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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. To potential investors, Jumbo Juice must providea. actual earnings figures.b. hypothetical earnings figures.c. projected earnings figures.d. none of the choices.
Q:
Axel steals a business law textbook from Beth. Curt, who does not know that the book is stolen, buys it from Axel. Curt has committed
a. conversion.
b. disparagement of property.
c. no tort.
d. wrongful interference with a business relationship.
Q:
Rona and Stiv do business as Treasure Island Traders. In acting on the firm's behalf in a deal with Unlimited Potential, Inc., Rona makes an honest error in overestimating the profit. To her firm, Rona 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:
Otis is interested in buying a franchise from Plentiful Inc. This transaction, like other franchise deals, is regulated to protect
a. certain types of anticompetitive agreements.
b. franchisors from dishonest prospective franchisees.
c. prospective franchisees from dishonest franchisors.
d. the government's power to restrict freedom of contract.
Q:
Quinn, a clerk at PC Computer Store, takes a computer from the store without PC's permission. Quinn is liable for conversion
a. if he damages the computer.
b. if he does not have a good reason for taking the computer.
c. if he fails to prevent a theft of the computer from his possession.
d. under any circumstances.
Q:
Erte, a partner in Fluoride Dental Associates, applies for a loan with Great State Bank allegedly on Fluoride's behalf but without the authorization of the other partners. Great State knows that Erte is not authorized to take out the loan. Erte's default on the loan results in
a. Erte and Fluoride's joint liability for the amount.
b. Erte's sole liability for the amount.
c. Fluoride's sole liability for the amount.
d. neither Erte's nor Fluoride's liability.
Q:
Dave and Eiger are partners in First-Place Athletic Supplies, which sells sports equipment. Dave manages the business. Unless the partnership agreement states otherwise, Dave is
a. entitled to compensation in proportion to its effect on the business.
b. entitled to compensation in proportion to the effort expended.
c. entitled to compensation in proportion to the effort required.
d. not entitled to compensation for his effort.
Q:
Alpha, Inc., uses a bot to continually comb the Web site of Beta Company for information and its updates. In line with the decision of the court in Case 6.2, Register.com, Inc. v. Verio, Inc., Alpha has most likely committed
a. assault.
b. conversion.
c. trespass to personal property.
d. no tort.
Q:
Frooty Drinks, Inc., and Great Gulp Bottling Company have a processing-plant franchise arrangeÂment. This involves the transfer of
a. a license.
b. a trade name.
c. the formula to make a certain product.
d. the ownership of the business.
Q:
Cody is a partner in Delta Accounting Service. Cody can inspect
a. all of Delta's books and records.
b. Delta's books and records only as the firm's management permits.
c. Delta's books and records only for a reasonable purpose.
d. Delta's books and records relating to Cody's capital contribution only.
Q:
Paradise Footwear buys a franchise from Reliant Athletic Shoes Inc. This relationship, like all other franchise relationships, is governed by
a. contract law.
b. no law.
c. the Franchise Disclosure Document, or FDD.
d. the rules of the National Collegiate Athletic Association.
Q:
Pepsi-Cola Bottling Company is
a. a chain-style franchise.
b. a distributorship franchise.
c. a manufacturing franchise.
d. not a franchise.
Q:
Pat and Quint sign a five-year partnership agreement to do business as "Pat's Landscaping Service." At the end of the fifth year, they decide to continue without specifying a new term. This partnership is terminable
a. at any time by either partner.
b. only after an additional five-year term.
c. only if Pat dissociates from the firm.
d. only if Quint dissociates from the firm.
Q:
Leo buys an exclusive territory in which he is authorized to set up a plant to make Midwest Dairy, Inc., products. After receiving the formula, Leo begins making Nice-brand ice cream and other Midwest products. This is
a. a chain-style franchise.
b. a distributorship franchise.
c. a manufacturing franchise.
d. no franchise.
Q:
Sabin and Tyler agree while talking on the phone to form a partnership. Their partnership agreement is legally binding
a. only if a third person knows of the agreement.
b. only if the agreement is reduced to writing.
c. only if the parties exchange valid consideration.
d. without more.
Q:
As a joke, Fran hides Gary's business law book so that he cannot find it during the week before the exam. Fran is liable for
a. appropriation.
b. disparagement of property.
c. trespass to personal property.
d. wrongful interference with a business relationship.
Q:
Denise and Elke do business as Final Curtain Decorators. In most states, for purposes of holding title to property, this partnership would be treated as
a. an aggregate of the individual partners.
b. a natural person.
c. an entity.
d. a non-existent party.
Q:
CheezBurger Heaven, Inc., conducts a chain-style franchise. This involves the transfer to Clive, one of its franchisees, of
a. a license.
b. a trade name.
c. the formula to make a product.
d. the ownership of the business.
Q:
Noah and Orin do business as Personnel Partners. In most states, for purposes of suing and being sued, Personnel Partners would be treated as
a. an aggregate of the individual partners.
b. a natural person.
c. an entity.
d. a non-existent party.
Q:
Instead of setting up a business to market her own products, Krissy conÂsidÂers entering into a distributorship franchise with Little Breweries Corporation. This involves the transfer of
a. a license.
b. a trade name.
c. the formula to make a certain product.
d. the ownership of the business.
Q:
Ned leaves his car with OK Car Shop to have it repaired. After the car is fixed, OK keeps it. OK is not liable for trespass to personal property if
a. Ned refuses to pay for the repair.
b. Ned thinks his car is a "joke."
c. OK is keeping the car as a "joke."
d. OK received payment for the repair.
Q:
Events Promotion Corporation licenses trademarks to Fandom Souvenirs, Inc., to use in selling caps, sweatshirts, and similar goods. This is
a. a franchise.
b. an entrepreneur.
c. a principal-agent relationship.
d. a sole proprietorship.
Q:
Bo and Clancy decide to do business as Marketing & Promotion Services. To be a partnership, this association can result from an agreement that is
a. express, but not from an agreement that is implied.
b. implied, but not from an agreement that is express.
c. oral, written, or implied by conduct.
d. written, but not from an agreement that is oral or implied.
Q:
Jane enters onto Sam's property to help someone in danger. If Sam charges Jane with trespass to land, Jane has
a. no defense.
b. a possible defense.
c. a partial defense.
d. a complete defense.
Q:
Betty owns a large ranch in Colorado. Dan drives his sport utility vehicle off a highway and onto Betty's land. Dan commits trespass only if he
a. does not have Betty's permission to drive on the property.
b. drives onto the property for recreational purposes.
c. harms the property in a material way.
d. harms the property in any way.
Q:
Grady and Hedy do business as Island Tours. For federal income tax purposes, Island Tours would be treated as
a. an aggregate of the individual partners.
b. a natural person.
c. an entity.
d. a non-existent party.
Q:
Mello Coffee Shops, Inc., sells a franchise to Noah's Arch, a café. Mello is
a. a franchisee.
b. a franchisor.
c. an agent.
d. a principal.
Q:
Worldwide Realtors, Inc., sells a franchise to XL Sales Company. XL is
a. a franchisee.
b. a franchisor.
c. an agent.
d. a principal.
Q:
Joy invites Kent into her apartment. Kent commits trespass to land if he
a. enters the apartment with fraudulent intent.
b. harms the apartment in any way.
c. makes disparaging remarks about Joy to others.
d. refuses to leave when Joy asks him to go.
Q:
Ben, who runs a livestock breeding business, owes the Circle C Ranch $40,000. Ben agrees to pay the Circle C a percentage of his profits each month until the debt is paid. Because of this agreement, the Circle C is
a. Ben's creditor and partner.
b. Ben's creditor only.
c. Ben's partner only.
d. neither Ben's creditor nor his partner.
Q:
Jody owns KuppaJava Kiosks, a sole proprietorship. Jody's liability is
a. limited by state statute and varies from state to state.
b. limited to the extent of capital expenditures.
c. limited to the extent of his or her original investment.
d. unlimited.
Q:
Guy and Hanna do business as G-H Associates. If G-H is a partnership, it is governed by the Uniform Partnership Act
a. in the absence of an express agreement.
b. in the absence of an implied agreement.
c. only in the presence of an express agreement.
d. under all circumstances.
Q:
Curt, a dairy goods salesperson, follows Dona, a competitor's salesperson, as she visits convenience stores to make sales. Curt solicits each of Dona's customers. Curt is likely liable for
a. conversion.
b. trespass to personal property.
c. wrongful interference with a business relationship.
d. wrongful interference with a contractual relationship.
Q:
Robert owns Textbooks Plus, a sole proprietorship that sells textbooks. When Robert dies, Textbooks Plus will
a. be automatically dissolved.
b. pass directly to his oldest child.
c. pass directly to the state.
d. be evenly divided among all Robert's heirs.
Q:
Phillipa is the sole proprietor of Fun Floral Arrangements. As a sole proprietor, on Fun Floral Arrangement' profits, Phillipa
a. does not pay income taxes.
b. pays only personal income taxes.
c. is taxed twice.
d. pays both personal and sole proprietor income taxes.
Q:
In a limited liability limited partnership, the liability of a general partner is the same as the liability of a limited partner.
Q:
Excel Dry-Cleaning advertises so effectively that Next Day Cleaners's regular customers patronize Excel instead of Next Day. Excel has committed
a. appropriation.
b. wrongful interference with a business relationship.
c. wrongful interference with a contractual relationship.
d. none of the above.
Q:
The death of a limited partner dissolves a limited partnership.
Q:
Kelly, the owner of Llama Farms, a sole proprietorship, wants to obtain additional busiÂness capital but to maintain control. This can best be accomplished by
a. borrowing funds.
b. bringing in partners.
c. issuing stock.
d. selling the business.
Q:
Kay files a suit against Larry based on one of Larry's statements that Kay alleges is fraudulent. To give rise to fraud, the statement must be one of
a. delusion.
b. fact.
c. opinion.
d. truth.
Q:
Leigh wants to go into the business of construction contracting. Among the reasons that would probably convince Leigh to set up his business as a sole proprietorship would be
a. its greater organizational flexibility.
b. its limited liability.
c. its perpetual existence.
d. the ease of transferring the business to other family members.
Q:
Kelly is an appliance salesperson. Kelly commits fraud if, to make a sale, she
a. discloses the truth.
b. represents as a fact something that she knows is untrue.
c. states an opinion concerning something that she knows nothing about.
d. uses puffery.
Q:
A general partner has the power to dissociate from a limited partnership regardless of what the partnership agreement specifies.
Q:
A limited partner who participates in the management of the partnership may be personally liable to the firm's creditors.
Q:
Julia owns and operates Collectable Dolls without creating a separate business organization. She receives all the profits from the doll sales. Collectable Dolls is most likely a
a. a corporation.
b. a limited liability company.
c. a partnership.
d. a sole proprietorship.
Q:
Ace Corporation uses, in its radio ads, a recording by Blair, who owns the rights, without paying for the use. Over time, the song comes to be associated with Ace's products. Blair sues Ace. Ace is liable to Blair for
a. appropriation.
b. conversion.
c. wrongful interference with a customary relationship.
d. none of the above.
Q:
Dale hears Ed falsely accuse Flo of stealing from Great Warehouse, Inc., their employer. Ed's statement is defamatory
a. because Dale heard it.
b. only if Ed made the statement loudly.
c. only if Ed's statement is also published in the Dispatch, a local paper.
d. only if Flo suffers emotional distress.
Q:
Cal sells "DownSize," a weight-reduction program, from a Web site, in competition with Eat-Less Inc.'s product "Fit "˜n Trim." Eat-Less files a suit against Cal, alleging in part that he is a sole proprietor, but his enterprise should be deemed a different form of business. Cal's enterÂprise should most likely be considered
a. a corporation because DownSize is sold online.
b. a franchisee because DownSize is sold in competition to Fit "˜n Trim.
c. a sole proprietorship because Cal is a sole proprietor.
d. no form of business entity because Cal has no formal organization.
Q:
A limited partner who gives a general partner advice on matters relating to the management of the partnership cannot be liable as a general partner.
Q:
At Sea Food Cafe, Tom believes that he was overcharged and shoves Wally, a waiter. Wally sues Tom, alleging that the shove was a battery. Tom is liable if
a. Sea Food did not overcharge Tom.
b. the shove was offensive.
c. Tom acted out of malice.
d. Wally did not wait on Tom.
Q:
In determining whether a franchisor acted in good faith in terminating a franchise relationship, a court would balance the rights of both parties.
Q:
A franchisor's decision to terminate a franchise may be made in the normal course of business operations.
Q:
Only a limited partnership's limited partners have a fiduciary obligation to the other partners.
Q:
In a limited partnership, the liability of a general partner is limited to the amount of capital he or she has invested in the partnership.
Q:
Bob pushes Carol. Carol falls and breaks her arm. Bob is liable for the injury
a. if Bob intended to push Carol.
b. only if Bob did not intend to break Carol's arm.
c. only if Bob had a bad motive for pushing Carol.
d. only if Bob intended to break Carol's arm.
Q:
The termination provision of a franchise contract is usually more favorable to the franchisor.
Q:
The maximum amount of money at risk by a limited partner is the amount of his or her investment in the limited partnership.
Q:
Federal law permits the use of unsolicited commercial e-mail but prohibits certain types of spamming activities.
Q:
Much franchise litigation involves claims of wrongful termination.
Q:
Most franchise agreements provide that notice of termination of a franchise is not necessary.
Q:
In a family limited liability partnership, only persons related to each other may be partners.
Q:
There are no statutes regulating the use of spam.
Q:
A franchisor can require a franchisee to purchase certain supplies from the franchisor at an established price.
Q:
A limited liability partnership must be formed in compliance with state law.
Q:
An Internet service provider cannot be held liable in tort for disseminating his or her own defamatory remarks.
Q:
A franchisor can set the retail prices for the goods that a franchisee sells.
Q:
With a few exceptions, all of the rules that govern partnerships apply to limited liability partnerships.
Q:
In a limited liability partnership, a partner can be exempt from personal liability for partnership obligations.
Q:
Good intentions are a defense against conversion.
Q:
The duration of a franchise is a matter to be determined between the parties.
Q:
Disparagement of property is another term for appropriation.
Q:
A limited liability partnership can be formed in virtually any state.
Q:
An artisan's lien is a defense to a charge of trespass to personal property.
Q:
The validity of a provision permitting the franchisor to establish and enforce certain quality standards is questionable.
Q:
A franchise agreement may specify that the premises for the business must be leased.
Q:
Bona fide competitive behavior can constitute wrongful interference with a contractual relationship.
Q:
In winding up a general partnership, creditors are paid before partners receive their capital contributions.
Q:
Normally, a franchisee determines the territory that it will serve.
Q:
Unintentionally causing a party to break a contract may constitute wrongful interference with a contractual relationship.
Q:
A general partner is personally liable for partnership debts if its assets are insufficient to pay its creditors.