d. no one.
Q:
Steve, a television news reporter, knowingly broadcasts an untrue story claiming that Medi-Drugs, Inc., markets a medicine for children that contains highly addictive drugs. Steve is liable for
a. slander of quality.
b. slander of title.
c. wrongful interference with a business relationship.
d. none of the above.
Q:
Mabel and Nicol do business as One World Realty. In acting on the firm's behalf in a deal with Property Acquisition Company, Mabel fails to account for the profit. To her firm, Mabel is
a. liable for breach of the duty of care.
b. liable for breach of the duty of economic sense.
c. liable for breach of the duty of loyalty.
d. not liable.
Q:
Fact Pattern 26-1Jumbo Juice Inc. offers entrepreneurs the opportunity to operate a franchise under the Jumbo Juice trade name as a member of a select group of dealers that engage in retail juice sales.Refer to Fact Pattern 26-1. Jumbo Juice makes earnings claims to potential investors. For those claims, the franchisor must havea. a hypothetical basis.b. a reasonable basis.c. an actual basis.d. no basis.