Questions and Answers of Legal Environment Business

Question: When Phil McConkey interviewed for a job as an insurance agent with Alexander & Alexander, the company did not tell him that it was engaged in secret negotiations to merge with Aon. When
Question: The Duke Power Co. refused to transfer any employees at its generating plant to better jobs unless they had a high school diploma or could pass an intelligence test. The company was willing
Question: When Thomas Lussier filled out a Postal Service employment applica- tion, he did not admit that he had twice pleaded guilty to charges of disorderly conduct. Lussier suffered from Post
1. Peter Oiler was a truck driver at the grocery chain Winn-Dixie. He was also a transvestite he liked to dress as a woman. When his supervisor at Winn-Dixie found out about his cross-dressing, Oiler
2. Reginald Delaney managed a Taco Time restaurant in Portland, Oregon. Some of his customers told Mr. Ledbetter, the district manager, that they would not be eating there so often because there were
3. When Walton Weiner interviewed for a job with McGraw-Hill, Inc., he was assured that the company would not terminate an employee without "just cause." Weiner also signed a contract specifying that
4. ETHICS John Mundorf hired three women to work for Gus Construction Co. as traffic controllers at road construction sites in Iowa. Male members of the construction crew incessantly referred to the
5. CPA QUESTION An unemployed CPA generally would receive unemployment compensation benefits if the CPA: a. Was fired as a result of the employer's business reversals b. Refused to accept a job as an
6. Debra Agis worked in a Ground Round restaurant. The manager informed the waitresses that "there was some stealing going on." Until he found out who was doing
7. The Lillie Rubin boutique in Phoenix would not permit Dick Kovacic to apply for a job as a salesperson. It only hired women to work in sales because fittings and alterations took place in the
8. YOU BE THE JUDGE WRITING PROBLEM Nationwide Insurance Co. circulated a memorandum asking all employees to lobby in favor of a bill that had been introduced in the Pennsylvania House of
9. During a job interview with Venetia, Jack reveals that he and his wife are expecting twins. Venetia asks him if he is planning to take a leave once the babies are born. When Jack admits that he
10. ROLE REVERSAL Prepare a short-answer question in which an employee alleges that his discharge violated public policy, but you think a court would not agree.
At http://www.eeoc.gov/facts/accommodation.html, the EEOC offers advice to small employers on how to comply with some aspects of the Americans with Disabilities Act. Employers sometimes complain that
Question: Union workers are striking at Cheesey, a restaurant, forming picket lines in front of the restaurant during the lunch and dinner hours but at no other times. The union members chant slogans
Question: Power, Inc., which operated a coal mine, suffered financial losses and had to lay off employees. The United Mine Workers of America (UMWA) began an organizing drive. Power's general manager
Question: Concrete Company was bargaining a CBA with the drivers' union. Negotia- tions went on for many months. Concrete made its final offer of $9.50 per hour, with step increases of $0.75 per hour
Question: Douglas Kuroda worked for the Hertz Corp. He and his supervisor had a heated argument in which Kuroda told his boss, "You may have a master's degree but you don't know shit." The supervisor
1. Triec, Inc., is a small electrical contracting company in Springfield, Ohio, owned by its executives Yeazell, Jones, and Heaton. Employees contacted the International Brotherhood of Electrical
2. Q-1 Motor Express was an interstate trucking company. When a union attempted to organize Q-1's drivers, it met heavy resistance. A supervisor told one driver that if he knew what was good for him,
3. Gibson Greetings, Inc., had a plant in Berea, Kentucky, where the workers belonged to the International Brotherhood of Firemen & Oilers. The old CBA expired, and the parties negotiated a new one,
4. YOU BE THE JUDGE WRITING PROBLEM Plainville Ready Mix Concrete Co. was bargaining a CBA with the drivers' union. Negotiations went forward, on and off, over many months, with wages the major
5. Eads Transfer, Inc., was a moving and storage company with a small workforce represented by the General Teamsters, Chauffeurs and Helpers Union. When the CBA expired, the parties failed to reach
6. Olivetti Office U.S.A., Inc., was located in Newington, Connecticut, and its workers were represented by the United Automobile, Aerospace, and Agriculture Implement Workers of America. The
7. Fred Schipul taught English at the Thomaston (Connecticut) High School for 18 years. When the position of English Department chairperson became vacant, Schipul applied, but the Board of Education
8. Labor Day is a national holiday originally intended to celebrate the contributions of working men and women. But for most people today it simply means a day off from work-or the day before school
9. ETHICS The chapter refers in several places to the contentious issue of subcontracting. Make an argument for management in favor of a company's ethical right to subcontract, and one for unions in
10. ROLE REVERSAL Write an essay question involving a union organizing campaign and a management response that includes both permissible advocacy and illegal conduct.
Find a website that is campaigning against sweatshops. What are sweatshops? Do they exist in the United States? Describe a current campaign about this issue. Do you agree or disagree with what is
Question: Consider these two entrepreneurs: Judith formed a corporation to publish a newsletter that will not generate substantial revenues. Drexel operated his construction and remodeling business
Question: Hortense and Gus are each starting a business. Hortense's business is an Internet startup. Gus will be opening a yarn store. Hortense needs millions of dollars in venture capital and
Question: In which one or more of the following forms of organization is it true that none of the partners are liable for the debts of the partnership? A. General partnership B. Limited liability
1. ETHICS Lee McNeely told Hardee's officials that he was interested in purchasing multiple restaurants in Arkansas. A Hardee's officer assured him that any of the company-owned stores in Arkansas
2. CPA QUESTION: Assuming all other requirements are met, a corporation may elect to be treated as an S corporation under the Internal Revenue Code if it has: (a) Both common and preferred
3. Under Delaware law, a corporation cannot appear in court without a lawyer, but a partnership can. Fox Hollow Ventures, Ltd., was a limited liability company. One of its employees, who was not a
4. Glenleigh Falls Development Co. was a limited liability company that hired architects John and Marion Zaugg to design a residential golf course. The Zauggs were to receive partial payment for
5. Question: Alan Dershowitz, a law professor famous for his wealthy clients (O. J. Simpson, Claus von Bulow, Leona Helmsley), joined with other lawyers to open a kosher delicatessen, Maven's Court.
6. CPA QUESTION A joint venture is a(n): (a) Association limited to no more than two persons in business for profit (b) Enterprise of numerous co-owners in a nonprofit undertaking (c) Corporate
7. Question: Mrs. Meadows opened a biscuit shop called The Biscuit Bakery. The business was not incorporated. Whenever she ordered supplies, she was careful to sign the contract in the name of the
8. YOU BE THE JUDGE WRITING PROBLEM Cellwave was a limited partnership that applied to the Federal Communications Commission (FCC) for a license to operate cellular telephone systems. After the FCC
9. Arnold and Judith Germain bought two franchises from My Pie International, Inc. They did not receive the franchise disclosure statement from My Pie until two years after the purchase. Did My Pie
10. Leonard C. Blum, an attorney, was negligent in his representation of Louis Anthony, Sr. In settlement of Anthony's claim against him, Blum signed a promissory note for $10,400 on behalf of his
11. ROLE REVERSAL Draft a multiple-choice question that focuses on the difference between an LLC and an S corporation. 2. Result: An S corporation can have only one class of stock. A partnership
At http://ftc.gov, the Federal Trade Commission provides information on enforcement cases it has brought against franchisors who violate FTC rules. Do you see a pattern? Are some violations more
1. Michael Ferns incorporated Erin Homes, Inc., to manufacture mobile homes. He issued himself a stock certificate for 100 shares for which he made no payment. He and his wife served as officers and
2. CPA QUESTION A corporate stockholder is entitled to which of the following rights? a. Elect officers b. Receive annual dividends c. Approve dissolution d. Prevent corporate borrowing
3. An appraiser valued a subsidiary of Signal Co. at between $230 million and $260 million. Six months later, Burmah Oil offered to buy the subsidiary at $480 million, giving Signal only three days
4. YOU BE THE JUDGE WRITING PROBLEM Asher Hyman and Stephen Stahl formed a corporation named Ampersand to produce plays. Both men were employed by the corporation. After producing one play, Stahl
5. Angelica is planning to start a home security business in McGehee, Arkansas. She plans to start modestly but hopes to expand her business within 5 years to neighboring towns and, perhaps, within
6. ETHICS Edgar Bronfman, Jr., dropped out of high school to go to Hollywood and write songs and produce movies. Eventually, he left Hollywood to work in the family business-the Bronfmans owned 36
7. Klinicki and Lundgren started an air taxi service in Berlin, Germany, under the name Berlinair, Inc. Lundgren was approached by a group of travel agents who were interested in hiring an air
8. CPA QUESTION Generally, a corporation's articles of incorporation must include all of the following except the: a. Name of the corporation's registered agent. b. Name of each incorporator. c.
9. Two shareholders of Bruce Company, Harry and Yolan Gilbert, were fighting management for control of the company. They asked for permission to inspect Bruce's stockholder list so that they could
10. ROLE REVERSAL Write a short-answer question that deals with the duty of care under the business judgment rule.
Think of an idea for a new company and prepare a corporate charter for your business. You can find sample charters online. For extra credit, do one charter for your state and one for Delaware. Using
Question: Dr. Warfield hired Wolfe, a young carpenter, to build his house. A week or so after they signed the contract, Wolfe filed Articles of Incorporation for Wolfe Construction, Inc. Warfield
Question: Uncle signed a lease with Landlord on a storefront in Georgetown, D.C. Uncle convinced Nephew to start a furniture store in the space. Uncle and Nephew formed a corporation to operate the
Question: You are the CEO of a software company. You will only allow your engineers to create software for Apple computers, not for PCs because you think Apple is cooler and you hate Microsoft. Some
Question: Ajouelo signed an employment contract with Wilkerson. The contract stated: "Whatever company, partnership, or corporation that Wilkerson may form for the purpose of manufacturing shall
Question: Daniel Cowin was a minority shareholder of Bresler & Reiner, Inc., a public company that developed real estate in Washington, D.C. He alleged numerous instances of corporate mismanagement,
Question: Vern Hayes owned 32 percent of Coast Oyster Co. and served as president and director. The company owned several large oyster beds, including two located in Washington State. Coast was
Question: As a pitcher for the Cleveland Indians farm team, Randy Newsom had dreams of glory but a paycheck that was a nightmare-$8,000 for the season. Newsom came up with a clever solution: He set
Question: You are the CEO of Calmm.com, Inc. The company's board has decided to sell $2 million in stock. You have 40 wealthy friends who would like to invest a total of $1 million. What would be the
Question: Paul was an investment banker who sometimes bragged about deals he was working on. One night he told a bartender, Ryanne, about an upcoming deal. Ryanne bought stock in the company Paul had
Question: Christopher Stenger bought 12 Impressionist paintings from R.H. Love Galleries for $1.5 million. Love told Stenger that art investment would produce a safe profit. The two men agreed that
CPA Question: Hamilton Corp. makes a $4.5 million securities offering under Rule 505 of Regulation D of the Securities Act of 1933. Under this regulation, Hamilton is: (a) Required to provide full
Question: You are the president of Turbocharge, Inc., a publicly traded company. You have been buying stock recently because you think the company's product-a more efficient hybrid engine-is very
1. CPA QUESTION When a common stock offering requires registration under the Securities Act of 1933: (a) The registration statement is automatically effective when filed with the SEC. (b) The issuer
2. Fluor, an engineering and construction company, was awarded a $1 billion project to build a coal gasification plant in South Africa. Fluor signed an agreement with a South African client that
3. Do you love ice cream? Here is an opportunity for you! For only $800, you can buy cow from Berkshire Ice Cream. The company gets milk from the cow and you get to share in the profits from the sale
4. ETHICS ETS Payphones, Inc., sold pay phones to the public. The company then leased back the pay phones from the purchaser, promising a fixed 14 percent annual return on their investment. Although
5. CPA QUESTION Pace Corp. previously issued 300,000 shares of its common stock. The shares are now actively traded on a national securities exchange. The original offering was exempt from
6. YOU BE THE JUDGE WRITING PROBLEM World-Wide Coin Investments Ltd. sold rare coins, precious metals, camera equipment, and Coca-Cola collector items. Its stock was registered with the SEC under the
7. Suppose that, while waiting in line at the grocery store, you overhear a stranger saying that the FDA is going to approve a new drug tomorrow-one that will be a huge success for Alpha
8. Malaga Arabian Limited Partnership sold investments in the Spanish Arabian horse industry under Rule 506. James E. Mark, who purchased one of the partnership interests, alleged that the
9. ROLE REVERSAL Prepare a multiple-choice question that focuses on an issue involving Rule 504, restricted securities, or insider trading.
Choose a company, go to the EDGAR database at the SEC, and look at all filings this company has made during the last year. What filings has it made and why? Extra credit: search EDGAR for a
1. CPA QUESTION When a common stock offering requires registration under the Securities Act of 1933: (a) The registration statement is automatically effective when filed with the SEC. (b) The issuer
2. Fluor, an engineering and construction company, was awarded a $1 billion project to build a coal gasification plant in South Africa. Fluor signed an agreement with a South African client that
3. Do you love ice cream? Here is an opportunity for you! For only $800, you can buy a cow from Berkshire Ice Cream. The company gets milk from the cow and you get to share in the profits from the
4. ETHICS ETS Payphones, Inc., sold pay phones to the public. The company then leased back the pay phones from the purchaser, promising a fixed 14 percent annual return on their investment. Although
5. CPA QUESTION Pace Corp. previously issued 300,000 shares of its common stock. The shares are now actively traded on a national securities exchange. The original offering was exempt from
6. YOU BE THE JUDGE WRITING PROBLEM World-Wide Coin Investments Ltd. sold rare coins, precious metals, camera equipment, and Coca-Cola collector items. Its stock was registered with the SEC under the
7. Suppose that, while waiting in line at the grocery store, you overhear a stranger saying that the FDA is going to approve a new drug tomorrow-one that will be a huge success for Alpha
8. Malaga Arabian Limited Partnership sold investments in the Spanish Arabian horse industry under Rule 506. James E. Mark, who purchased one of the partnership interests, alleged that the
9. ROLE REVERSAL Prepare a multiple-choice question that focuses on an issue involving Rule 504, restricted securities, or insider trading.
Choose a company, go to the EDGAR database at the SEC, and look at all filings this company has made during the last year. What filings has it made and why? Extra credit: search EDGAR for a
Question: Troy owns an art gallery specializing in Greek artifacts. To modernize the gallery, Troy borrows $150,000 from the Sparta Bank, which takes a security interest in all of his inventory.
Question: Lawrence Williams and his wife, Diana, enjoyed a luxurious lifestyle while his investment bank flourished. But when the bank failed, Lawrence was faced with debts of $6 million. On the eve
Question: John and Clara Lockovich bought a 22-foot Chaparrel Villian II boat from Greene County Yacht Club for $32,500. They paid $6,000 cash and borrowed the rest of the purchase price from
Question: Barwell, Inc., sold McMann Golf Ball Co. a "preformer," a machine that makes golf balls, for $55,000. Barwell delivered the machine on February 20. McMann paid $3,000 down, the remainder to
1. CPA QUESTION Under the UCC Secured Transactions Article, perfection of a security interest by a creditor provides added protection against other parties in the event the debtor does not pay its
2. Eugene Ables ran an excavation company. He borrowed $500,000 from the Highland Park State Bank. Ables signed a note promising to repay the money and an agreement giving Highland a security
3. Jerry Payne owed the First State Bank of Pflugerville $342,000. The loan was secured by a 9.25-carat diamond ring. The bank claimed a default on the loan and, without notifying Payne, sold the
4. ETHICS On November 5, The Fred Hawes Organization, Inc., a small subcontractor, opened an account with Basic Distribution Corp., a supplier of construction materials. Hawes promised to pay its
5. Question: Mark Milbank built custom furniture in Port Chester, New York. His business was unsuccessful, and he repeatedly borrowed money from his wife and her father. He promised that the loans
6. CPA QUESTION Decal Corp. incurred substantial operating losses for the past three years. Unable to meet its current obligations, Decal filed a petition of reorganization under Chapter 11 of the
7. CPA QUESTION A voluntary petition filed under the liquidation provisions of Chapter 7 of the federal Bankruptcy Code: a. Is not available to a corporation unless it has previously filed a petition
8. YOU BE THE JUDGE WRITING PROBLEM Lydia D'Ettore received a degree in computer programming at DeVry Institute of Technology, with a grade-point average of 2.51. To finance her education, she
9. ROLE REVERSAL Write a multiple-choice question that highlights the difference between Chapters 7 and 11 of the Bankruptcy Code.

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