BUSINESS LAW CHAPTERS 1-10

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Assume that Congress passes a law establishing a new administrative agency to oversee cyberlaw issues. The agency writes rules to enable it to carry out its duties. The rules written by the agency will be known as a part of
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ADMINISTRATIVE LAW
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Richard is a state appeals court judge. In making judicial decisions, Richard issues rulings that are consistent with precedents established in similar cases within his jurisdiction. Richard is following the principle of
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STARE DECISIS
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A case comes before a Wisconsin state trial court on the subject of free speech on the Internet. It is a case of first impression, meaning that no case involving the same issue has been decided by the Wisconsin courts. In deciding such a case, it would not be considered proper for the judge to consider
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EQUITABLE MAXIMS
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Tyler believes that some laws passed by his state’s legislature are bad, and he refuses to comply with them. He believes that there is a universal law above all others that grants rights to all people and that it is above all other laws. Tyler subscribes to what school of jurisprudential thought?
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THE NATURAL LAW SCHOOL
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Elaine is involved in a car accident where the other driver ran a red light. To determine whether she has a case, her attorney would apply which of the following classifications of law?
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SUBSTANTIVE LAW
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Most appellate court judges write opinions in which they give the reasons for their decisions. These opinions are collected and published in volumes of books known as
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REPORTERS
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Monroe is reviewing an appellate case for class and must correctly identify the parties to the case. The party appealing the case is known as the
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APPELLANT
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Marco files a lawsuit against Allied Company in an Oregon court with limited jurisdiction. The difference between general and limited jurisdiction is based on
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the subject matter of the cases that the court can decide.
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Robert, who lives in Ohio, files a lawsuit against Trading Post, a Washington company, in an Ohio state court. The Trading Post’s only sales activity outside the state of Washington occurs via its Web site. According to the sliding-scale standard, the Ohio court can always exercise personal jurisdiction over out-of-state defendants based on Internet transactions if the court finds that the defendant has
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conducted substantial business with Ohio residents through its Web site.
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Charles loses his breach-of-contract case against Micheletta in a Georgia state trial court. Charles appeals to the state court of appeals. Losing again, he files his next appeal with
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The Georgia Supreme Court.
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Transpac Corp. and Alliance, Inc., agree to a contract that includes an arbitration clause. After a dispute arises, the case goes to arbitration. The arbitrator finds in Transpac’s favor. Alliance files a lawsuit, alleging that the award should not be enforced because the arbitrator made an error in her findings of fact. The court will likely
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DO NOTHING
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Miller signed an employment contract containing an arbitration clause stating that “any dispute” arising during employment must be resolved by binding arbitration. Two years later, after she was injured on the job and took leave to recover, she was fired. She filed a complaint for disability discrimination with the Equal Employment Opportunity Commission, which gave her a “right to sue” letter. She then filed suit in federal court against her employer for disability discrimination. The court
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dismissed the suit because of the arbitration agreement.
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Marshall is working on a contract with a U.S. company involving the manufacturing of goods in China, and wants to ensure that U.S. law applies in the event of a dispute. He should include which of the following clauses in the contract.
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CHOICE OF LAW CAUSE
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Lily has retained an attorney to represent her regarding her injuries sustained in an automobile accident. The type of fee charged in her case is likely a
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CONTINGENCY FEE
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Juan files a lawsuit against Liliana. Liliana responds to the complaint by filing an answer. After the pleadings are closed, Juan can file
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a motion for judgment on the pleadings.
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Motor Sports, Inc., sues A-Z Speed. Motor Sports alleges that A-Z breached (failed to perform) a contract that required A-Z to sell ten Jet Skis to Motor Sports. Under the rules governing discovery, Motor Sports is most likely entitled to obtain
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documents in A-Z’s possession relating to the contract
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Stewart, a construction worker, fell from a beam and suffered serious injuries. He sued his employer, Sunrise Construction, for damages. In most jurisdictions, a court will first impose lighter sanctions but eventually will dismiss a case if a party shows blatant disregard for court orders. Over six years of pretrial motions, Stewart was repeatedly asked to provide the names of expert witnesses he intended to call for his case. Sunrise filed motions three times asking the court to compel Stewart to answer the questions. The trial court entered three orders to compel Stewart to answer and four orders allowing him extra time to answer. Stewart did not respond. Sunrise filed a motion to dismiss because of Stewart’s failure to comply with the orders. What would the court most likely do?
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Dismiss the case because of Stewart’s refusal to provide information to Sunrise.
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A trial between Shane and Verna results in a jury verdict in Shane’s favor. After the jury renders its verdict, Verna’s attorney can file a motion
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FOR A NEW TRIAL
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A judgment is entered against Michael in Anderson’s case against him. Michael appeals to an intermediate appellate court, which agrees to review the case. On appeal, most appellate courts
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affirm trial court findings of fact.
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While hospitalized at the Washoe Medical Center, Swisher fell out of bed and died. Her family sued Washoe. Judges are required to remain impartial and to provide a courtroom that promotes order and decorum. During voir dire at the trial, when the plaintiff’s attorney arrived late after a break, the trial judge led the prospective jurors in a standing ovation. The judge joked with one juror whom he had known in college and endorsed another juror’s business. The judge’s comments were made in the presence of the plaintiff and the defendant, their attorneys, and all prospective jurors. The jury found for Washoe. The plaintiff moved for a new trial, but the judge denied the motion. The plaintiff appealed, arguing that the tone set by the judge prejudiced the plaintiff’s right to a fair trial and violated Nevada’s Code of Judicial Conduct, which requires judicial neutrality. The appellate court most likely
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held that the Nevada judicial code applied and ordered a new trial.
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Maya prevails in her lawsuit against Anthony. Anthony can satisfy the judgment by
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transferring property he owns directly to Maya or selling property he owns and using the proceeds to pay her.
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Garrett was a commercial tour boat operator on the northern coast of Kauai, Hawaii. He was licensed by the state of Hawaii to operate his boat in Hanalei Bay. The U.S. Department of Transportation and the U.S. Coast Guard also granted Garrett an unrestricted license to operate his boats in Hanalei Bay. Hawaii subsequently passed a law that banned all commercial use of Hanalei Bay. The state refused to renew Garrett’s state license and ruled that he was not allowed to operate his vessel based on his federal licenses. Garrett sued the state, alleging that the state law that prohibited him from operating his boat conflicted with the federal law that authorized him to do so. The court probably found that the state law was
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unconstitutional under the supremacy clause
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The Iowa legislature passed a law banning trucks 65 feet long or longer from operating on its roads and highways because big trucks do more damage to roads than smaller trucks and are involved in more serious accidents. Consolidated Freightways (CF) drove big trucks through Iowa on a regular basis, and these trucks were legal in other states. Switching to smaller trucks for trips through Iowa was inconvenient and costly. CF filed a lawsuit contending that the statute was unconstitutional. The court most likely found that the Iowa statute was
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unconstitutional under the “dormant” commerce clause.
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A state legislature passes a statute prohibiting businesses from supporting any political candidate. If some business owners challenge the constitutionality of the law in court, will the law be upheld?
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No, because the law is an unconstitutional restriction on free speech.
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A Minnesota statute required all operators of slow-moving vehicles to display a fluorescent red triangular sign. Henderson, a member of the Amish religion, was charged with violating the statute. His defense was that the law violated his First Amendment right to freedom of religion because displaying “loud” colors on his slow-moving black buggy conflicted with his religious belief that he should remain separate from the modern world. Henderson stated that he was willing to display the sign if he could use silver, instead of red, reflective tape, which was equally effective. The state argued that the law applied to all equally. The court most likely found that the statute, as it applied to Henderson, was
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unconstitutional under the free exercise clause.
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Ocean City passes an ordinance that prohibits all churches from meeting within its city limits. This rule affects the residents’ constitutional right to
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substantive due process.
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A city ordinance allows only two hot dog stands to operate in the city’s downtown area. If someone who would like to add another hot dog stand challenges this ordinance under the equal protection clause, the rule will be subject to
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THE RATIONAL BASIS TEST
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Marshall owns and operates a construction firm. He uses inexpensive and low-grade building products and accepts inferior carpentry work from his subcontractors. Nevertheless, Marshall complies with all the city building codes as well as all state and federal laws. Has he fulfilled all of his ethical obligations?
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No, because legal compliance is regarded as the moral minimum.
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Jeff believes in the principle of rights theory and uses it to make ethical decisions for his business. He must decide whether to expand his business into Asia. Several key employees do not want the business to expand overseas and have threatened to quit if Jeff makes this move. Under the principle of rights theory, he will make this decision by considering
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how the expansion will affect the rights of his employees, his consumers, and the community into which he wishes to expand.
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Bernard is the owner and manager of a small auto-parts store. He thinks that talking about business ethics with employees takes time that would be better spent paying attention to customers. He also does not believe that he has a right to tell other people how they should behave. Is Bernard likely to create an ethical workplace with this way of thinking? Why or why not?
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Bernard is unlikely to create an ethical workplace, because the attitude of top management influences employee ethics.
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Robert was employed as a sales representative by the United States Steel Corporation. It had a “whistleblowing” policy and procedure by which employees could make complaints about company policies and products. Robert, who was not a safety expert, believed that one of the company’s products had not been adequately tested and posed a serious danger. In accordance with company policy, Robert notified his supervisor of his concerns. The product was successfully tested and marketed and caused no harm. Robert had
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fulfilled his ethical obligations as a salesperson because he followed company policy concerning unsafe products.
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Bribery is acceptable in certain foreign countries. Indeed, U.S. Development, Inc., has found that the only way it can ensure delivery on certain contracts in these countries is to bribe the officials. This is
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permitted by U.S. law if the payment is made to a minor official to speed up administrative procedures.
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The state of Texas has placed caps on noneconomic damages in medical malpractice causes of action. This type of limitation on damages is
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an example of tort reform
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Mel sent Jasper an e-mail message telling Jasper that his wife had been killed in a car accident, and Mel knew this was untrue. Jasper may be able to sue Mel for
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Infliction of emotional distress.
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Mark is a famous syndicated radio personality for TalkRadio. He has a distinctive voice and manner of speaking. MoreTalk hires Gordon, who sounds nearly identical to Mark, to host a competing show. MoreTalk encourages Gordon to imitate Mark as closely as possible while on the air. MoreTalk is most likely to be liable for
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APPROPRIATION
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The members of the City High soccer team have been training with Hanson, a personal trainer who charges by the hour, for several years. Bob, the soccer coach, tells the team members that they must now train with Martin, not Hanson, or they will be kicked off the team. All of Hanson’s clients immediately stop training with Hanson. Bob is most likely to have committed
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wrongful interference with a business relationship.
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Doug obtains permission to be on Nathan’s land for one day to hold a four-wheeling event. Doug’s truck breaks down, and instead of removing it, he leaves it on Nathan’s property for several days after the event. Doug has most likely committed
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TRESSPASS TO LAND
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Cory opens a small jewelry store but has difficulty competing with Bling Jewels, a much larger firm. In his newspaper ad, Cory includes the false statement, “Bling Jewels sells stolen diamonds.” Bling experiences an immediate decrease in sales. Cory has most likely committed the tort of
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SLANDER OF TITLE
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Baylee is driving her friend Sarah to the movies. Baylee loses control of the car and crashes into a fence. The vehicle’s airbags deploy, and both Sarah and Baylee are shaken up but not physically injured. Sarah threatens to sue Baylee for negligence. Sarah’s lawsuit is likely to be
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unsuccessful, because Sarah was not injured.
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John becomes seriously ill while vacationing at a remote island resort. Dr. Smith is vacationing at the same resort. Because it is an emergency and no one else is available, the doctor treats John until he can be flown to the mainland. John’s illness is outside of Dr. Smith’s area of expertise, and the treatment she provides causes permanent damage to Frank. If John sues Dr. Smith, he can defend himself under
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Good Samaritan statutes
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Andy decides to go skydiving for his 40th birthday. He signs a waiver, boards the plane and prepares for the jump. Everything is going smoothly until just before landing a down draft forces Andy down at a much faster rate into the ground, causing injury to both of his legs. Andy will likely not be able to recover for his injuries under the defense of
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ASSUMPTION OF THE RISK
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Bob was staying at a hotel owned by the Resort Hotels. While a hotel employee was removing luggage from the back seat of Bob’s car, Bob reached into the front seat to get his briefcase. He supported himself by placing his left hand on the center pillar to which the rear door was hinged. The hotel employee closed the rear door, and a part of Bob’s left index finger was amputated. bob filed a negligence lawsuit against the hotel in a state that adopted a “pure” form of comparative negligence. The court probably found that
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Bob contributed to his injury and apportioned his damages
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West Agricultural Services, Inc. (“WAS”) stores approximately 100,000 pounds of ammonium nitrate on its property in three storage tanks for use in agriculture fertilizer, and is highly explosive if it comes into contact with an ignition source. WAS has taken all necessary precautions to prevent any explosions. If an explosion were to occur with resulting injuries, WAS could be liable under the strict liability theory for damages proximately caused by
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an abnormally dangerous activity.
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Exxon owned a gasoline station in Virginia that it used for years. The station had five underground gasoline storage tanks that were not properly maintained. The property was sold to AFA, which discovered gasoline contamination of the soil. AFA filed a lawsuit in Virginia state court contending that Exxon should be held strictly liable for the cost of cleaning up the property. The court most likely found that Exxon was
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not liable, because gasoline storage is not an abnormally dangerous activity
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Ginger is retired school teacher to bakes goods in her spare time. She often delivers a batch of her cookies to the neighborhood restaurant to be sold at the cash register. One of her batches of cookies causes more than 20 people to become extremely sick with food poisoning. Which of the following statements is applicable?
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Ginger can be sued under the strict product liability theory of product liability.
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Martha is walking from her office building to her car in a torrential downpour with an umbrella manufactured by Umbrellas USA, Inc. She is struck by lightening, and files suit claiming the manufacturer failed to include a warning. A court would likely find that
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there is no duty to warn about risks that are obvious or commonly known, such as the risk of lightening occurring during a rainstorm
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David, a ten-year-old, purchased a plastic snow sled from K-Mart. He went sledding, lost control, hit a tree, and was injured. David’s parents filed a negligence lawsuit in a state court against K-Mart, alleging that the store should not have sold this type of sled because it was difficult to steer and had no brakes, making it unreasonably dangerous. K-Mart contended that sledding is an inherently dangerous activity and that David assumed the risks involved when he went sledding. The court probably found that K-Mart was
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not liable, because David assumed the risks of sledding.
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Harvey is driving while intoxicated in his new truck when his tire blows out. He loses control of the truck and crashes into a tree causing injury to himself and to his vehicle. The tire is determined to be defective. Which of the following defenses would be the most viable to be raised by the tire manufacturer in a product liability cause of action?
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COMPARATIVE NEGLIGENCE
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Amy Mendoza is a local radio personality who goes by the name “Amy in the A.M.” on the air. She also uses that label in print ads to help radio listeners distinguish her show from the other morning radio shows in her town. Amy would be most likely to register her name as a
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SERVICE MARK
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On the Border Mexican restaurants all have the same terracotta and turquoise color scheme, with posters of bullfighters and maps of Mexico on the walls. The restaurants also have identical furniture and menus, the wait staff wear similar types of clothing, and the same music plays in the background. The restaurants have a unique ambience, known in legal terms as their
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TRADE DRESS
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Hot Products owns a patent for a fan motor that it uses in ceiling fans. Allied Electric uses a fan motor that is identical to Hot’s in the air conditioners it manufactures. Allied does not have Hot’s permission to use the motor. Can Hot sue Allied for patent infringement?
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Yes, because Allied infringed on Hot’s patent
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Cason thinks of a new concept for a palm-sized computer notebook. He also thinks of a new, faster process for producing the notebooks. Federal copyright law protects
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neither Cason’s concept nor his process
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A is the software designer of the most popular video game in the country. A decides to develop the game into a series and have its best designer, Laz, head the team of programmers working on the next game. Laz quits and goes to work for GameWare, taking some files for the new game with him. Under trade secret laws, A has protection for
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the information in the files and Laz’s ideas for the game design.
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Rachel has just finished the business plan for a franchise that she expects to have international appeal. She is concerned about protecting the trade name of the business. Which of the following provides her an avenue for registering a trade name internationally?
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The Madrid Protocol.
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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
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trademark dilution.
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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
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Digital Millennium Copy Right Act.
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Michael, a teacher, posts derogatory comments about his fellow teachers and students on his Facebook page, and is subsequently terminated. His posts likely
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violated school policy, and his termination will be upheld.
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Ben has consulted with an attorney regarding his employer having reviewed his personal communications at work. Be would have a viable claim for a violation of the Electronic Communications Privacy Act for which of the following actions?
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Accessing Ben’s private Facebook page by guessing his password
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Jennifer has filed a privacy complaint against Google. The federal agency to conduct an investigation by consumer complaints is the
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FTC
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Jonas is arrested for the criminal offense of attacking and injuring a neighbor in the neighbor’s front yard. After the arrest, he is concerned about potential civil liability. Which of the following should he be concerned about relating to both criminal and civil liability in this case?
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ASSAULT
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Joseph, a 16-year old honor student calls 911 from a pay phone to report a possible bomb in the town square. He does not have a bomb or any materials to make a bomb, and has no intention of placing one in the town square. He is arrested for making a terrorist threat, and claims that he has not committed a criminal offense. A court will likely
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find Joseph guilty of making a terrorist threat
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Starla was killed when her car struck one of a group of horses that were roaming on the highway. The Sea Horse Ranch owned the horses, which were property of the corporation that owned the ranch. The horses frequently escaped through poorly maintained fences surrounding the ranch. Shipley, the ranch’s owner and president of the corporation, had been cited by the police and the humane society for allowing his horses to run free on the highway. The state sought to prosecute both the Sea Horse Ranch and Shipley for involuntary manslaughter. Can the Sea Horse Ranch corporation be held liable for the crime?
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Yes, because a corporation can be held liable for the criminal actions of its officers
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Gavin runs an illegal gambling operation out of the back of a store that he owns. The store shows increasing profits because Gavin reports the profits of his gambling operation as legitimate store income on his tax returns. Gavin is engaged in
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MONEY LAUNDERING
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Justin is the accountant for a trucking company. A driver, Andrew, holds a gun to Justin’s head and forces him to steal from the company. Justin falsifies records, obtains cash, and gives it to Andrew. If criminal charges are brought against Justin, he can assert the defense of
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DURESS
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The Department of Justice wants access to the telephone records of a major newspaper. The requirement for a search warrant, an order from a judge authorizing the search of the records, would be required under the
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4TH AMENDMENT

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