Questions and Answers of The Legal Environment

Groseth had the International Harvester (IH) truck franchise in Yankton, South Dakota. The franchise agreement Groseth signed required dealers to “cooperate with the Company by placing orders for
Brenner was in the scrap iron business. Almost daily, Plitt lent Brenner money with which to purchase scrap iron. The agreement of the parties was that when the scrap was sold, Plitt would be repaid
H.C. Blackwell Co. held a franchise from Kenworth Truck Co. to sell its trucks. After 12 years, the franchise was nearing expiration. Kenworth notified Blackwell that the franchise would not be
A joint venture is a(an):a. Association limited to no more than two persons in business for profitb. Enterprise of numerous co-owners in a nonprofit undertakingc. Corporate enterprise for a single
Ray, Linda, and Nancy form a partnership. Ray and Linda contribute property and cash. Nancy contributes only services. Linda dies, and the partnership is liquidated. After all debts are paid, the
Calvin Johnson and Rudi Basecke did business as the Stockton Cheese Co., a partnership, which owned a building and equipment. The partners agreed to dissolve the partnership but never got around to
Two brothers, Eugene and Marlowe Mehl, formed a partnership to operate the family farm. One year, Eugene Mehl withdrew $7,200 from the partnership account and bought the Dagmar Bar. The warranty deed
Chaiken and two others ran a barbershop. The Delaware Employment Security Commission claimed that the other two persons were employees of Chaiken and that Chaiken had failed to pay the unemployment
Ross, Marcos, and Albert are partners. Ross and Marcos each contributed$60,000 to the partnership; Albert contributed $30,000. At the end of the fiscal year, distributable profits total $150,000.
Leland McElmurry was one of three partners of MHS Enterprises, a Michigan partnership. Commonwealth Capital Investment Corp. sued the partnership 1010 Part 7 Business Organizations and obtained a
St. John Transportation Co., a corporation, made a contract with the partnership of Bilyeu and Herstel, contractors, by which the latter was to construct a ferryboat. Herstel, a member of the firm of
Acorn and Bean were general partners in a farm machinery business. Acorn contracted, on behalf of the partnership, to purchase 10 tractors from Cobb Corp. Unknown to Cobb, Acorn was not authorized by
Upon dissolution of a general partnership, distributions will be made on account of:I. Partners’ capital accounts.II. Amounts owed partners with respect to profits.III. Amounts owed partners for
Which of the following statements is correct with respect to a limited partnership?a. A limited partner may not be an unsecured creditor of the limited partnership.b. A general partner may not also
When a partner in a general partnership lacks actual or apparent authority to contract on behalf of the partnership, and the party contracted with is aware of this fact, the partnership will be bound
What is the principal advantage of an LLP over an LLC?AppendixLO1
Alan Waung, a Hong Kong businessperson, purchased a golf course in Saginaw, Michigan, as an investment. As an avid golfer, Alan anticipates spending several weeks during the year at his “Northern
Kate Haley, an experienced builder, formed a limited partnership in August 2009, along with two limited partners, Drs. Growbioski and Gailen, who each provided $100,000 to the partnership for initial
Alice Meyers, Monroe Moylan, and Bart Means practice medicine as Bay Area Anesthetics Associates (BAAA), a limited liability partnership. A newly certified nurse anesthesiologist, Mary Noyes, working
Hurwitz and Padden practiced law as equal partners for a short period of time before converting to an LLC. Some three years later, Padden informed Hurwitz that he intended to leave the firm. When
Don Mason and Beth Daley were managers and members of Pacific Beach Developers, LLC (PBD), a start-up real estate development company focusing on rehabilitating older properties for increased rental
Jerome Micco was a major shareholder and corporate officer of Micco and Co., Inc., which was a limited partner in Harbor Creek, Ltd., a limited partnership formed to build a condominium complex.
Which of the following statements is correct with respect to a limited partnership?a. A limited partner may not be an unsecured creditor of the limited partnership.b. A general partner may not also
Give an example of a third-party beneficiary contract.Appendix
Jessie borrows $1,000 from Thomas and agrees to repay the money in 30 days.Thomas assigns the right to the $1,000 to Douglas Finance Co. Douglas sues Jessie. Jessie argues that she had agreed to pay
Zoya operated a store in premises rented from Peerless. The lease required Zoya to maintain liability insurance to protect Zoya and Peerless. Caswell entered the store, fell through a trap door, and
Henry was owed $10,000 by Jones Corp. In consideration of the many odd jobs performed for him over the years by his nephew, Henry assigned the$10,000 claim to his nephew Charles. Henry died, and his
On August 1, Neptune Fisheries contracted in writing with West Markets to deliver to West 3,000 pounds of lobster at $4.00 a pound. Delivery of the lobsters was due October 1, with payment due
Graham contracted with the city of Harris to train and employ high school dropouts residing in Harris. Graham breached the contract. Long, a resident of Harris and a high school dropout, sued Graham
Union Bank lent $200,000 to Wagner. Union required Wagner to obtain a life insurance policy naming Union as beneficiary. While the loan was outstanding, Wagner stopped paying the premiums on the
New York’s banking law provides that a presumption arises that a joint tenancy has been created when a bank account is opened in the names of two persons“payable to either or the survivor.”
Baena Brothers agreed to reupholster and reduce the size of the arms of Welge’s sofa and chair. The work was not done according to the contract, and the furniture when finished had no value to
Newman underwent physical therapy at Physical Therapy Associates of Rome, Inc. (PTAR), in Rome, Georgia, for injuries sustained in an auto accident. At a therapy session on February 6, it was
The topic of insurance has been eliminated from the content outline for the CPA exam as of October 2009. However, the exam lags behind the content change, so this topic may continue to appear on the
Compare the limitations of the liability of a warehouse and of a hotelkeeper.Appendix
Compare warehouse receipts and bills of lading as to negotiability.Appendix
Richard Schewe and others placed personal property in a building occupied by Winnebago County Fair Association, Inc. Prior to placing their property in the Chapter 22 Legal Aspects of Supply Chain
Tate hired Action-Mayflower Moving & Storage to ship his belongings. Action prepared a detailed inventory of Tate’s belongings, loaded them on its truck, and received the belongings at its
A common carrier bailee generally would avoid liability for loss of goods entrusted to its care if the goods are:a. Stolen by an unknown personb. Negligently destroyed by an employeec. Destroyed by
Under a nonnegotiable bill of lading, a carrier who accepts goods for shipment must deliver the goods to:a. Any holder of the bill of ladingb. Any party subsequently named by the sellerc. The seller
Under the UCC, a warehouse receipt:a. Is negotiable if, by its terms, the goods are to be delivered to bearer or to the order of a named personb. Will not be negotiable if it contains a contractual
Under the Documents of Title Article of the UCC, which of the following acts may limit a common carrier’s liability for damages to the goods in transit?a. Vandalismb. Power outagec. Willful acts of
Smythe wrote to Lasco Dealers inquiring about the price of a certain freezer.Lasco wrote her a letter, signed by its credit manager, stating that Smythe could purchase the freezer in question during
REMC furnished electricity to Helvey’s home. The voltage furnished was in excess of 135 volts and caused extensive damage to his 110-volt household appliances. Helvey sued REMC for breach of
On May 2, Lace Corp., an appliance wholesaler, offered to sell appliances worth $3,000 to Parco, Inc., a household appliances retailer. The offer was signed by Lace’s president and provided that it
Bond and Spear orally agreed that Bond would buy a car from Spear for $475.Bond paid Spear a $100 deposit. The next day, Spear received an offer of $575, the car’s fair market value. Spear
Cookie Co. offered to sell Distrib Markets 20,000 pounds of cookies at $1.00 per pound, subject to certain specified terms for delivery. Distrib replied in writing as follows: “We accept your offer
Maria Gonzalez lived in a rental unit with her sons in Queens, New York. The hot water supplied to their apartment was heated by a Morflo water heater, which had a temperature control device on its
Jane Jackson purchased a sealed can of Katydids, chocolate-covered pecan caramel candies manufactured by NestlT. Shortly after, Jackson bit into one of the candies and allegedly broke a tooth on a
Avery purchased a refrigerator from a retail store. The written contract stated that the refrigerator was sold “as is” and that the warranty of merchantability and all warranties of fitness were
In April 1990, Herbert S. Garten went to Valley Motors to purchase a new 1990 Mercedes-Benz Model 300E. Robert Bell, a Mercedes salesman, told Garten that except for some cosmetic changes, the 1990
Zogarts manufactured and sold a practice device for beginning golfers.According to statements on the package, the device was completely safe, and a player could never be struck by the device’s golf
On July 27, 2000, Sheldorado Aluminum Products, Inc., installed an aluminum awning on the back of Marie Villette’s home for use as a carport. On January 11, 2001, the awning collapsed on top of Ms.
Drehman Paving & Flooring Co. installed a brick floor at Cumberland Farms that its salesman promised would be “just like” another floor Cumberland had installed several years earlier. The bricks
Under the UCC Sales Article, the warranty of title may be excluded by:a. Merchants or nonmerchants, provided the exclusion is in writingb. Nonmerchant sellers onlyc. The seller’s statement that it
Which of the following factors result(s) in an express warranty with respect to a sale of goods?I. The seller’s description of the goods is part of the basis of the bargain.II. The seller selects
Morgan is suing the manufacturer, wholesaler, and retailer for bodily injuries caused by a power saw Morgan purchased. Which of the following statements is correct under the theory of strict
On May 2, Handy Hardware sent Ram Industries a signed purchase order that stated, in part: “Ship for May 8 delivery 300 Model A-X socket sets at current dealer price. Terms 2/10/net 30.” Ram
In 1992, Donna Smith telephoned Clark, the manager of Penbridge Farms, inresponse to an advertisement Clark had placed in the July issue of the EmuFinder about the availability for sale of proven
On January 3, 1991, Central District Alarm (CDA) and Hal-Tuc entered into awritten sales agreement providing that CDA would sell and install new securityequipment described on an equipment list
Lafer Enterprises sold Christmas decorations to B. P. Development &Management Corp., the owners and operators of the Osceola Square Mall. Thepackage of decorations was delivered to Osceola Square
Spaulding & Kimball Co. ordered from Aetna Chemical Co. 75 cartons ofwindow washers. The buyer received them and sold about a third to itscustomers but later refused to pay for them, claiming that
Economy Forms Corp. sold concrete-forming equipment to Kandy. After usingthe equipment for more than six months, Kandy notified Economy that the594 Part 3 Sales and Leases of Goodsequipment was
Cornelia and Ed Kornfeld contracted to sell a signed Picasso print to DavidTunick, Inc. The print, entitled Le Minotauromachie, was signed “PabloPicasso.” The signature on the print was
Under the sales article of the UCC, which of the following statements is correct?a. Obligations of the parties to the contract must be performed in good faith.b. Merchants and nonmerchants are
Rowe Corp. purchased goods from Stair Co. that were shipped COD. Underthe sales article of the UCC, which of the following rights does Rowe have?a. The right to inspect the goods before payingb. The
Bibbeon Manufacturing shipped 300 designer navy blue blazers to CustomClothing Emporium. The blazers arrived on Friday, earlier than Custom hadanticipated and on an exceptionally busy day for its
Parker ordered 50 cartons of soap from Riddle Wholesale Company. Eachcarton contained 12 packages of soap. The terms were: $8.00 per carton 2/10,net/30, FOB buyer’s delivery platform, delivery June
Nation-Wide Check Corp. sold money orders through local agents. A customer would purchase a money order by paying an agent the amount of the desired money order plus a fee. The customer would then
Bellino made a promissory note that was payable in installments and contained the provision that on default of the payment of any installment, the holder had the option to declare the entire balance
Is the following instrument negotiable?I, Richard Bell, hereby promise to pay to the order of Lorry Motors Ten Thousand Dollars ($10,000) upon the receipt of the final distribution from the estate of
Smith has in his possession the following instrument:September 1, 2003 I, Selma Ray, hereby promise to pay Helen Savit One Thousand Dollars($1,000) one year after date. This instrument was given for
A note from Mark Johnson with HealthCo International as payee for$28,979.15 included the following language:[p]ayable in , Successive Monthly Installments of $ Each, and in 11 Successive Monthly
A company has in its possession the following instrument:This instrument is:a. Not negotiable until December 1, 1987b. A negotiable bearer notec. A negotiable time draftd. A nonnegotiable note
The instrument shown here is a:a. Draftb. Postdated checkc. Trade acceptanced. Promissory note.AppendixLO1 To: Middlesex National Bank Nassau, N. Y. Pay to the September 15, 1994. order of Robert
Under the commercial paper article of the UCC, for an instrument to be negotiable, it must:a. Be payable to order or to bearerb. Be signed to the payeec. Contain references to all agreements between
An instrument reads as follows:Which of the following statements correctly describes this instrument?a. The instrument is nonnegotiable because it is not payable at a definite time.b. The instrument
Which of the following instruments is subject to the provisions of the Negotiable Instruments Article of the UCC?a. A bill of ladingb. A warehouse receiptc. A certificate of depositd. An investment
C&N and Alabama Siding performed construction work at job sites throughoutthe southeastern United States. On Wednesday of each week, the foreman ateach job site would telephone Bivens and give her
How could a check made out to “Joseph Klimas and his Attorney Fritzshall &Gleason & Blue Cross Blue Shield Company and Carpenters Welfare Fund” benegotiated further? What would be required?
Jerry O. Peavy, Jr., who did not have a bank account of his own, received adraft from CNL Insurance America in the amount of $5,323.60. The draft wasdrawn on CNL’s account at Bank South, N.A., and
Snug Harbor Realty Co. had a checking account in First National Bank. Whenconstruction work was obtained by Snug Harbor, its superintendent, Magee,would examine the bills submitted for labor and
Benton, as agent for Savidge, received an insurance settlement check fromMetropolitan Life Insurance Co. He indorsed it “For deposit” and depositedit in Bryn Mawr Trust Co. in Savidge’s
Eutsler forged his brother Richard’s indorsement on certified checks and cashedthem at First National Bank. When Richard sought to recover the funds fromthe bank, the bank stated that it would
Michael Sykes, the president of Sykes Corp., hired Richard Amelung to handlethe company’s bookkeeping and deal with all of its vendors. Amelung enteredinto an agreement with Eastern Metal Supply to
Would a bank be liable to a customer who indorsed a check “For deposit onlyinto account #071698570” if that check were deposited into the wrongaccount? What if the customer’s indorsement was
Two employees of the state of New Mexico fraudulently procured and indorseda warrant (a draft drawn against funds of the state) made out to the GreaterMesilla Valley Sanitation District. There was no
Hand executed and delivered to Rex a $1,000 negotiable note payable to Rex orbearer. Rex then negotiated it to Ford and indorsed it on the back by merelysigning his name. Which of the following is a
Jane Lane, a sole proprietor, has in her possession several checks that shereceived from her customers. Lane is concerned about the safety of the checkssince she believes that many of them are bearer
West Corp. received a check that was originally made payable to the order ofone of its customers, Ted Burns. The following indorsement was written on theback of the check:Ted Burns, without recourse,
An instrument reads as follows:$250.00 Chicago, Illinois April 1, 1992Thirty days after date I promise to pay to theorder ofTwo hundred and fifty Dollars atNew York CityNo. 20 Due May 1, 1992 Robert
How does the selling of subsidized foreign goods in the United States adversely affect free trade?Appendix
PepsiCo has registered its PEPSI trademarks in the U.S. Patent and Trademark Office. PEPSI products are bottled and distributed in the United States by PepsiCo and by authorized bottlers pursuant to
United Overseas, Ltd. (UOL), is a U.K. firm that purchases and sells manufacturers’ closeouts in Europe and the Middle East. UOL’s representative, Jay Knox, used stationery listing a UOL office
Assume that before the formation of the European Union, the lowest-cost source of supply for a certain product consumed in France was the United States. Explain the basis by which, after the EU was
A complaint was filed with the U.S. Commerce Department’s ITA by U.S.telephone manufacturers AT&T, Comidial Corp., and Eagle Telephones, Inc., alleging that 12 Asian manufacturers of small business
U.S. Steel Corp. formed Orinoco Mining Co., a wholly owned corporation, to mine large deposits of iron ore that U.S. Steel had discovered in Venezuela.Orinoco, which was incorporated in Delaware, was
Lawrence loaned money to Moore, who died without repaying the loan.Lawrence claimed that when he mentioned the matter to Moore’s widow, she promised to pay the debt. She did not pay it, and
Jackson signed an agreement to sell 79 acres of land to Devenyns. Jackson owned 80 acres and was apparently intending to keep for himself the acre on which his home was located. The written agreement
In February or March, Corning Glass Works orally agreed to retain Hanan as management consultant from May 1 of that year to April 30 of the next year for a present value fee of $200,000. Was this

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