Business Law

rJPENNFOSTER

Name:

COLLEGE

Date:

Legal Environment of Business Proctored Final Examination (Alternate)

INSTRUCTOR USE ONLY

GRADE GRADED BY

YOUR STUDENT NO.

I I I I I I EXAMINATION NO.

500408

Part A: Answer each of the following questions in a composition of 10 to

20 sentences. Each answer is worth 20 points.

1. Discuss the four elements of negligence and illustrate each element with an example.

2. Bob and Shirley attempted to form a corporation for the restaurant Bob & Shirley's.

Bob and Shirley inadvertently failed to file the articles of incorporation. Can they still

be treated as a corporation? If yes, how and in which situations?

3. Discuss the mirror image rule, specifically stating what the rule means. Then give a

set of circumstances in which the mirror image rule would apply.

Part B: Answer each of the following questions in 2 to 4 sentences. Each answer

is worth 5 points.

1. Bud had his agent, Brody, meet with Joey to work out the details of an important busi-

ness contract. Joey didn't know that Brody was acting on Bud's behalf. If Joey thinks

the contract isn't being adequately performed, whom may he hold liable? Why?

2. Candy Store is notified by the federal government that a federal highway will be built

where Candy Store now stands and the federal government intends to take Candy

Store's property to build that highway. The government offers Candy Store $75,000

for the property. The fair value of Candy Store's property is $200,000. Why is Candy

Store entitled to at least $200,000?

(Continued on reverse side)

PE2339(1401)

Proctored Final Examination (Alternate)

3. Pierre loaned his sister Patti $2,500 so she could start a gymnastics coaching business. Patty gave Pierre the following writing, signed by her: "I promise to pay to Pierre the

sum of $2,500 with 6% interest 30 days from the date of this writing." Does Pierre

hold a negotiable instrument? Why or why not?

4. Myra is a single, employed mom, who has fallen a bit behind on her financial obliga-

tions due to some unexpected medical emergencies. She wants to pay as many of her

creditors off as she can and could pay half of her debt over a three-year period, but needs some relief. What type of bankruptcy protection would you recommend for

Myra? Why?

5. Sally and Burt enter an agreement in which Sally agrees to purchase Burt's house.

Burt owes Usa a large amount of money and in the agreement, Sally agrees to pay

the money for the house directly to Lisa. What rights, if any, does Lisa possess under

this contract? Why does she possess these rights?

6. Lloyd borrows money from Collin. In exchange for the loan, Lloyd orally offers Collin

a security interest in his boat. The next day, Lloyd offers Matilda a signed written security interest in the same boat in exchange for a loan. Neither Collin nor Matilda

properly perfects the security interest. Lloyd defaults on both loans. Who will receive

the boat? Why?

7. Ethan and Leigh-Ann enter a shipment agreement in which Ethan agrees to sell

Leigh-Ann exercise equipment. The terms of the agreement are delivery by a common

carrier. Ethan places the exercise equipment with a common carrier for delivery. In

transit, an accident causes destruction of the equipment. Who bears the risk of loss?

Why?

8. Marsha, a California citizen, is involved in an automobile accident with another driver, Jan, also a California resident. Marsha has medical bills and other damages totaling

$50,000. Marsh wants to sue Jan. Should she file in federal court or state court? Why?

Proctored Final Examination (Alternate)