Questions and Answers of Business Its Legal Ethical

Discuss the standard of care required from the bailee for the bailed property in the following situations, and determine whether the bailee breached that duty.(a) Benedetto borrows Tom’s lawn mower
Bill Heise is a janitor for the First Mercantile Department Store. While walking to work, Bill finds an expensive watch lying on the curb.Bill gives the watch to his son,Otto.Two weeks later,Martin
QUESTION WITH SAMPLE ANSWER Curtis is an executive on a business trip to the West Coast. He has driven his car on this trip and checks into the Hotel Ritz.The hotel has a guarded underground parking
Jaspal has a serious heart attack and is taken to the hospital. He is aware that he is not expected to live. Because he is a bachelor with no close relatives nearby,Jaspal gives his car keys to his
Can you think of a better way that the law can address the problem of global warming, which is clearly not just a national issue? Explain.
Assume that removing all asbestos from every public building in the nation would save ten lives per year and that the cost of the asbestos removal would be $250 billion (or $25 billion per life
If 90 percent of the toxic waste at a given site can be removed for $50,000, but removing the last 10 percent will cost $2 million, is it reasonable to require that the last 10 percent be removed?
Does the national Do Not Call Registry adversely affect the way that business is conducted in this country? If so, how? Should Congress enact a Do Not Spam law? Why or why not?
A QUESTION OF ETHICS In the 1990s,DuCoa,LP, made choline chloride, a B-complex vitamin essential for the growth and development of animals.The U.S. market for choline chloride was divided into thirds
Price Discrimination. The customers of Sodexho, Inc.,and Feesers,Inc.,are institutional food service facili ties such as school, hospital, and nursing home cafete rias. Feesers is a distributor that
Price Fixing. Texaco,Inc.,and Shell Oil Co.are com petitors in the national and international oil and gasoline markets.They refine crude oil into gasoline and sell it to service station owners and
CASE PROBLEM WITH SAMPLE ANSWER In 1999, residents of the city of Madison, Wisconsin, became concerned that overcon sumption of liquor seemed to be increasing near the campus of the University of
Sherman Act. Dentsply International,Inc.,is one of a dozen manufacturers of artificial teeth for dentures and other restorative devices. Dentsply sells its teeth to twenty-three dealers of dental
Restraint of Trade. Visa U.S.A., Inc., MasterCard International, Inc., American Express (Amex), and Discover are the four major credit- and charge-card net works in the United States.Visa and
Monopolization. Moist snuff is a smokeless tobacco product sold in small round cans from racks, which include point-of-sale (POS) ads. POS ads are critical because tobacco advertising is restricted
QUESTION WITH SAMPLE ANSWER Instant Foto Corp.is a manufacturer of photog raphy film.At the present time,Instant Foto has approximately 50 percent of the market. Instant Foto advertises that the
Jorge’s Appliance Corp. was a new retail seller of appliances in Sunrise City.Because of its innovative sales techniques and financing, Jorge’s caused the appliance department of No-Glow
A QUESTION OF ETHICS In the Clean Air Act, Congress allowed California, which has particular problems with clean air,to adopt its own standard for emissions from cars and trucks, subject to the
Environmental Impact Statement.The fourth largest crop in the United States is alfalfa, of which 5 percent is exported to Japan.RoundUp Ready alfalfa is genetically engineered to resist glyphosate,
Clean Water Act. The Anacostia River, which flows through Washington,D.C.,is one of the ten most polluted rivers in the country. For bodies of water such as the Anacostia, the Clean Water Act
CASE PROBLEM WITH SAMPLE ANSWER William Gurley was the president and majority stockholder in Gurley Refining Co.(GRC).GRC bought used oil, treated it, and sold it.The refining pro cess created a
CERCLA. Beginning in 1926, Marietta Dyestuffs Co.operated an industrial facility in Marietta, Ohio, to make dyes and other chemicals.In 1944,Dyestuffs became part of American Home Products
Environmental Impact Statement. Greers Ferry Lake is in Arkansas,and its shoreline is under the management of the U.S.Army Corps of Engineers,which is part of the U.S. Department of Defense (DOD).
Clean Water Act. Attique Ahmad owned the Spin-N Market, a convenience store and gas station. The gas pumps were fed by underground tanks,one of which had a leak at its top that allowed water to
Moonbay is a home-building corporation that pri marily develops retirement communities.Farmtex owns a number of feedlots in Sunny Valley.Moonbay purchased 20,000 acres of farmland in the same area
QUESTION WITH SAMPLE ANSWER Fruitade, Inc., is a processor of a soft drink called Freshen Up. Fruitade uses returnable bottles, which it cleans with a special acid to allow for further beverage
Some scientific knowledge indi cates that there is no safe level of exposure to a cancer-causing agent.In theory,even one molecule of such a substance has the potential for caus ing cancer.Section
VIDEO QUESTION Go to this text’s Web site at www.cengage.com/blaw/jentz and select “Chapter 44.”Click on “Video Questions” and view the video titled Advertising Communication Law: Bait and
A QUESTION OF ETHICS After graduating from law school—and serving time in prison for attempting to collect debts by posing as an FBI agent—Barry Sussman theorized that if a debt-collection
Debt Collection. 55th Management Corp. in New York City owns residential property that it leases to vari ous tenants. In June 2000, claiming that one of the ten ants, Leslie Goldman, owed more than
CASE PROBLEM WITH SAMPLE ANSWER One of the products that McDonald’s Corp. sells is the Happy Meal®, which consists of a McDonald’s food entree, a small order of french fries, a small drink, and
Deceptive Advertising. “Set Up & Ready to Make Money in Minutes Guaranteed!” the ads claimed.“The Internet Treasure Chest (ITC) will give you everything you need to start your own exciting
Fair Credit Reporting Act. Source One Associates, Inc., is based in Poughquag, New York. Peter Easton, Source One’s president,is responsible for its daily opera tions. Between 1995 and 1997, Source
Fair Debt Collection. CrossCheck, Inc., provides check-authorization services to retail merchants.When a customer presents a check, the merchant contacts CrossCheck, which estimates the probability
QUESTION WITH SAMPLE ANSWER On June 28, a salesperson for Renowned Books called on the Gonchars at their home.After a very persuasive sales pitch by the agent, the Gonchars agreed in writing to
Maria Ochoa receives two new credit cards on May 1. She had solicited one of them from Midtown Department Store,and the other arrived unsolicited from High-Flying Airlines. During the month of May,
Andrew, a resident of California, received an advertising circular in the U.S.mail announcing a new line of regional cook books distributed by the Every-Kind Cookbook Co.Andrew didn’t want any
Agency Powers. A well-documented rise in global temperatures has coincided with a significant increase in(a) The agency’s cost-benefit analysis included new methods that were not disclosed to the
A QUESTION OF ETHICS To ensure highway safety and protect driver health, Congress charged federal agencies with regulating the hours of service of commercial motor vehi cle operators.Between 1940 and
Rulemaking. The Investment Company Act of 1940 prohibits a mutual fund from engaging in certain transac tions in which there may be a conflict of interest between the manager of the fund and its
CASE PROBLEM WITH SAMPLE ANSWER Riverdale Mills Corp.makes plastic-coated steel wire products in Northbridge, Massachusetts.Riverdale uses a water-based cleaning process that gener ates acidic and
Judicial Controls. Under federal law, when accept ing bids on a contract,an agency must hold “discussions”with all offerors. An agency may ask a single offeror for“clarification” of its
Investigation. Maureen Droge began working for United Air Lines,Inc.(UAL),as a flight attendant in 1990.In 1995, she was assigned to Paris, France, where she became pregnant.Because UAL does not
Arbitrary and Capricious Test. Lion Raisins,Inc.,is a family-owned,family-operated business that grows raisins and markets them to private enterprises. In the 1990s, Lion also successfully bid on
Rulemaking. The Occupational Safety and Health Administration (OSHA) is part of the U.S.Department of Labor. OSHA issued a “Directive” under which each employer in selected industries was to be
QUESTION WITH SAMPLE ANSWER Assume that the Food and Drug Administration(FDA),using proper procedures,adopts a rule describing its future investigations.This new rule covers all future circumstances
For decades, the Federal Trade Commission (FTC) resolved fair trade and advertising disputes through individual adju dications.In the 1960s,the FTC began promulgating rules that defined fair and
Should corporate lawyers who become aware that someone at the client corporation may have violated securities laws report their suspicions only to persons within the corporation, or should they
“When opinions about a company’s reputation are exchanged in Internet chat rooms and those opinions cause the price of the company’s stock to decline, the company may have a cause of action for
Do you agree that when a corporation is approaching insolvency, the directors’ fiduciary obligations should extend to the corporation’s creditors as well as to the shareholders? Why or why not?
Three decades ago, corporations and corporate directors were rarely prosecuted for crimes, and penalties for corporate crimes were relatively light. Today, this is no longer true. Under the corporate
A QUESTION OF ETHICS Sean McNamee was the owner of an account ing firm, W. F. McNamee & Co., LLC (WFM), which he founded and formed in Connecticut as a limited liability company (LLC). For federal
Trademarks. National Distillers Products Co. was founded to market and sell a vodka called Teton Glacier, and the company registered this mark with the U.S.Patent and Trademark Office. National
Trade Secrets. J. K. Harris & Co. was a small busi ness that was established to help taxpayers settle delin quent accounts. Harris hired Vicki Dye on February 6, 2001. After several weeks, she was
Owner Liability. Harry Lipson was the president of The Folktree Concertmakers, Inc. To obtain concert advertising in the Boston Globe, Lipson completed the newspaper’s “Standard Application for
Owner Liability. Gregory and Dale Stires and Stanley Hall owned and operated the Elk Valley Game Ranch as partners.Hall bought thirty-eight head of elk from Martin Carelli and signed a promissory
CASE PROBLEM WITH SAMPLE ANSWER Carol Anstett was a salaried, at-will employee of the Plastics Division of Eagle-Picher Industries, Inc.The Plastics Division had an express sev erance policy under
QUESTION WITH SAMPLE ANSWER 812 Amy forms Best Properties, LLC (BP), to own real estate as a long-term investment. BP acquires a 40,000-square-foot warehouse for $500,000, with the financing arranged
George Overton has plans for estab lishing a new business with Elena Costanza. They will both be managers, and each will take an annual salary of $50,000.The company will have other expenses of
VIDEO QUESTION Go to this text’s Web site at www.cengage.com/blaw/jentz and select “Chapter 41.”Click on “Video Questions” and view the video titled Mergers and Acquisitions. Then answer
A QUESTION OF ETHICS Melvin Lyttle told John Montana and Paul Knight about a “Trading Program” that purport edly would buy and sell securities in deals that were fully insured, as well as
Securities Trading. Between 1994 and 1998,Richard Svoboda,a credit officer for NationsBank N.A.,in Dallas, Texas,evaluated and approved his employer’s extensions of credit to clients. These
Securities Laws. In 1997, WTS Transnational, Inc., required financing to develop a prototype of an unpatented fingerprint-verification system. At the time, WTS had no revenue, $655,000 in
CASE PROBLEM WITH SAMPLE ANSWER Scott Ginsburg was chief executive officer(CEO) of Evergreen Media Corp.,which owned and operated radio stations. In 1996, Evergreen became interested in acquiring EZ
Insider Reporting and Trading. Ronald Bleakney,an officer at Natural Microsystems Corp.(NMC),a Section 12 corporation,directed NMC sales in North America,South America, and Europe. In November 1998,
Violations of the 1934 Act. 2TheMart.com,Inc.,was conceived in January 1999 to launch an auction Web site to compete with eBay, Inc. On January 19, 2TheMart announced that its Web site was in its
QUESTION WITH SAMPLE ANSWER Huron Corp. has 300,000 common shares out standing. The owners of these outstanding shares live in several different states.Huron has decided to split the 300,000 shares
Estrada Hermanos, Inc., a corpora tion incorporated and doing business in Florida,decides to sell $1 million worth of its common stock to the public.The stock will be sold only within the state of
A QUESTION OF ETHICS Topps Co. makes baseball and other cards, including the Pokemon collection, and distrib utes Bazooka bubble gum and other confections. Arthur Shorin, the son of Joseph Shorin,
Purchase of Assets. Paradise Pools, Inc. (PPI), also known as “Paradise Pools and Spas,”was incorporated in 1981.In 1994,PPI entered into a contract with Bromanco, Inc., to build a pool in
Corporate Dissolution. Trans-System, Inc. (TSI), is an interstate trucking business.In 1994,to provide a source of well-trained drivers, TSI formed Northwestern Career Institute, Inc., a school for
CASE PROBLEM WITH SAMPLE ANSWER In January 1999, General Star Indemnity Co.agreed to insure Indianapolis Racing League(IRL) race cars against damage during on-track acci dents. In connection with the
Successor Liability. In 1996, Robert McClellan, a licensed contractor doing business as McClellan Design and Construction, entered into a contract with Peppertree North Condominium Association, Inc.,
QUESTION WITH SAMPLE ANSWER Alir owns 10,000 shares of Ajax Corp.Her shares represent a 10 percent ownership in Ajax.Zeta Corp.is interested in acquiring Ajax in a merger,and the board of directors
A QUESTION OF ETHICS New Orleans Paddlewheels, Inc. (NOP), is a Louisiana corporation formed in 1982 when James Smith, Sr., and Warren Reuther were its only share holders, with each holding 50
Fiduciary Duties and Liabilities. Harry Hoaas and Larry Griffiths were shareholders in Grand Casino, Inc., which owned and operated a casino in Watertown,South Dakota.Griffiths owned 51 percent of
Duties of Majority Shareholders. Steve and Marie Venturini were involved in the operation of Steve’s Sizzling Steakhouse in Carlstadt, New Jersey, from the day their parents opened it in the 1930s.
CASE PROBLEM WITH SAMPLE ANSWER In 1978, David Brandt and Dean Somerville incorporated Posilock Puller, Inc. (PPI), to make and market bearing pullers.Each received half of the stock. Initially
Duty of Loyalty. Digital Commerce, Ltd., designed software to enable its clients to sell their products or services over the Internet. Kevin Sullivan served as a Digital vice president until
Inspection Rights. Craig Johnson founded Distributed Solutions,Inc.(DSI),in 1991 to make software and provide consulting services, including payroll ser vices for small companies. Johnson was the
Lucia has acquired one share of common stock of a multimillion-dollar corporation with more than 500,000 shareholders. Lucia’s ownership interest is so small that she is not sure what her rights
Superal Corp.authorized 100,000 shares and issued all of them during its first six months in operation.Avril purchased 10,000 of the shares (10 percent). Later, Superal reacquired 10,000 of the
QUESTION WITH SAMPLE ANSWER AstroStar,Inc.,has a board of directors consist ing of three members (Eckhart, Dolan, and Macero) and has approximately five hundred sharehold ers.At a regular board
Oxy Corp. is negotiating with the Wick Construction Co. for the renovation of the Oxy corporate headquarters.Wick,the owner of the Wick Construction Co., is also one of the five members of the board
VIDEO QUESTION Go to this text’s Web site at www.cengage.com/blaw/jentz and select “Chapter 38.”Click on “Video Questions” and view the video titled Corporation or LLC:Which Is Better? Then
A QUESTION OF ETHICS Mike Lyons incorporated Lyons Concrete,Inc.,in Montana,but did not file its first annual report, so the state involuntarily dissolved the firm in 1996.Unaware of the dissolution,
Improper Incorporation. Denise Rubenstein and Christopher Mayor agreed to form Bayshore Sunrise Corp. (BSC) in New York to rent certain premises and operate a laundromat. BSC entered into a
CASE PROBLEM WITH SAMPLE ANSWER Thomas Persson and Jon Nokes founded Smart Inventions,Inc.,in 1991 to market house hold consumer products.The success of their first prod uct,the Smart Mop,continued
Torts and Criminal Acts. Greg Allen is an employee, shareholder,and director of Greg Allen Construction Co., and its president.In 1996,Daniel and Sondra Estelle hired Allen’s firm to renovate a
Corporate Powers. InterBel Telephone Cooperative, Inc., is a Montana corporation organized under the Montana Rural Electric and Telephone Cooperative Act.This statute limits the purposes of such
Disregarding the Corporate Entity. Steven and Janis Gimbert leased a warehouse to a manufacturing busi ness owned by Manzar Zuberi.Zuberi signed the lease as the purported representative of “ATM
Oya Paka and two business associates formed a corporation called Paka Corp. for the purpose of selling computer services. Oya, who owned 50 percent of the corporate shares, served as the
QUESTION WITH SAMPLE ANSWER Cummings,Okawa,and Taft are recent college graduates who want to form a corporation to manufacture and sell personal computers.Peterson tells them he will set in motion
Jonathan, Gary, and Ricardo are active members of a partnership called Swim City. The partnership manufactures, sells,and installs outdoor swimming pools in the states of Arkansas and Texas.The
A QUESTION OF ETHICS Blushing Brides,L.L.C.,a publisher of wedding planning magazines in Columbus, Ohio, opened an account with Gray Printing Co. in July 2000.On behalf of Blushing Brides, Louis
Limited Liability Companies. A “Certificate of Formation” (CF) for Grupo Dos Chiles, LLC, was filed with the Delaware secretary of state in February 2000.The CF named Jamie Rivera as the
CASE PROBLEM WITH SAMPLE ANSWER Westbury Properties, Inc., and others (collec tively, the Westbury group) owned, managed, and developed real property.Jerry Stoker and the Stoker Group, Inc. (the
Joint Ventures. In 1993, TOG Acquisition Co.attempted to acquire the Orleander Group, a manu facturer of bicycle accessories, but failed for lack of financing. Orleander then granted to Herrick Co.
Limited Liability Companies. Michael Collins entered into a three-year employment contract with E-Magine, LLC. E-Magine was in business for only a brief time, during which it incurred considerable
Foreign Limited Liability Companies. Walter Matjasich and Cary Hanson organized Capital Care, LLC,in Utah.Capital Care operated,and Matjasich and Hanson managed, Heartland Care Center in Topeka,

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