17-2. QUESTION WITH SAMPLE ANSWER: Control of a Franchise. National Foods, Inc., sells franchises to its fast-food restaurants, known as Chicky-D's. Under the franchise agreement, franchisees agree to hire and train employees strictly according to Chicky-D's standards. Chicky-D's regional supervisors are required to approve all job candidates before they are hired and all general policies affecting those employees. Chicky-D's reserves the right to terminate a franchise for violating the franchisor's rules. In practice, however, Chicky-D's regional supervisors routinely approve new employees and individual franchisees' policies. After sev-eral incidents of racist comments and conduct by Tim, a recently hired assistant manager at a Chicky-D's, Sharon,a counterperson at the restaurant, resigns. Sharon les a suit in a federal district court against National. National les a motion for summary judgment, arguing that it is not liable for harassment by franchise employees. Will the court grant National's motion? Why or why not?

17-2A. Question with Sample AnswerThe court would likely conclude that National Foods was responsible for the acts of harassment by the manager at the franchised restaurant, on the ground that the employees were the agents of National Foods. An agency relation-ship can be implied from the circumstances and conduct of the parties. The important question is the degree of control that a franchisor has over its franchisees. Whether it exercises that control is beside the point. Here, National Foods retained considerable control over the new hires and the franchisee's policies, as well as the right to terminate the franchise for violations. That its supervisors routinely approved the policies would not undercut National Foods' liability.

18-2. QUESTION WITH SAMPLE ANSWER: Partnership Dissolution.

Dorinda, Luis, and Elizabeth form a limited partnership. Dorinda is a general partner, and Luis and Elizabeth are limited partners. Consider the separate events below, and dis-cuss fully whether each event constitutes a dissolution of the limited partnership.(a) Luis assigns his partnership interest to Ashley.(b) Elizabeth is petitioned into involuntary bankruptcy.(c) Dorinda dies. For a sample answer to Question 18-2, go to Appendix F at the end of this text.

18-2A. Question with Sample Answer(a) A limited partner's interest is assignable. In fact, assignment allows the assignee to become a substitutedreason to believe that the maintenance job required of them by their employer involved great risk, and there-fore, under OSHA, their discharge was wrongful. Denton and Carlo can turn to the Occupational Safety and Health Administration, which is part of the Department of Labor, for assistance.22-2A. Question with Sample AnswerUnder Title VII of the Civil Rights Act, an employer must offer a reasonable accommodation to resolve a con ict between an employee's sincere religious belief and a condition of employment. Reasonable accommodation is required unless such an accommodation would design an undue hardship for the employer's business. In this hypothetical scenario, the only accommodation that Caldwell considered reasonable was a complete exemption from the no-facial-jewelry policy. This could be construed to impose an undue hardship on Costco. The company's dress code could be based on the belief that employees re ect on their employers, especially employees who regularly inter-act with customers, as Caldwell did in her cashier position. Caldwell's facial jewelry could have affected Costco's public image. Under this reasoning and in such a situation, an employer has no obligation to offer an accom-modation before taking other action. Thus, Caldwell is not likely to succeed in a lawsuit against Costco for religious discrimination.23-2A. Question with Sample AnswerThe NLRB has consistently been suspicious of companies that grant added bene ts during election campaigns. These bene ts will be considered as an unfair labor practice that biases elections, unless the employer can demonstrate that the bene ts were unrelated to the unionization and would have been granted anyway. 24-3A. Question with Sample AnswerYes. A regulation of the Federal Trade Commission (FTC) under Section 5 of the Federal Trade Commission Act makes it a violation for door-to-door sellers to fail to give consum-ers three days to cancel any sale. In addition, a number of state statutes require this three-day "cooling off" period to protect consumers from unscrupulous door-to-door sellers. Because the Gonchars sought to rescind the contract within the three-day period, Renowned Books was obligated to agree to cancel the contract. Its failure to allow rescission was in violation of the FTC regulation and of most state statutes.limited partner with the consent of the remaining part-ners. The assignment, however, does not dissolve the lim-ited partnership.(b) Bankruptcy of the limited partnership itself causes dissolution, but bankruptcy of one of the limited partners does not dissolve the partnership unless it causes the bank-ruptcy of the rm.(c) The retirement, death, or insanity of a general part-ner dissolves the partnership unless the business can be continued by the remaining general partners. Because Dorinda was the only general partner, her death dissolves the limited partnership.

19-2. QUESTION WITH SAMPLE ANSWER: Liability of Directors. AstroStar, Inc., has approximately ve hundred shareholders. Its board of directors con-sists of three members (Eckhart, Dolan, and Macero). At a regular board meeting, the board selects Galiard as president of the corporation by a two-to-one vote, with Eckhart dissenting. The minutes of the meet-ing do not register Eckhart's dissenting vote. Later, an audit reveals that Galiard is a former convict and has embezzled $500,000 from the corporation that is not covered by insurance. Can the corporation hold direc-tors Eckhart, Dolan, and Macero personally liable?

Discuss.19-2A. Question with Sample AnswerDirectors are personally answerable to the corporation and the shareholders for breach of their duty to exercise reasonable care in conducting the affairs of the corporation. Reasonable care is de ned as being the degree of care that a reasonably prudent person would use in the conduct of personal business affairs. When directors delegate the running of the corporate affairs to ofcers, the directors are expected to use reasonable care in the selection and supervision of such ofcers. Failure to do so will make the directors liable for negligence or mismanagement. A director who dissents to an action by the board is not personally liable for losses resulting from that action. Unless the dissent is entered into the board meeting minutes, however, the director is presumed to have assented. Therefore, the rst issue in the case of AstroStar, Inc., is whether the board members failed to use reasonable care in the selection of the president. If so, and particularly if the board failed to provide a reasonable amount of supervision (and openly embezzled funds indicate that failure), the directors will be personally liable. This liability will include Eckhart unless she can prove that she dissented and that she tried to reasonably supervise the new president. Considering the facts in this case, it is question-able that Eckhart could prove this.

20-1. Agency Formation Paul Gett is a well-known, wealthy nancial expert liv-ing in the city of Torris. Adam Wade, Gett's friend, tells Timothy Brown that he is Gett's agent for the purchase of rare coins. Wade even shows Brown a local newspa-per clipping mentioning Gett's interest in coin collect-ing. Brown, knowing of Wade's friendship with Gett, contracts with Wade to sell a rare coin to Gett valued at $25,000. Wade takes the coin and disappears with it. On the payment due date, Brown seeks to collect from Gett, claiming that Wade's agency made Gett liable. Gett does not deny that Wade was a friend, but he claims that Wade was never his agent. Discuss fully whether an agency was in existence at the time the contract for the rare coin was made.

21-1. Hours and Wages Calzoni Boating Co. is an interstate business engaged in manufacturing and selling boats. The company has ve hundred nonunion employees. Representatives of these employees are requesting a four-day, ten-hours-per-day workweek, and Calzoni is concerned that this would require paying time and a half after eight hours per day. Which federal act is Calzoni thinking of that might require this? Will the act in fact require paying time and a half for all hours worked over eight hours per day if the employees' proposal is accepted? Explain.

27-2. QUESTION WITH SAMPLE ANSWER: Market Power. Super-Tech Industries presently controls 55 per-cent of the market for the manufacture and sale of computers. The balance of the market is con-trolled by ve other manufacturers, with Alcan Corp. having 25 percent of the market. Alcan has aninnovative research staff, but every time Alcan introduces a faster, more powerful, and more efcient computer into the market, Super-Tech immediately informs its customers of the upcoming development of a competing com-puter that it will sell at 30 percent below the Alcan price. Alcan claims that these activities on the part of Super-Tech are an antitrust violation. Discuss fully whether this unilateral action by Super-Tech violates antitrust law

27-2A. Question with Sample AnswerSuper-Tech's unilateral action is a violation of the Sherman Act, Section 2. Super-Tech already controls a substan-tial portion of the market for computers and thus has a monopoly position in this business eld. Super-Tech's action is a misuse of its monopoly power in the market-place. Any person who shall monopolize or attempt to monopolize any part of trade or commerce may be in violation of the Sherman Act. Therefore, Alcan can le a private action seeking treble damages, costs, and reason-able attorneys' fees, and the U.S. Department of Justice can institute criminal and civil proceedings.

28-1. Price Discrimination Most of the egg wholesalers supplying eggs to grocery stores in a particular area sell eggs to the retailers under various credit terms. The credit terms vary among the different buyers and sellers, but all of the wholesalers follow a common practice of reducing by 10 percent the price charged to a retailer if the retailer pays the wholesaler within three days of delivery. The various wholesalers agree that henceforth the 10 percent discount will be dis-continued. If the agreement is indeed carried out by the wholesalers and the discount policy is discontinued, have the wholesalers violated any antitrust laws? Explain. If a suit is brought against the wholesalers, whatif anyjusti cation could they offer for the agreement?