BUSFIN 3500 MIDTERM QUESTIONS AND ACCURATE
ANSWERS
In Design Strategies Inc v Davis, the court found that: - Answers - Davis had breached
his fiduciary duty when he informed IT Web about a business opportunity with Microsoft.
You want to buy a house. You go to a real estate agent who is a "seller's agent,"
someone who represents exclusively only sellers in real estate transactions. While
showing you one of the properties, the agent asks what is your budget limit, and you tell
the agent the maximum price you can pay. You tell the agent to make an offer that is
below what you previously told the agent was the limit of what you could afford to pay.
When the agent delivers the offer to the seller, the agent informs the seller that your
offer is below what you previously told the agent was your budget limit to pay for a
house. When the seller hears this, the seller does not accept your offer, but has the
agent return the form with a counteroffer from the seller at just below what you told the
agent was the maximum amount you could afford to pay. Under these circumstances,
the agent has breached the agent's fiduciary duty to you. - Answers - False
The legal and ethical rule forbidding dealings where there is a conflict is not an absolute
prohibition, one can maintain a conflict of interest with full disclosure to all parties
involved and with the consent of all the parties involved. - Answers - True
In Knudsen v Lax, the court focused on the landlord's internal, subjective state of mind
in determining whether the landlord violated the landlord's obligation of good faith and
fair dealing toward the tenants, parents of three young girls, who wanted to terminate
their lease six months before it ended when the landlord rented out the adjacent
apartment to a sexual predator. - Answers - False
The federal Sarbanes Oxley Act and the federal Sentencing guidelines are examples of
using the law as a motivator toward ethical behavior. - Answers - True
Legal realism is a conception of law that looks primarily to logic and reasoning to
explain what occurs in the legal process - Answers - False
Only the legislative branch of the United States makes law - Answers - False
The US Supreme Courts opinion in Abramski v US is an example of - Answers -
Purposive legal reasoning
"A law is a command proceeding from the political authority of a state and addressed to
the persons who are subject of that authority" is a definition of law best identified as a
positive conception - Answers - True
, For business executives, the doctrine of stare decisis is important because it allows
business decisions to be made on the basis of prior court decisions - Answers - True
Recall Otis engineering Corp v Clark, at pp 5-77=, in the introduction of the B &K
textbook. The courts holding is - Answers - Part of the common law of Texas
In Knick v Township of Scott, the U.S. Supreme Court overruled one of its precedents,
Williamson v Hamilton Bank. In so doing, it established that when deciding whetehr to
overrule one of its past decisions, the Supreme Court will - Answers - Consider several
factors including the quality of the reasoning of the past case, the workability of its rule,
its consistency with other related decisions, and the reliance on the decision
The Federal District Court has exclusive jurisdiction over any case involving diversity of
citizenship. - Answers - False
That each State in the United States has its court system, headed by a state supreme
court, and there also exists the court system of the United States of America, headed by
the U.S. Supreme Court, is an example of the concept of federalism. - Answers - True
The burden of proof on the plaintiff in a civil case is to prove the plaintiff's claim: -
Answers - By a preponderance of the evidence
Al Ladin, attorney for Spray Lawn, Inc., suspected that two of Spray Lawn's lower-
echelon employees were diverting the corporation's funds to their own use. Ladin
confronted the employees with his suspicions, and they both confessed. At Ladin's
insistence, the employees wrote a detailed account of their activities involving the
diversion of company funds. Their employment was then terminated. Subsequently, the
IRS conducted an audit of Spray Lawn, Inc. and issued a summons for the employees'
written statements in Ladin's possession. - Answers - Ladin may lawfully refuse to
produce the statements on the basis of the attorney-client privilege.
The most likely result of AT&T Mobility LLC v. Conception would be an increase in class
action lawsuits. - Answers - False
A long-arm statute: - Answers - Must meet the 'minimum contacts' test required by U.S.
Supreme Court interpretation of the Due Process Clause of the U.S. Constitution.
When a court relies on stare decisis, which of the following is language it may use in its
opinion? - Answers - "The case at hand is virtually indistinguishable from Smith v Jones
and we are thus bound to follow the result of that case"
President Biden signed into law a ball that passed in both houses of Congress (the
House of Representatives and the Senate) that: - Answers - Invalidates arbitration
agreements that preclude a party from filing a lawsuit in court involving sexual assault or
sexual harassment, at the election of the party alleging such conduct
ANSWERS
In Design Strategies Inc v Davis, the court found that: - Answers - Davis had breached
his fiduciary duty when he informed IT Web about a business opportunity with Microsoft.
You want to buy a house. You go to a real estate agent who is a "seller's agent,"
someone who represents exclusively only sellers in real estate transactions. While
showing you one of the properties, the agent asks what is your budget limit, and you tell
the agent the maximum price you can pay. You tell the agent to make an offer that is
below what you previously told the agent was the limit of what you could afford to pay.
When the agent delivers the offer to the seller, the agent informs the seller that your
offer is below what you previously told the agent was your budget limit to pay for a
house. When the seller hears this, the seller does not accept your offer, but has the
agent return the form with a counteroffer from the seller at just below what you told the
agent was the maximum amount you could afford to pay. Under these circumstances,
the agent has breached the agent's fiduciary duty to you. - Answers - False
The legal and ethical rule forbidding dealings where there is a conflict is not an absolute
prohibition, one can maintain a conflict of interest with full disclosure to all parties
involved and with the consent of all the parties involved. - Answers - True
In Knudsen v Lax, the court focused on the landlord's internal, subjective state of mind
in determining whether the landlord violated the landlord's obligation of good faith and
fair dealing toward the tenants, parents of three young girls, who wanted to terminate
their lease six months before it ended when the landlord rented out the adjacent
apartment to a sexual predator. - Answers - False
The federal Sarbanes Oxley Act and the federal Sentencing guidelines are examples of
using the law as a motivator toward ethical behavior. - Answers - True
Legal realism is a conception of law that looks primarily to logic and reasoning to
explain what occurs in the legal process - Answers - False
Only the legislative branch of the United States makes law - Answers - False
The US Supreme Courts opinion in Abramski v US is an example of - Answers -
Purposive legal reasoning
"A law is a command proceeding from the political authority of a state and addressed to
the persons who are subject of that authority" is a definition of law best identified as a
positive conception - Answers - True
, For business executives, the doctrine of stare decisis is important because it allows
business decisions to be made on the basis of prior court decisions - Answers - True
Recall Otis engineering Corp v Clark, at pp 5-77=, in the introduction of the B &K
textbook. The courts holding is - Answers - Part of the common law of Texas
In Knick v Township of Scott, the U.S. Supreme Court overruled one of its precedents,
Williamson v Hamilton Bank. In so doing, it established that when deciding whetehr to
overrule one of its past decisions, the Supreme Court will - Answers - Consider several
factors including the quality of the reasoning of the past case, the workability of its rule,
its consistency with other related decisions, and the reliance on the decision
The Federal District Court has exclusive jurisdiction over any case involving diversity of
citizenship. - Answers - False
That each State in the United States has its court system, headed by a state supreme
court, and there also exists the court system of the United States of America, headed by
the U.S. Supreme Court, is an example of the concept of federalism. - Answers - True
The burden of proof on the plaintiff in a civil case is to prove the plaintiff's claim: -
Answers - By a preponderance of the evidence
Al Ladin, attorney for Spray Lawn, Inc., suspected that two of Spray Lawn's lower-
echelon employees were diverting the corporation's funds to their own use. Ladin
confronted the employees with his suspicions, and they both confessed. At Ladin's
insistence, the employees wrote a detailed account of their activities involving the
diversion of company funds. Their employment was then terminated. Subsequently, the
IRS conducted an audit of Spray Lawn, Inc. and issued a summons for the employees'
written statements in Ladin's possession. - Answers - Ladin may lawfully refuse to
produce the statements on the basis of the attorney-client privilege.
The most likely result of AT&T Mobility LLC v. Conception would be an increase in class
action lawsuits. - Answers - False
A long-arm statute: - Answers - Must meet the 'minimum contacts' test required by U.S.
Supreme Court interpretation of the Due Process Clause of the U.S. Constitution.
When a court relies on stare decisis, which of the following is language it may use in its
opinion? - Answers - "The case at hand is virtually indistinguishable from Smith v Jones
and we are thus bound to follow the result of that case"
President Biden signed into law a ball that passed in both houses of Congress (the
House of Representatives and the Senate) that: - Answers - Invalidates arbitration
agreements that preclude a party from filing a lawsuit in court involving sexual assault or
sexual harassment, at the election of the party alleging such conduct
