UHCL LEGL 2301 Fall 2016 Exam 3

Cybersquatting is illegal only if a domain name is identical to the
trademark of another, not if the name is merely confusingly similar
T or F
F
Cybersquatting occurs when key words are inserted into the hyper text
markup language code to tell Internet browsers specific information
about a Web page.
T or F
F
that would be Meta Tags
Trademark dilution occurs when a person registers a domain name that
is the same as, or confusingly similar to, the trademark of another and
then offers to sell the domain name back to the original owner.
T or F
F
would be true if Cyber-squatting occurs
Employees who use social media in a way that violates their employer’s
stated policies cannot be disciplined or fired from their jobs.
T or F
F
Law enforcement uses social media to detect and prosecute criminals.
T or F
T
Social media posts are routinely included in discovery in litigation
T or F
T
Fact Pattern 15-1
Great Looks Clothing Corporation sends daily e-mail ads to its previous customers and those who have opted to receive the notices. Hot Trends Inc. sends e-mail ads to any e-mail address that Hot Trends can find on the Web or otherwise generate. Ilene sends e-mail notes to her friends, relatives, and co-workers, discussing personal issues and recommending products or services that she likes.
Federal law preempts state anti-spam laws

a. with no exceptions.
b. except for laws that require the use of spam by business entities.
c. except for statutes that ban the use of spam altogether.
d. except for provisions that prohibit false and deceptive e-mailing
practices.

d. except for provisions that prohibit false and deceptive e-mailing practices.
Fact Pattern 15-2 ( Use for this question and the next)

CallTalk Corporation, a smartphone and phone-time seller, chooses to use
and register “calltalk” as its second-level domain. Later, CallTalk’s less
successful competitor, CellTalk Company, chooses to use and register
“caltalk” (an intentional misspelling of “calltalk”) as its second-level domain.
Still later, Call&Talk, Inc., uses the domain name “callltalk” (also a deliberate misspelling of “calltalk”) without CallTalk’s authorization, to sell pornographic phone conversations.

Refer to Fact Pattern 15-2. CallTalk wants to sue Call&Talk for its
unauthorized use of the domain name “callltalk.” Before bringing the suit,
CallTalk has to ask the court for a subpoena to discover

a. the true identity of the owner of the unauthorized site.
b. the amount of the profits of the unauthorized site.
c. the estimated costs of the court proceedings and discovery.
d. all of the registered variations of the name “calltalk.

a. the true identity of the owner of the unauthorized site.
Refer to Fact Pattern 15-2. Call&Talk’s use of the domain name
“callltalk,” without CallTalk’s authorization, to sell pornographic phone conversations, is
a. goodwill.
b. fair use.
c. a license.
d. trademark dilution.
d. trademark dilution.
Stefano transfers copyrighted music recordings, without the copyright
owners’ authorization, to his friends. This is

a. copyright infringement.
b. a license.
c. a safe harbor.
d. none of the choices.

a. copyright infringement.
Sally registers the domain name thedallascowboys.com before the NLF football team is able to do so, with the title of her web site called The Dallas Cowboys, a nightclub in Austin, Texas. Sally’s use of the domain name and the name of her bar is

a. trademark infringement.
b. trademark dilution.
c. trademark squatting.
d. trademark theft.

b. trademark dilution.
Sean is researching federal law to determine if there are civil or criminal penalties associated with the circumvention of the encryption software on a DVD. He should find the

a. Digital Copyright Act.
b. Digital Millennium Copy Right Act.
c. Digital Anti-Circumvention Act.
d. Digital Anti-Piracy Act.

b. Digital Millennium Copy Right Act.
Ben has consulted with an attorney regarding his employer having reviewed his personal communications at work. Ben would have a viable claim for a violation of the Electronic Communications Privacy Act for which of the following actions?

a. Accessing Ben’s voicemail on his company issued cell phone.
b. Reviewing Ben’s work email on his work computer.
c. Reviewing Ben’s telephone calls on his work phone.
d. Accessing Ben’s private Facebook page by guessing his password.

d. Accessing Ben’s private Facebook page by guessing his password.
Unobtainium Venture Capital, a new venture capital start-up, wants to create a place for employees to communicate and share files, but wants to minimize its potential risk to competitors by protecting its trade secrets that the shared data may contain. UVC should utilize
a. standalone PCs.
b. email.
c. an internal social network.
d. a public social media site.
c. an internal social network.
Lily developed a blog and relays rumors and gossip she hears in her hometown. She should be concerned about

a. copyright infringement.
b. trademark infringement.
c. online defamation.
d. disclosing trade secrets.

c. online defamation.
Jennifer has filed a privacy complaint against Google. The federal agency to conduct an investigation by consumer complaints is the
a. FCC.
b. SEC.
c. FAA.
d. FTC.
d. FTC. investigates consumer complaints
Only a few types of property—a debtor’s wages or bank account, for
example—can be garnished.
T or F
F -many types of property can be garnishes, including tax refunds, wages, bank accounts
Liens generally take priority over other claims against the same property.
T or F
T
If a homeowner defaults, or fails to make the mortgage payments, the
lender has the right to foreclose on the mortgaged property
T or F
T
A surety can be required to pay an obligation only after the principal
debtor defaults and usually only after the creditor has made an attempt
to collect from the debtor.
T or F
F – that would be a guaranty
A court awards a judgment to Loan Collection Agency, who is the creditor, against Margret, who is the debtor. After the judgment, the creditor requests a court order to seize Margret’s property to ensure that the judgment will be collectible. This is

a. a judicial lien.
b. a writ of attachment.
c. a writ of execution.
d. a violation of most state laws.

c. a writ of execution.
Ridgeline Bank provides Shirley with a mortgage to buy a home. The
rate of interest is fixed for three years and then adjusts annually. This is

a. a fixed-rate mortgage.
b. an adjustable-rate mortgage.
c. a creditor’s composition agreement.
d. a guaranty agreement.

b. an adjustable-rate mortgage.
Erin and Dooley, a married couple, borrow $120,000 from Capital & Credit Bank to buy a home. When Erin and Dooley divorce, they are
unable to make payments on the mortgage. The market value of the home has declined to less than the balance of the loan. Capital & Credit agrees to a sale of the property for this amount. This is

a. a prepayment penalty.
b. forbearance.
c. foreclosure.
d. a short sale.

d. a short sale.
Nancy joins with other creditors to force Odette, a debtor, into bankruptcy. One of the goals of bankruptcy law with respect to creditors
is to
a. provide that creditors will continue to lend to insolvent debtors.
b. protect creditor assets from diminution in value.
c. ensure equitable treatment of creditors who are competing for a debtor’s assets.
d. make all debtor property available for creditors.
c. ensure equitable treatment of creditors who are competing for a debtor’s assets.
Roland files a petition in bankruptcy. After all his assets have been sold
and the proceeds distributed among his creditors, Roland’s remaining
debts
a. are discharged.
b. will be paid by the court.
c. must be paid by Roland.
d. are put on hold until Roland has sufficient means to pay them.
a. are discharged.
Gerald files a petition in bankruptcy. An automatic stay will apply to
actions by creditors seeking to collect Gerald’s debts comprised of

a. alimony.
b. child-support.
c. none of the choices.
d. car payments.

d. car payments.
Bartell contracts with LaRonda to remodel and retile a bathroom. LaRonda finishes the job and gives Bartell a bill for $14,000 for labor and materials. Bartell refuses to pay. In this case, LaRonda may seek

a. an artisan’s lien.
b. nothing; she may bring a suit only for breach of contract.
c. an innkeeper’s lien.
d. a mechanic’s lien.

d. a mechanic’s lien.
Rosie hired Donald to perform repairs on some farm equipment she owned. Donald allowed Rosie to have the equipment before she paid for the repairs. When it became obvious that Rosie was not going to pay him, Donald successfully sued her for breach of contract. Rosie did not pay the judgment, and the tractor was destroyed in a fire. Rosie has no other valuable property that can be seized to satisfy the judgment, but she does have a job. Donald

a. may seek to have Rosie jailed for nonpayment.
b. may seek an order for garnishment.
c. may file a lawsuit for harassment.
d. is out of options

b. may seek an order for garnishment.
Donald is buying a house and obtains a loan from the lender. The document Donald signed giving the lender an interest in Donald’s house as security for a debt is called a

a. guaranty.
b. mortgage.
c. promissory note.
d. deed.

b. mortgage.
As a surety for a loan that Duke did not pay, Caden pays the debt in full. If Duke does not declare bankruptcy, Caden has a right of

a. contribution.
b. foreclosure.
c. reimbursement.
d. exemption.

c. reimbursement.
Lindsey promises Mountain State Bank that she will be responsible for a loan taken out by her niece, Emma. The agreement is that at the moment the debt is due, Mountain State may demand repayment from Lindsey. This is known as a

a. foreclosure.
b. creditors’ composition agreement.
c. bond.
d. suretyship.

d. suretyship.
Carl has been sued and is concerned about losing his house if the plaintiff wins. He consults with an attorney who reviews his case and tells him not to worry because of the

a. homestead exemption.
b. personal property exemption.
c. equitable right of redemption.
d. right of reimbursement

a. homestead exemption.
Michael opens an upscale men’s clothing store. He borrows money to rent space and buys inventory on credit. Unfortunately, business is weak. He promises his creditors that he will be able to pay them after the next season. Business does not improve, and two years later, his creditors seek to force him into Chapter 7 bankruptcy through

a. a concealed bankruptcy.
b. an automatic bankruptcy.
c. a cram-down provision.
d. an involuntary bankruptcy.

d. an involuntary bankruptcy.
Alex files a petition for bankruptcy under Chapter 7. He owes $2.37 million to assorted creditors. Two months before filing, he sold his beach house, which was valued at $600,000, to his brother Jonah for $150,000. If the trustee objects to the sale, most likely

a. the trustee will avoid the transfer and take back the house as part of Alex’s estate.
b. Jonah will keep the house because the sale took place before the petition was filed.
c. the trustee will take the house from Jonah and give it to the secured creditor with the largest claim on Alex’s estate.
d. the sale of the house will be considered a preference.

a. the trustee will avoid the transfer and take back the house as part of Alex’s estate.
Jordan files for bankruptcy because he has debts of $1 million that he cannot pay. He would like to sign a document to assure his kind aunt Matilda that he will repay all of the $30,000 that she lent him. Jordan could have this debt discharged in the bankruptcy but would rather not. In this situation, Jordan

a. can sign a reaffirmation agreement.
b. cannot sign any agreement that he will pay Matilda, because it would give preference to one creditor over the others.
c. can do nothing because he has filed the petition, only the trustee can control his finances.
d. can sign a revisionary loan.

a. can sign a reaffirmation agreement.
Serena files for bankruptcy for her business, and retains her assets and continues to operate the business

a. as a debtor in possession.
b. under a reaffirmation agreement.
c. after a creditors’ committee meeting.
d. under a workout.

a. as a debtor in possession.
Adam is a sole proprietor, and must file for bankruptcy to reorganize his debt under a repayment plan so he can pay his creditors and continue operating his business. He should file a

a. Chapter 13 bankruptcy.
b. Chapter 7 bankruptcy.
c. Chapter 12 bankruptcy.
d. Chapter 10 bankruptcy.

a. Chapter 13 bankruptcy.
In choosing a form of business organization for a new enterprise,
important factors include the ability to raise capital.
T or F
T
The intent to associate is a key element of a partnership.
T or F
T
The partnership is a pass-through entity and a taxpaying entity.
T or F
F -not a taxpaying entity
A franchisee is generally legally independent of the franchisor.
T or F
T
Kari is the sole proprietor of Living Earth Garden Shop. As a sole
proprietor, on the business’s profits, Kari pays
a. no income taxes.
b. only personal income taxes.
c. only business income taxes.
d. both personal and business income taxes.
b. only personal income taxes.
Silvano owns Textbooks Plus, a sole proprietorship that sells textbooks
and other school supplies. When Silvano dies, Textbooks Plus will
automatically
a. dissolve.
b. pass to Silvano’s heirs.
c. pass to the state.
d. be offered for sale to its creditors and competitors.
a. dissolve.
Noah and Orin do business as Personnel Providers, an employment
agency. In most states, for purposes of suing and being sued, Personnel
Providers, which is a partnership, would be treated as

a. an aggregate of the individual partners.
b. a natural person.
c. an entity.
d. a non-existent party

c. an entity.
Luke and Maya form Northwest Air Express, a general partnership. The
essential elements of this partnership do not include

a. a sharing of profits and losses.
b. a joint ownership of the business.
c. an equal right to management in the business.
d. goodwill.

d. goodwill.
Pualani and Quentin do business as partners in Rio Vista Builders, a
residential construction firm. For federal income tax purposes, Rio Vista
would be treated as

a. a pass-through entity.
b. a natural person.
c. a tax-paying entity.
d. a partnership by estoppel.

a. a pass-through entity.
Paradise Footwear buys a franchise from Quadrangle Athletic Shoes
Inc. This relationship, like all other franchise relationships, is governed
by
a. contract law.
b. no law.
c. the Franchise Disclosure Document, or FDD.
d. Article 2 of the Uniform Commercial Code.
a. contract law.
Marsha is a sole proprietor of a small quilting shop. She has considered changing her business structure, but she cannot find an alternative structure that would give her the main advantage she enjoys as a sole owner. The major advantage is that she

a. assumes very limited risk.
b. receives dividends.
c. receives all the profits.
d. is taxed as a corporation.

c. receives all the profits.
Rubina convinced Mariah to start a business with her in a partnership rather than a sole proprietorship. The disadvantage of a sole proprietorship that Rubina wants to avoid is

a. being taxed as a limited liability corporation.
b. receiving all the profits.
c. undertaking limited liabilities.
d. bearing the burden of all losses and liabilities.

d. bearing the burden of all losses and liabilities.
Roy, Andy and Tim are partners in a general partnership, and have all been sued individually based on a breach of contract relating to the partnership. The judge dismisses the lawsuit on the basis that the plaintiff should have filed a lawsuit only against the partnership under the UPA as an
a. anomaly.
b. aggregate.
c. adjustment.
d. entity.
d. entity.
Chance, Justina, and Rich have been operating a chain of self-service laundries as a general partnership for three years. At the beginning of the fourth year, Justina declares bankruptcy. Under the version of the Uniform Partnership Act (UPA) that is in effect in most states, Justina’s bankruptcy will

a. cause the partnership to declare bankruptcy.
b. cause Justina’s dissociation from the partnership.
c. do nothing to the partnership; it will continue as before.
d. dissolve the partnership automatically.

b. cause Justina’s dissociation from the partnership.
Anna and Jennifer start a new business as a partnership, and agree from the beginning that if one of the partners wants to leave the partnership at a later date, that the other partner will purchase the leaving partner’s ownership interest at book and amortized over a five-year term. This type of agreement is referred to as a

a. dissolution agreement.
b. buy-sell agreement.
c. certification of termination.
d. exit strategy.

b. buy-sell agreement.
Tina designed a new type of handbag that has proven to be very popular. She begins manufacturing these handbags on a large scale and considers her options for setting up a business to market the bags nationwide. She opts for a distributorship franchise under which she will

a. license distributors to sell her handbags.
b. avoid certain taxes and fees.
c. pay for one half of the franchisee’s start-up costs.
d. grant a trade name in her handbags to dealers.

a. license distributors to sell her handbags.
Members of limited liability companies are shielded from personal
liability in many situations.
T or F
T
Limited liability companies are entities apart from their owners.
T or F
T
A limited liability company can be taxed as a partnership
T or F
T
A limited liability company can be held liable for any loss or injury caused
by the wrongful acts or omissions of its members.
T or F
T
In a limited partnership, a limited partner has full responsibility for the
partnership and for all its debts
T or F
F
Would be true if a GENERAL partner has full responsibility
Bee Hive Honey, LLC’s members include Chad, Dolores, and others.
For purposes of suing and being sued, Bee Hive Honey is

a. an aggregate of Chad, Dolores, and the other members.
b. a natural person in the members’ “family.”
c. a legal entity apart from the owners.
d. a non-participating third party.

c. a legal entity apart from the owners.
Arnie is a member of Bowling & Billiards, LLC, a limited liability company.
Arnie can participate in the firm’s management

a. only to the extent that he assumes liability for the firm’s debts.
b. only to the extent of his investment in the firm.
c. to any extent.
d. to no extent.

c. to any extent.
Hillside Vineyards is a family limited liability partnership. All of the
partners must be

a. natural persons only.
b. natural persons or persons acting as fiduciaries for natural persons.
c. persons acting as fiduciaries for natural persons only.
d. related.

b. natural persons or persons acting as fiduciaries for natural persons.
Nikki and Orlando are limited partners in Port City Exports, a limited
partnership. To avoid personal liability for partnership obligations, they
must not

a. acquire an interest in the firm.
b. contribute property to the firm.
c. engage in activities independent of the firm’s business.
d. participate in the firm’s management.

d. participate in the firm’s management.
Buckley is a general partner in Cut-Rate Shipping, LLLP, a limited
liability limited partnership, which cannot pay its debts. Buckley is
personally liable for the debts

a. in proportion to the number of partners in the firm.
b. to no extent.
c. to the extent of his capital contribution.
d. to the full extent.

c. to the extent of his capital contribution.
Mack is an oil executive. He wants to start a new company with different partners to explore some drilling opportunities. His attorney advises him about the various business forms. When discussing the LLC form, his attorney mentions that one of the biggest disadvantages of the LLC form is that

a. its members have limited liability for LLC debts.
b. it is taxed like a partnership, unless the members choose differently.
c. LLC members pay no taxes.
d. there is no uniform law governing LLCs in the United States.

d. there is no uniform law governing LLCs in the United States.
Xavier consults with an attorney and some business acquaintances from the Chamber of Commerce about the management of his LLC. He is told that management may take one of two forms, a member-managed LLC or a manager-managed LLC. In the second form

a. the managers may be members, nonmembers, or a combination of both.
b. the managers must be certified public accountants (CPAs).
c. a state-appointed receiver manages the firm.
d. members may not participate in management of the LLC.

a. the managers may be members, nonmembers, or a combination of both.
Matt and Chad for an LLC, and Matt later decides to withdraw as a member. They do not have a provision in their operating agreement regarding withdrawal of a member, but they do live in a state that has adopted the ULLCA, which means that

a. Matt will lose all of his interest in the LLC.
b. the LLC must dissolve within 120 days.
c. Matt must find a new member to purchase Chad’s interest at a fair value.
d. the LLC must purchase Chad’s interest at fair value within 120 days.

d. the LLC must purchase Chad’s interest at fair value within 120 days.
Doug, Frank and Sarah want to form an entity for their new accounting firm, and want to ensure that each avoids personal liability for the malpractice of the other partners, so they should form

a. a joint venture.
b. a limited liability partnership.
c. a limited partnership
d. a general partnership.

b. a limited liability partnership.
Henry and Ryan each invest $10,000 in a limited partnership as a limited partners, so that each has a 50% interest. Tracey sues the limited partnership and obtains a $100,000 judgment. Henry’s liability is

a. Unlimited.
b. $50,000.
c. $100,000.
d. $10,000.

d. $10,000.
One of the key advantages of the corporate form is the unlimited liability
of its owners.
T or F
F -Limited liability of its owners/shareholders
Shareholders have the power to vote to elect or remove members of the
board of directors.
T or F
T
Dollars & Sense, Inc., is incorporated in the state of New Jersey and is
doing business in the state of New York. In New York, Dollars & Sense
is properly referred to as

a. a domestic corporation.
b. a foreign corporation.
c. an alien corporation.
d. a public corporation.

b. a foreign corporation.
The shares of Home Mortgage Corporation are publicly traded in
securities markets. Home Mortgage Corporation is

a. a close corporation.
b. a privately held corporation.
c. a public corporation.
d. a publicly held corporation.

d. a publicly held corporation.
Boutique Bodega Corporation would like to change its corporate status
to that of an S corporation to avoid income taxes at the corporate level.
To qualify, the shareholders must not be

a. corporations.
b. estates.
c. individuals.
d. partnerships.

d. partnerships.
There are no important consequences if the procedures for incorporation are not followed precisely.
T or F
F -if not followed precisely, others may challenge the existence of the corporation
The articles of incorporation serve as a primary source of authority for the corporation’s future organization and business functions.
T or F
T
Lewis is a director of Mines & Refineries, Inc. Using information that is not available to the public, Lewis makes a profit trading in Mines &
Refineries stock. Lewis is most likely liable for breach of

a. no duty or rule
b. the business judgment rule.
c. the duty of loyalty.
d. the duty of care.

c. the duty of loyalty.
Eloise is a director for Frozen Yogurt Company. Eloise is also a director
for Gelato Desserts, Inc. When the board of Frozen Yogurt considers
entering into a contract with Gelato Desserts, Eloise must

a. resign from one of the boards.
b. resign from both boards.
c. make a full disclosure of any conflict of interest.
d. use her best business judgment in voting on the proposed deal.

c. make a full disclosure of any conflict of interest.
Farrah and Grant are shareholders of Hong Kong Restaurants, Inc. As
shareholders, they must approve

a. conducting a merger.
b. deciding to pursue new business opportunities.
c. none of the choices.
d. negotiating a contract between management and labor.

a. conducting a merger.
A group of lawyers in Plainsville decide to start a law firm together. They use the name of the three lawyers who first decided to create the firm. The law firm of Adams, Bell, and Clyde has the letters P.C. at the end of its name. The letters stand for

a. public company. None of its members are professionals, and they pay taxes at a higher rate than most corporations.
b. professional corporation. All of its members are professionals and are subject to less liability than most corporate officers.
c. professional corporation. All of its members are professionals and are subject to greater liability than most corporate officers.
d. public corporation. All of its members are professionals, and they pay taxes at a lower rate than most corporations.

c. professional corporation. All of its members are professionals and are subject to greater liability than most corporate officers.
Jazmine is an officer of New Stage, a theater production company. Without telling any other officers or the board of directors, she decides that New Stage should try to sell gardening tools over the Internet. She makes contracts with suppliers and a Web-based remote order-fulfillment company. The only action that may NOT be taken is

a. she can file a lawsuit against the corporation if it refuses to reimburse the expenses she incurred to make the contracts.
b. the shareholders can file a lawsuit on behalf of the corporation.
c. the corporation can file a lawsuit against her.
d. the state attorney general may seek an injunction against the transactions or seek a dissolution order from a court.

a. she can file a lawsuit against the corporation if it refuses to reimburse the expenses she incurred to make the contracts.
Elliot is suing Acme, Inc. for a breach of contract, but because it has very little in assets, he asking the court to pierce the corporate veil and hold the officers personally liable. In which of the following situations would the court likely approve Elliot’s request?

a. The corporation was under-capitalized from the beginning, and never had sufficient assets to operate as a viable business.
b. The corporation has struggled to make a profit from the beginning.
c. The officers loaned money to the corporation in an attempt to delay any adverse actions.
d. The officers make their decisions based on information presented to them, but unknown to them is the fact the information is incorrect.

a. The corporation was under-capitalized from the beginning, and never had sufficient assets to operate as a viable business.
Wendy is a member of the board of directors and the chief financial officer of The Shoe Fits, Inc. Under the duty of due care that she owes the corporation, Wendy does NOT need to

a. attend presentations and make a careful study of business choices before making decisions.
b. oversee every aspect of the business, including such things as ordering merchandise and arranging for janitorial services.
c. attend board meetings and oversee the corporation’s employees and other officers.
d. subordinate her personal interests to the welfare of the corporation.

b. oversee every aspect of the business, including such things as ordering merchandise and arranging for janitorial services.
Buck is a director of Bromley Corp. Buck owns a printing company, and Bromley needs to have a book printed. If Buck contracts with Bromley to print the book, he must

a. Fully disclose his interest to the other board members and abstain from voting on the matter.
b. Do nothing special; the contract is valid.
c. Resign from the board if anyone questions the conflict of interest.
d. Never enter into a contract like this.

a. Fully disclose his interest to the other board members and abstain from voting on the matter.
The directors and officers of Sports Color, Inc., vote to refuse to declare a dividend. The shareholders can

a. return treasury shares in exchange for a dividend.
b. overrule the directors and vote themselves to declare a dividend.
c. demand that a court declare a dividend.
d. file an action in equity to require the directors to declare a dividend.

d. file an action in equity to require the directors to declare a dividend.
Don, Keith, Jack and Diane are shareholders in a close corporation. Don and Keith, as majority shareholders owe which of the following duty to Jack and Diane as minority shareholders:

a. a good faith and fair dealing duty to minority shareholders.
b. no duty to minority shareholders.
c. a fiduciary duty to minority shareholders.
d. a goodwill duty to minority shareholders.

c. a fiduciary duty to minority shareholders.