legal environment of business Midterm 1

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This is the legal environment of business midterm for CSCC LEGL 2064, use this to help study. Test over CH. 1,2,6,9, and 14



Each state has its own constitution


Every state has adopted some or all of the Uniform Commercial Code.


Common law is a term for the laws that are familiar to most of us.






Linear reasoning proceeds from one point to another with the focal point being the conclusion.


Deductive reasoning involves a main premise, a minor premise, and a conclusion.


A jury's good sense and careful consideration of consequences is known as jurisprudence.




Rules and regulations adopted by federal administrative agencies are compiled in the Code of Federal Regulations.




A unilateral is a promise for an act


An agreement is evidenced by a single event: an offer.


A statement of future intent¾"I plan to sell my 700-pound sow"¾is an offer.


An acceptance subject to new conditions implicitly rejects the offer.


Under the mailbox rule, an acceptance takes effect at the time it is sent.


In contract law, "consideration" refers to the courtesy that one party shows another in negotiating a deal.


Parties are not usually free to bargain as they wish.






Misrepresentation of a material fact can occur through conduct alone.




In Case 14.1, The Coca-Cola Co. v. The Koke Co. of America, the United States Supreme Court permitted a Coca Cola competitor to call a product "Koke."


A famous trademark may be diluted only by the unauthorized use of an identical mark.


A trademark must be registered to support a trademark infringement action


A suggestive use of ordinary words may not be trademarked.


A service mark distinguishes products used by the government.


The unauthorized use of another's mark in a domain name is generally permissible because the Internet is vast.


A license permits the use of intellectual property for certain limited purposes.


A patent applicant must demonstrate that an invention is "commercially practicable" to receive a patent.


Almost anything is patentable.


In determining whether copyright protection should be granted, the central issue is the idea that forms the basis for a work


In determining whether a copyrighted work is infringed under the "fair use" doctrine, one factor is the effect of the use on the market for the work.


There are no registration requirements for trade secrets.


The theft of trade secrets is not a crime unless a contract is breached.



to all of the states.


administrative regulations.


the U.S. Constitution takes precedence.


case law.

In a suit against Owen over the performance of their contract, Phil obtains specific performance. This is

an order to perform what was promised.

MaxiMart, Inc., is a discount retailer. MaxiMart's customer service employees are on strike. Sixty of the workers block the entrances to one of MaxiMart's stores. To get them away from the doors, MaxiMart should seek

an injunction.

Eliza is a state court judge. Flora appears in a case in Eliza's court, claiming that Glover breached a contract. As in most state courts, Eliza may

award damages or cancel the contract.


that court and courts of lower rank.

In Sales Distribution Corp. v. Consumer Products Co., the court decides that a precedent is incorrect or inapplicable. The court

may rule contrary to the precedent.




how that statute will be applied.

To Serena, the written law of a particular society at a particular time is most significant. Serena is

a legal positivist.


the appellant.


could be either party


a per curiam opinion.


ensure proof of the contracts' existence.

When Jeff's car breaks down, he asks Kwik Tow, Inc., to tow it from its location to Lou's Repair Shop. There is no discussion of a price, and Jeff and Kwik do not sign any documents. After the tow, Kwik sends Jeff a bill. With respect to Jeff's obligation to pay the bill, this is

an implied contract.

Scot enters into a contract with Tiffany that later proves voidable at Tiffany's option. If she elects to avoid the contract

both parties are released from it.

Yvon asks Zach, "Do you want to buy one of my fishing rods?" This is

not a valid offer because the terms are not definite.




required to pay, because Jon obtained a degree at Ivy.

Bubbly Cola features Sparkly Cola's trademark without its owner's permission. Bubbly's use of the mark is actionable provided

consumers are confused.

In 2012, Online Marketing Corporation registers its trademark as provided by federal law. After the first renewal, this registration

is renewable every ten years.

Modern Clothing, Inc., and National Denim Corporation use the mark "Made by Members of the U.S. Textile Workers Union" on the tags of their products to indicate the participation of the union in the manufacture. Modern and National are not in business together and do not own this mark. The mark is

a collective mark.

Mary Kate Corporation allows Ashley Company to use Mary Kate's trademark as part of Ashley's domain name. This is

a license.

Elementals, Inc., makes computer chips identical to Flik Quik Corporation's patented chip, except for slight differences in the "look," without Flik's permission. This is most likely

patent infringement.

In 2011, Sara writes Terror at the Track, a novel about racecar driving. Sara does not register the work with the appropriate government office. Under federal copyright law, Sara's work is protected

for the life of the author plus seventy years.

Garland publishes a book titled Half Pipe, Full Throttle, which includes a chapter from Ian's copyrighted book Snowboarder. Garland's use of the chapter is actionable provided

Garland does not have Ian's permission.

Mace copies Nick's book, Off the Beaten Path, in its entirety and sells it to Parkland Books, Inc., without Nick's permission. Parkland publishes it under Mace's name. This is

copyright infringement

Kay and Leo copy and exchange MP3 music files over the Internet without anyone's permission. With respect to songs owned by Natural Recording Company, this is

copyright infringement.

The idea for "On Your Mark," a computer game featuring racing cars, is protected by

trade secrets law.

Like most successful companies, Paychex, Inc., has trade secrets. The law protects those secrets if

the information is unique and has value to a competitor.

In a lawsuit between Digital Hardware Corporation and Software Engineering Associates, Inc., the court applies the doctrine of stare decisis. What is this doctrine? What does this doctrine have to do with the American legal system?

In a common law legal system, past judicial decisions are binding in current disputes with similar facts. This feature of the common law, which is the basis of the American legal system, is unique because, unlike the law in other legal systems, it is judge-made law. Within the common law system, when possible, judges attempt to be consistent and to base their decisions on the principles suggested by earlier cases. The body of principles and doctrines that form the common law emerged over time as judges applied the principles announced in earlier cases to subsequent legal controversies. The practice of deciding cases with reference to former decisions, or precedents¾the cornerstone of the American legal system¾is called the doctrine of stare decisis. Under this doctrine, judges are obligated to follow the precedents established within their jurisdictions. This helps courts to be more efficient, and makes the law more stable and predictable.

For a business law class, Kelly reads and briefs several court opinions using the IRAC method of legal reasoning. What do the letters I, R, A, and C abbreviate? What are the steps in the IRAC method?

The letters I, R, A, and C designate "Issue," "Rule," "Apply," and "Conclude." The IRAC method of legal reasoning requires Kelly or any other student or reader to first summarize the important facts of a legal case and state the salient issue or issues. The second step is to determine and set out the rule of law that applies to the facts to resolve the issue. The third step is to apply that rule to those facts. The application of the rule requires an answer to the question posed by the issue. This answer may involve one or more different types of legal reasoning, but those reasons should be thought out and expressed clearly. Finally, the conclusion derived from the application of the rule to the facts is stated. This is sometimes referred to as the result or the outcome in a case¾who won, who lost, what the award, if any, consists of, or what the parties are, or are not, required to do next.

Ed, a businessperson, is a friend of Fran, the owner of a candy store. Every day, Ed spends five minutes in Fran's candy store, looking at the candy and usually buying one or two candy bars. One afternoon, Ed goes into the store, looks at the candy, and picks up a $1 candy bar. Ed waves the candy at Fran without saying a word and walks out. Is there a contract? If so, how would it be classified in terms of formation, performance, and enforceability?

The facts presented here indicate the presence of all the elements necessary for a valid contract. There are a serious offer and acceptance, consideration is exchanged (a candy bar for $1), both parties have capacity, the selling of the candy is legal, and there is no particular form required for this type of contract. Thus, a contract exists and for the reasons given here is classified as valid, enforceable, and informal. In addition, this is a classic case of an implied contract. There is no explicit agreement between the parties. Rather, an agreement is implied by Ed's action of waving the candy bar and by his past conduct. By his conduct Ed is telling Fran that he will pay for the candy later. The contract is also bilateral (as opposed to unilateral), because Fran impliedly promises to sell the candy to Ed in exchange for Ed's implied promise to pay. The contract is partially executory, as Ed has engaged to pay for the candy in the future. Because the contract is for a legal purpose, both parties have capacity, and voluntariness of consent is not an issue, the contract is neither voidable nor void.

On May 1, Brand Name Industries, Inc. (BNI), sent Carol a letter, via overnight delivery, offering to employ her to audit BNI's financial statements for the current year for $1,000. In the letter, BNI stated that Carol had ten days to accept. On May 5, Carol sent BNI a fax that stated, "The price for the audit seems too low. Would you consider paying $1,200?" BNI received the fax. The next day, Dan offered to conduct the audit for $800. On learning of Dan's offer, Carol immediately e-mailed BNI, agreeing to do the work for $1,000. BNI received this e-mail on May 7. Explain why BNI and Carol do, or do not, have a contract.

BNI and Carol have a contract. Carol effectively accepted BNI's offer to perform an audit of BNI's financial statements. Carol's fax was merely an inquiry about BNI's offer. An attempt to change the terms of an offer is a rejection of that offer, terminates it, and makes a counteroffer. Here, however, the fax did not indicate an intent to reject the offer, and a reasonable person in BNI's position would not conclude that the fax was a rejection. Carol was still considering the offer. Her learning of Dan's offer did not act as a revocation of BNI's offer (although the offer would have been revoked if BNI had accepted Dan's offer, and Carol had learned of this acceptance). Also, in accepting BNI's offer, Carol used a medium that was reasonable under the circumstances because BNI did not expressly specify any particular method of acceptance. Carol's acceptance was timely sent and received, and consequently, was effective on dispatch.

Courts apply the objective theory of contract when determining contract formation. Explain this basic contract theory.

Contract must bre determined by what a resonable person believes basd on the objective facts, what was said , how did the parties act and what were the circumstances.

Is the sharing of stored music files proper and legal? Exlain using the cases and material from chapter 14.

copyright isues arise -means that this is copyright infringment violating the artists intellectual property and therefore,the artist or record company can sue for damages and copyright infringment.

For five years, baby-food makers Baby-One Corporation and Baby-B-Mine, Inc., both use the phrase "Tastes Good" on their labels. Baby-One files a suit against Baby-B-Mine, claiming trademark infringement. Baby-B-Mine argues that the phrase is not generally associated with any particular firm, pointing to other companies that use the same phrase on their labels. In whose favor is the court most likely to rule, and why?

The court is most likely to rule in favor of the defendant Baby-B-Mine, because the phrase "Tastes Good" is generic and therefore cannot be owned by the plaintiff Baby-One. That the phrase is generic is indicated by it use by other companies on their labels. Also, that both baby-food makers have used the phrase on their labels for the same period of time supports a finding that the phrase is generic. The court might consider the words of the phrase, "tastes" and "good," and reason that there is nothing distinctive about the words or their combination, nor has the phrase developed a secondary meaning or any other attributes that would support a conclusion in the plaintiff's favor.

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