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355 Cards in this Set

  • Front
  • Back
True or false: The court in U.S. v. Park decided that there is no criminal liability for a corporate officer who had notice of a violation of the law if he could prove that he delegated the responsibility to someone else.
FALSE. [The court ruled that he was responsible because he had noticed that previous violations had not been corrected. He could not delegate away his responsibility. See the last 3 paragraphs of the opinion on page 248.]
True or false: Corporate boards could be held liable for their failure to institute and monitor adequate internal controls to prevent fraud.
TRUE. [See the last paragraph on page 253 regarding In Re Caremark. Note that directors may also have personal liability as well.]
True or false: Corporate sentencing guidelines use a culpability multiplier.
TRUE.
True or false: Actus reus is the intent to commit a crime.
FALSE. [It is mens rea. Actus reus is the action that is criminal. See pages 255-259.]
True or false: You can be arrested and charged with a crime if you look at a new Porsche and think to yourself, "Gee, I’d love to steal that car."
FALSE. [There must be an actus reus. Criminal intent alone is not enough.]
True or false: To prove mens rea for corporations, you must prove intent to commit a crime on behalf of directors by showing individual intent to commit a crime or by showing their knowledge of actions and failure to object.
TRUE.
True or false: Obstruction of justice is a felony.
TRUE. [Make sure that you understand the types of actions that could result in liability for obstruction on page 260. Also note that felonies are a big deal! You go to state prison – not just a county jail!]
True or false: Intentionally destroying a computer by installing or transmitting a virus program is not a crime.
FALSE. [See page 262.]
True or false: The Economic Espionage Act provides that it is a criminal offense to steal trade secrets using downloading, unauthorized access, etc.
TRUE. [See page 262.]
True or false: Obtaining money, goods, services, or property through false statements and misleading the other party with intent to defraud is a crime.
TRUE. [Fraud is discussed on page 264.]
True or false: Miranda rights are required to be given when individual is in "custodial interrogation" meaning he or she is unable to leave and he or she is being questioned.
TRUE. [Note: If the individual confesses without knowing his or her rights, the confession will be inadmissible in court. However, there may still be other evidence that is sufficient to convict the person without the confession.]
True or false: Probable cause is required for a search warrant.
TRUE. [See page 269.]
True or false: Commercial bribery is only criminal for the recipient.
FALSE. [The person making the bribe is also responsible. See page 264.]
True or false: A corporation’s failure to follow crime prevention programs can result in harsher sentences under the U.S. corporate sentencing guidelines.
TRUE.
True or false: Voluntary reporting of criminal violations reduces a company's penalties under the federal sentencing guidelines.
TRUE.
Which group is not directly liable for business crime?

a. shareholders
b. managers who authorized the conduct.
c. managers who knew about the conduct and did nothing.
d. managers who fail to reasonably supervise employees who are engaged in criminal activity.
e. employees who participate in criminal activity.
a. shareholders

[Note: See page 247. Academic studies show that it takes 5 years for a company’s stock to recover from a major ethics scandal.]
2. The White-Collar Criminal Penalty Enhancement Act of 2002 or Sarbanes-Oxley Act provides for

a. increased criminal penalties
b. new crimes for certification of false financial statements
c. increased penalties for obstruction, mail, and wire fraud
d. all of the above are correct.
d. all of the above are correct.
The elements of theft and embezzlement include

a. an intent to take property
b. no authorization to take the property
c. both a and b
d. none of the above.
c. both a and b

[Note: Embezzlement is theft from an employer by an employee.]
The FBI has developed new technology that enables it to listen to conversations in homes from vans parked in the street outside the homes. While listening to conversations in one neighborhood, the FBI uncovers a meth lab. Agents move in and arrest those in the home without a warrant. Under the Kyllo case:

a. the FBI needs a warrant to listen only if it is going to arrest someone.
b. the FBI is not required to have a warrant because the information was uncovered without invading the house.
c. the FBI is not required to have a warrant because the information was uncovered from outside the private property of the individuals involved.
d. the FBI is required to have a warrant in order to listen to the conversations.
e. none of the above.
d. the FBI is required to have a warrant in order to listen to the conversations.

[Note: Everyone has a reasonable expectation of privacy in his or her home and that can not be violated without first obtaining a search warrant.]
The failure to give the Miranda warnings

a. is a problem only if the defendant is in custody.
b. is a problem only if the defendant is in jail.
c. will result in a dismissal of all charges.
d. none of the above
a. is a problem only if the defendant is in custody.

[Note: Miranda warnings are required when the suspect is in custody and under interrogation. If the proper warnings are not given then the defendant’s confession is not admissible in court. However, the rest of the evidence is admissible.]
Which of the following would mitigate an officer's or corporation's sentence under the corporate sentencing guidelines?

a. subordinates were demoted for questioning decisions
b. officer had no direct knowledge; he was only the supervising manager
c. the company had an ethics training program
d. subordinates failed to follow orders
c. the company had an ethics training program
Which of the following would be the crime of obstruction of justice?

a. making a false accounting entry to thwart investigators
b. certification of financial statements
c. destroying e-mails
d. both a and c
d. both a and c
Joan owns a citrus tree farm near Mesa, Arizona. Joan and her family have fertilized the trees each spring for 52 years. The irrigation for the trees carries the fertilizer remnants into the Salt River. When EPA investigators discover the fertilizer in the Salt River and trace the unique brand to Joan, they indict her for violation of the Clean Water Act, for the discharge of a substance into a waterway. Joan responds, "I didn’t know that there was fertilizer in the water."

a. Joan can be held criminally liable for negligence.
b. Joan has sufficient mens rea for the crime.
c. Joan can rely on the Ahmad case and escape criminal liability.
d. none of the above.
c. Joan can rely on the Ahmad case and escape criminal liability.

[Note: The prosecution must prove that she knew that fertilizer was going into the river and if the judge or jury decides that she thought that only water but not fertilizer was going into the river, she does not have the required intent to violate the statute, just as in the Ahmad case.]
Under the Corporate Sentencing Guidelines developed by the U.S. Sentencing Commission, sentences for officers increase if the following crime prevention methods are not in place

a. a written crime prevention program.
b. officer-level employees who are assigned responsibility for enforcement.
c. ethics programs.
d. crime prevention and detection processes.
e. all of the above are correct.
e. all of the above are correct.
The corporate sentencing guidelines may increase sentences if the following are not in place

a. a code of conduct
b. ombudsmen
c. a reporting hot line
d. mandatory ethics training
e. all of the above are correct.
e. all of the above are correct.
To prove obstruction of justice, the prosecutor must prove

a. the defendant intended to impede, obstruct, or influence investigation or the administration of justice
b. the defendant interfered with an investigation or prosecution of a criminal offense
c. both a and b
d. none of the above.
c. both a and b

[Note: Both the mens rea (in a above) and actus reus (in b above) must be established.]
Martha Stewart was

a. not convicted of insider trading although she did use insider information.
b. not convicted of insider trading because she did not use insider information.
c. was convicted of insider trading.
d. was convicted of obstruction of justice and insider trading.
b. not convicted of insider trading because she did not use insider information.
Which of the following is not a computer crime?

a. using computers to steal data
b. unauthorized use of computer equipment
c. alteration or destruction of computer files
d. entering fraudulent data
e. all of the above are computer crimes.
e. all of the above are computer crimes.
"Taking the fifth" means:

a. demanding a search warrant.
b. refusing to turn over corporate documents.
c. refusing to testify to prevent self-incrimination.
d. refusing to allow a search of your office.
c. refusing to testify to prevent self-incrimination.

[Note: Under the Fifth Amendment, you do not have to divulge incriminating information to investigators.]
What is not correct about the Racketeer Influenced and Corrupt Organization Act?

a. Parties must prove a pattern of racketeering activity to recover (2 violations within a 10 year period) of at least RICO crimes which include bribery, mail fraud, wire fraud, and fraud in the sale of securities.
b. Injured parties may obtain treble damages (three times the amount of damages) plus attorneys’ fees and costs.
c. It can only be used to prosecute organized criminal enterprises.
d. It has criminal and civil applications.
c. It can only be used to prosecute organized criminal enterprises.

[Note: Although RICO was designed to combat organized crime, it can be used against legitimate businesses as well. See pages 264-266]
Paying a bribe by disguising it as a consulting fee is an exemption to the FCPA.
FALSE. [Just "calling something by a different name" is one way we try to avoid facing ethical dilemmas and it does not work ethically or legally, especially in this context. See the first paragraph on page 222.]
The FCPA prohibits facilitation payments.
FALSE. [These are exceptions to the rule. See page 222.]
Are payments to officials to influence their independent judgment illegal under the FCPA?
Yes.
Up to how much are penalties for violations of the FCPA?
Twice the benefit obtained by the bribe.

[See the Alternative Fines Act on the bottom of page 222.]
The OECD Convention on the Combating Bribery of Foreign Public Officials in International Business Transactions will result in a form of the FCPA to be enacted in all of the member nations.
TRUE. [See page 226.]
The Provisions on the OECD Convention include
a. Prohibiting off-the-books accounts
b. Prohibiting currency fluctuations
c. Stabilizing currencies
d. Does not include bribes to political parties and political officials
a. Prohibiting off-the-books accounts

[See page 227.]
What are torts?
Civil wrongs that interfere with someone’s person or property such that injury results.
True or false: The article about Oprah below, if untrue, constitutes defamation as long as it is published with malice or with reckless disregard for the truth.
TRUE. [Malice or reckless disregard for the truth must be proven in defamation actions brought by public figures ONLY, such as Oprah Winfrey. See pages 286-288.]
True or false: Intentional torts are more than accidental wrongs.
TRUE. [These torts result from intentional acts. See page 285.]
True or false: Truth is a complete defense to defamation.
TRUE [See page 288.]
True or false: Opinion commentary is not defamation.
TRUE. [In Wilkow v. Forbes, Inc., an opinion piece questioning the ethics of a real estate developer, the magazine was not liable for defamation. Defamatory statements are false and malicious; however, opinions are not statements of fact, so they can not be the basis for a defamation action. The case is discussed on page 288.]
True or false: In Burnett v. National Enquirer, Inc., the story in the Enquirer depicting Ms. Burnett as drunk was libel, even though a retraction was printed. The standard of malice was applied, and the evidence clearly established that the article was published with knowledge that part or all of it was not true.
TRUE. [This is a good summary of the case. The case begins on page 289.]
True or false: False imprisonment occurs when a person is detained for any period of time against his or her will.
TRUE. [This tort occurs when a person’s ability to move about freely is restricted. See page 292.]
True or false: Physical damages are not required for liability for false imprisonment.
TRUE. [The only injury that is required is an interference with the plaintiff’s freedom to move about freely.]
True or false: Intentional infliction of emotional distress imposes liability for conduct that exceeds all bounds of decency.
TRUE. [This is the definition in the textbook. This tort has been used against debt collectors who unduly harass debtors.]
True or false: To avoid liability for negligence, all persons are expected to behave as ordinary and reasonably prudent people.
TRUE. [When your standard of care falls below this level, you will be held liable for any damages. See page 296.]
True or false: In the Randi W. case, a former employer can not be held liable for the failure to disclose information about a former employee.
FALSE. [The former employer was responsible for misrepresentation for providing glowing recommendations for this employee who had a very troubling record. The case begins on page 296.]
True or false: Letters of reference are usually exempt from liability for defamation.
[This is true under the laws of most states as long as the information contained in them is disclosed in good faith. This was mentioned in lecture but not discussed explicitly in the book. It is alluded to in #5 at the top of page 300.]
True or false: Failure to disclose information about the dangerous propensities of an employee can result in liability if employee goes on to harm others.
TRUE. [See the Randi W. case and page 297-298.]
True or false: "Car dealers are crooked" is an example of actionable defamation.
FALSE. [This statement is not directed at a specific, identifiable person.]
True or false: Asking a buyer to break its existing contracts with another supplier is contract interference.
TRUE. [It is also called tortious interference with contract. See page 291.]
True or false: Businesses are never liable for criminal activity on their premises.
FALSE. [They have the duty to use reasonable care to protect business invitees if they know or have reason to know of an unreasonable and foreseeable risk of harm to the invitee. See the Pichardo case and the language in the second whole paragraph on page 301.]
True or false: To establish assumption of risk, the defendant must show that the plaintiff was aware of the risk and accepted it voluntarily.
TRUE. [See page 306.]
True or false: Comparative negligence reduces the plaintiff's recovery.
TRUE. [See page 306.]
True or false: The decision in BMW v. Gore lead to an overall increase in the amount of punitive damages awarded.
FALSE. [The case decreased or eliminated punitive damages in many situations. You should understand the factors on p. 309-310 discussing when punitive damages will be assessed and how much is appropriate.]
True or false: Tort reform is designed to help people that are injured by increasing the amount of compensation they receive from the person that committed the tort.
FALSE [Tort reform is designed to decrease the damages that injured parties may recover. See pages 308-309.]
Negligence requires which of these elements:

a. breech of duty
b. injury
c. causation
d. all of the above
d. all of the above
Category of tort which requires that the person causing the harm compensate the injured party without regard to fault is known as:

a. intentional tort
b. negligence
c. strict liability
d. none of the above
c. strict liability

[See page 311.]
Which statement is correct?

a. Defamation includes the torts of slander, oral falsehoods that damage a person’s reputation, and libel, damaging written falsehoods.
b. Slander includes defamation and libel.
c. Using the defense of the privilege of equity, even if a statement is false, no action can be brought against the speaker or writer.
d. If Bill calls George dishonest and incompetent with only two other persons present, the act is not slander.
a. Defamation includes the torts of slander, oral falsehoods that damage a person’s reputation, and libel, damaging written falsehoods.
Bill entered a car race knowing that there was a risk of injury or death from a crash. Bill was seriously injured in a crash. Bill sued the owner of the track alleging negligence. The track owner's best defense is:

a. assumption of risk
b. contributory negligence
c. intervening forces
d. all of the above
a. assumption of risk

[Note: Bill knew of the risk and voluntarily accepted it.]
The elements of defamation are

a. A statement about a business’ or person’s reputation or honesty that is untrue
b. A statement about a discernible business
c. Publication to a third party
d. All of the above
d. All of the above
The tort of contract interference occurs when

a. there is a valid contract
b. the third party knew of contract
c. the plaintiff is injured
d. the third party induces one of the parties to breach the original contract.
e. all of the above.
e. all of the above.
The defense of shopkeeper’s privilege

a. Applies to the tort of negligence.
b. Applies to the tort of defamation.
c. States that shopkeepers may detain individuals for a reasonable time.
d. None of the above.
c. States that shopkeepers may detain individuals for a reasonable time.

[Note: The shopkeeper must prove that he had a reasonable basis for detaining the suspected shoplifter. See page 292 for more.]
Invasion of privacy includes

a. Intrusion into plaintiff’s private affairs
b. Public disclosure of private facts
c. Appropriation of another’s name for commercial advantage
d. All of the above.
d. All of the above.

[Note: See page 293-294.]
In order to protect yourself and your employer from a defamation suit for providing information in references

a. Stick with facts, do not make judgments
b. Check privilege laws in your state
c. Both a and b
d. None of the above.
c. Both a and b

[See page 300.]
In order to prove negligence

a. “but for” causation must be proven.
b. Proximate cause must be proven.
c. Both a and b.
d. None of the above.
c. Both a and b.

[Note: “But for” causation is established by showing “but for the defendant’s negligence, the plaintiff would not have been injured”. “Proximate cause” is established if the damages to the plaintiff are foreseeable.]
Jane Mitchell, age 16, was shopping at her neighborhood Osco Drug Store. She had been looking at magazines as she waited for a friend. She decided to purchase a Tiger Beat magazine and then wait for her friend outside the store. She paid for the magazine, but as she headed for the door, the store manager used the store's loudspeaker system to announce, "You, with the green hair and the maroon Doc Marten's on. Yes, you, by the front of the store. I saw you take that magazine. Stop right there. I have a gun pointed at you." The manager's actions:

a. were excessive but will not result in any liability.
b. are protected by the shopkeeper's privilege.
c. constitute defamation.
d. none of the above.
c. constitute defamation.

[Note: Threatening to shoot at someone is not a reasonable means to use in order to detain a suspected shoplifter. Defamation occurs when a person makes false statements that are published.]
A-Plus Linens sent the following notice to John C. Lincoln Hospital: "Break your current linen contract and we'll give you $5 for every 100 pounds of linen you send our way." The notice sent by A-plus:

a. is invasion of privacy.
b. is contract interference.
c. is defamatory.
d. none of the above.
b. is contract interference.

[Note: Clearly, A-Plus knows that the hospital has a contract in place with someone else and is trying to persuade the hospital to break it. See page 291 for more information.]
A local liquor store posts the checks of customers that are returned from the bank. The store manager says the public display of the checks is a good way to deter other bad-check writers. The display of the checks is:

a. an invasion of privacy.
b. defamation.
c. protected by a qualified privilege.
d. none of the above
a. an invasion of privacy.

[Note: In this example, private information is displayed in public. This is not defamation because the fact that the checks were returned due to insufficient funds is true.]
The "But for" test:

a. is a test for causation.
b. is the test for proximate cause.
c. has been eliminated as the causation test in negligence cases.
d. none of the above
a. is a test for causation.

[Note: See page 302.]
Which of the following defenses to negligence serves as a complete bar to recovery?

a. comparative negligence
b. contributory negligence
c. both a and b
d. none of the above
b. contributory negligence

[Note: See page 305.]
Which of the following constitutes a defamatory statement (assuming the statements are untrue)?

a. "I don't think you'll be happy with their work."
b. "He was dismissed for embezzlement from his last job."
c. "I don't care for him at all."
d. All people from Kentucky are stupid."
b. "He was dismissed for embezzlement from his last job."

[Note: Item “b” is a false and malicious statement. Item “c” is an opinion and “d” is not specific enough to injure a specific identifiable person.]
Best practices when invoking the shopkeeper’s privilege include

a. Stopping shoplifters discreetly.
b. Yelling, “stop thief” when a suspected thief leaves the store.
c. Not using physical force unless it is in response to the shoplifter’s physical force
d. a and c only.
e. None of the above.
d. a and c only.

[Note: See page 293 for more information.]
Comparative negligence means

a. If any portion of the damages suffered by the plaintiff were caused by the plaintiff, the plaintiff’s damages will be reduced by the amount of damages he caused.
b. If any portion of the damages suffered by the plaintiff were caused by the plaintiff, the plaintiff may recover damages for all of his injuries.
c. If any portion of the damages suffered by the plaintiff were caused by the plaintiff, the plaintiff may not recover damages for any of his injuries.
d. None of the above.
a. If any portion of the damages suffered by the plaintiff were caused by the plaintiff, the plaintiff’s damages will be reduced by the amount of damages he caused.

[Note: See page 306.]
True or false: A plaintiff may usually recover in contract and in tort for injuries caused by defective products.
TRUE. [Note: Injured parties may recover under tort for negligence and strict liability and under breach of warranty under contract law.]
True or false: "This carpet is stain-resistant" is a statement of opinion.
FALSE. [This is a warranty. The bottom of page 318 has additional examples.]
True or false: “This iPod holds 2000 songs” is an implied warranty.
False. [It is an express warranty. See page 318.]
True or false: “This iPod has excellent sound quality” is an implied warranty.
False. [It is an opinion.]
True or false: Express warranties can be disclaimed at any time.
False. [They may not be disclaimed. See Exhibit 10.2 on page 333.]
True or false: A seller does not have to use the term “promise or guarantee” to make an express warranty.
True. [See pages 318 - 319.]
True or false: The Federal Trade Commission investigates price claims such as “50% off” on consumer goods to ensure that the original price is not artificially inflated and the savings described by the vendor are accurate.
True. It also regulates content control and accuracy, performance claims, celebrity endorsements, bait and switch claims and product comparisons. [See page 323.]
True or false: Claims about the ability or effectiveness of a product should be supported by evidence to avoid a lawsuit by the Federal Trade Commission.
True. [See page 323.]
True or false: “Bait and switch” occurs when a company advertises a cheap product to get you in a store and then either refuses to sell the product to you or does not have sufficient quantity in stock. The seller then attempts to switch the customer to a “better” (more expensive) product.
True [See page 325.]
True or false: The implied warranty of merchantability is given in all sales of products by all sellers.
False. [This only applies when the seller is a “merchant” who ordinarily deal with the goods that are the subject of the contract. See page 329.]
True or false: Privity is required between the buyer and seller of a defective product under strict liability theory.
False. [You should know the table labeled Exhibit 10.3 on page 343. Privity is not required for recovery under tort theories but is required under the warranty or contract theories.]
True or false: Knowledge of a defect and failure to prevent it from causing harm creates liability for a seller or manufacturer under negligence theory.
True. [The seller has to know of the defect before the product was sold, or the seller had to allow sales to continue knowing that the product had a defect. However, knowledge is not required under strict liability theory. See page 342.]
True or false: Manufacturers have a duty to warn buyers when there is a foreseeably dangerous use of a product that buyers know is dangerous.
False. [Manufacturers have a duty to warn buyers when there is a foreseeably dangerous use of a product that buyers do not know is dangerous. See page 339.]
Under this warranty, automobiles must accelerate and brake.

a. Express
b. Implied warranty of merchantability.

c. Implied warranty of fitness for a particular purpose.
d. All of the above
b. Implied warranty of merchantability.

[See page 329. The goods must be of fair or average quality and fit for ordinary purposes for goods of that type. They don’t need to do anything special, they just have to work.]
If a seller promises that goods are suitable for a use known to the seller and the item is unsuitable, this is violated

a. Express warranty
b. Implied warranty of merchantability
c. Implied warranty of fitness for a particular purpose.
d. All of the above
c. Implied warranty of fitness for a particular purpose.

[See page 332. The seller is selecting the proper item based on his or her skill and knowledge.]
Strict liability applies to

a. Persons engaged in the business of selling such a product.
b. All sellers.
c. Manufacturers only.
a. Persons engaged in the business of selling such a product.

[See page 336 and 342. See Restatement §402A. It applies to merchant sellers and manufacturers. So, WalMart is going to be liable for injuries caused by the toy trains that were painted with lead paint in Asia. However, a seller may be liable for negligence if he or she knew of the defect.]
Senco manufactures and markets a variety of pneumatic nail guns. John Lakin was using a Senco SN325 nail gun to build a new home. The gun automatically fired an unintended second nail that went through his cheekbone and into his brain. Lakin is permanently brain damaged. Lakin and his wife sued Senco for strict liability based on design defect. Lakin and his wife won. Senco appealed. Is Senco liable to Lakin for strict liability based on a design defect in the SN325 that allowed it to double fire?

a. No. There was no privity.
b. No. The plaintiff can not recover under strict liability.
c.Yes. There was a design defect that was inherently dangerous.
c. Yes. There was a design defect that was inherently dangerous.

[Note: The court of appeals held that the SN325 was defectively designed and affirmed the award of damages to Lakin and his wife. See page 336 for more about strict liability theory.]
Antonio Benedi consumed three or more glasses of wine a day. He also took Extra-Strength Tylenol. He was admitted to the hospital with liver and kidney failure. This was caused by a combination of Tylenol and too much alcohol. His Tylenol bottle did not contain a warning of the danger of the combination of Tylenol and excessive alcohol consumption. Benedi sued McNeil-P.P.C., the manufacture of Tylenol, for negligent failure to warn. Benedi won $7,850,000 in compensatory damages. McNeil appealed. Is McNeil liable for negligent failure to warn?

a. No. This is a manufacturing defect.
b. No. This is a design defect.
c. Yes. This is a negligent failure to warn of an inherent danger in the product.
c. Yes. This is a negligent failure to warn of an inherent danger in the product.

[Note: Tylenol now contains a warning that persons who regularly consume three or more alcoholic drinks a day should consult a physician before taking Tylenol. See page 339.]
Is Honda Motor Co., Ltd. (Honda) strictly liable to a plaintiff for the injuries suffered in the motorcycle accident during normal use?

a. No. Certain products are inherently dangerous and are known to the general population to be so under the theory of assumption of the risk.
b. No. Design defects are not covered by strict liability.
c. Yes. This is covered by a warranty.
a. No. Certain products are inherently dangerous and are known to the general population to be so under the theory of assumption of the risk.

[Note: Sellers are not strictly liable for failing to warn buyers of these generally known dangers. In this case, the court found that motorcycles are built to serve a certain purpose, and the Honda Hawk on which Camacho was injured was designed perfectly for this purpose. The court held that the danger was fully apparent and commonly known to persons of ordinary perceptions and sensibilities. Therefore, Honda did not owe a duty to warn Camacho of the dangers of riding a motorcycle. Camacho v. Honda Motor Co., Ltd., 701 P.2d 628 (Colo.App. 1985). See page 339.]
On November 1, 2006, the California Supreme Court in Buell-Wilson v. Ford Motor Co., refused to review a ruling that leaves Ford Motor Co. on the hook for $82.6 million in punitive damages because jurors felt Ford had acted reprehensibly and had taken no steps to correct design flaws that made the vehicle prone to rollovers. The plaintiff was paralyzed when her Ford Explorer rolled over. Ford’s counsel argued that the judge had prevented Ford from introducing critical evidence on industry safety standards. In particular, the evidence that would have shown the Explorer was one of the safest sport utility vehicles on the road. The plaintiff’s attorney stated that case law makes it clear that comparing a product’s safety or design features with those of competitors isn’t relevant. “What matters…is whether the challenged product is defective, not whether other products on the market are… Ford knew the Explorer was defectively dangerous, could have done something about it and didn’t.” [Mike McKee, SUV Case Will Keep Haunting Automakers, The Recorder – November 3, 2006]. The ruling

a. is correct because evidence that the manufacturer takes all possible precautions in manufacturing a product is irrelevant under strict liability theory.
b. Is correct because this indicates a breach of the warranty of fitness for a particular purpose.
c. Is incorrect because it is always a defense to show that other products are more dangerous.
d. is incorrect because evidence that the manufacturer takes all possible precautions in manufacturing a product is a defense under strict liability theory.
a. is correct because evidence that the manufacturer takes all possible precautions in manufacturing a product is irrelevant under strict liability theory.

[See page 336 in the second paragraph from the top stating that liability results even when the seller exercised all possible care in developing, producing and selling the product. Strict liability is strict liability -- very few defenses exist.]
Privity of contract between plaintiff and defendant is required
a. for recovery under negligence theory
b. for recovery under strict liability theory
c. for recovery under breach of warranty
d. a and b only.
e. a, b, and c.
c. for recovery under breach of warranty

[See page 343 Exhibit 10.3 – remember that privity is required for recovery under warranty theories.]
True or false: In a lease, the possession but not ownership of the property is transferred
True. See page 494.
True or false: In a snowboard rental shop, the owner has duty to check the rental equipment to be sure that it is in good working order and will not injure any patrons.
True. See page 495.
True or false: A debtor can give a lien in underlying collateral to provide more security to a creditor.
True. See page 495.
True or false: Secured transactions are governed by Article 9 of the UCC.
True. See page 495.
True or false: Ideas are patented if they are nonobvious novel and useful.
True. See page 497.
True or false: The grant of a patent is a guarantee that your product or invention will be protected.
False. The court still decides if the item meets the criteria, even if the Patent Office had approved it. See page 497.
True or false: Copyrights protect expressions of ideas, but not the ideas themselves.
True. The expression of the idea is protected. See page 498.
True or false: A copyright holder has no right to control the reproduction, distribution, public performances, derivative works and public displays of the created work.
False. The copyright holder has the exclusive right to the work. See page 498.
True or false: Software can not be copyrighted.
False. See page 499.
True or false: There are no criminal penalties for copyright infringement.
False. See page 499.
True or false: Terms that become generic, such as “aspirin” and “cellophane” may be trademarked.
False. They are generic and no one can give trademark a generic term. See page 504.
True or false: Blurring or creating confusion among consumers about the source of a product violates the Lanham Act.
False. It is the Federal Trademark Dilution Act that would be violated. See page 506.
True or false: If you tried to register goggle.com, you would be responsible for cybersquatting.
True. Cybersquatting occurs when you register a domain name deceptively similar to an existing trademarked name. See page 510.
True or false: Trade secrets must be registered to be effective.
False. No registration is required.
True or false: Registration of trademarks with the World Intellectual Property Organization are effective for as long as you use the trademark.
False. They are protected only for 5 years unless there is an objection. See page 513.
True or false: Knock-off goods carry a firm’s trademark but they are not actually produced by that firm.
True. See page 513.
True or false: Fixtures are items of personal property that become part of the real estate when they are affixed to it.
True. See page 517.
Copyrights protect the expressions of ideas for

a. authors
b. songwriters
c. photographers
d. a and b only
e. all of the above
e. all of the above

[Note: See page 498. Copyrights also protect the creators of choreography and movies.]
Public performance rights for songs are often assigned to this organization to collect royalties on behalf of the copyright owners

a. BMI
b. ASCAP
c. DMCA
d. A and b
e. A, b and c
d. A and b

[Note: See page 499.]
Damages for copyright infringement include
a. Profits made by the infringer.
b. Contingent costs.
c. Subliminal costs.
d. None of the above.
a. Profits made by the infringer.

[Note: See page 499.]
In the late 1990s, Kendall-Jackson and E.J. Gallo, two of the largest wine producers in California, went head to head over the Turning Leaf wine label. Kendall accused Gallo of copying the art design of the label to confuse consumers. After three years of bitter litigation, Kendall lost the case when the 9th U.S. Circuit Court of Appeals ruled that the winery's multicolored wine leaf label is generic. Therefore

a. Kendall was not entitled to trademark protection.
b. Kendall was entitled to have trademark protection.
c. The doctrine of generic trademark applies.
d. Both a and c are correct.
a. Kendall was not entitled to trademark protection.

[Generic names do not receive protection. See the Harley-Davidson case on page 504 for more about generic terms.]
The federal law that gave businesses protection of their trademarks

a. The Digital Millennium Copyright Act
b. The Lanham Act
c. The Trademark Protection Act
d. The Trademark and Trade Dress Protection Act
b. The Lanham Act

[Note: See page 504.]
These are produced by firms that exceed the licensed quotas of goods that they are authorized to produce

a. Gray market goods
b. Knock-off goods
c. Copyrighted goods
d. Protected goods
a. Gray market goods

[Note: See page 513.]
In a lease that runs month to month beginning on the first of each month, if you give notice on November 15, the least term will end

a. November 30.
b. December 1.
c. December 15
d. December 31.
d. December 31.

[Note: A full term’s notice of termination is required. See page 519.]
A lease for a full year with payments payable on the first of every month

a. Can be terminated by giving 30 days notice.
b. Can be terminated by giving notice at the beginning date of the next month.
c. Ends at the end of the year term.
d. Can be terminated by giving 90 days notice.
c. Ends at the end of the year term.

[See page 519.]
Which deed provides the transferee with the greatest degree of protection?

a. Quitclaim
b. special warranty deed
c. bargain and sale deed
d. general warranty deed
d. general warranty deed
When a general warranty is given by a property owner

a. The owner promises he has good title
b. The owner promises he has authority to transfer title
c. There are no liens or title problems other than anything noted on the deed
d. All of the above.
d. All of the above.

[See page 519.]
If real estate is conveyed to you and you do not record the deed, you run the risk

a. that the grantor could make a subsequent transfer and you could lose the title to the land to a subsequent transferee.
b. that the grantor did not have good title.
c. there is no risk.
a. that the grantor could make a subsequent transfer and you could lose the title to the land to a subsequent transferee.

[See page 520.]
actus reus
Latin term for the criminal act or conduct required for proof of a crime.
arraignment
Hearing in criminal procedure held after an indictment or information is returned; trial date is set and plea is entered.
computer crime
Theft, espionage, and other illegal activities accomplished through the use of a computer.
conscious avoidance
term used to apply to CEO and CFO of company trying to avoid criminal culpability for financial fraud by choosing to avoid understanding or examining the financial statements prepared by others in their companies.
Controlling the Assault of Non-Solicited Pornography and Marketing (CAN-SPAM)
federal law that deals with those who use unsolicited e-mails for purposes of advertising.
crime
A wrong against society that carries penalties of imprisonment and/or fines.
criminal fraud
A crime in which the victim is defrauded by an intentional act of the perpetrator.
discovery
Process occurring before a trial that involves each side's investigation of the case, the evidence, and the witnesses; consists of depositions, interrogatories, requests for admissions and productions, and so on.
due process
Constitutional protection ensuring notice and a fair trial or hearing in all judicial proceedings.
elements
The requirements for proof of a crime.
embezzlement
Name for the crime of an employee stealing funds, property, or services from his employer.
Fifth Amendment
Portion of the Bill of Rights of the U.S. Constitution providing protection against self-incrimination and ensuring due process.
Fourth Amendment
Part of the Bill of Rights of the U.S. Constitution that provides protection and assurance of privacy; the search and seizure amendment.
grand jury
Special group of jurors established as a review board for potential criminal prosecutions; generally established for a year to eighteen months.
indictment
Formal criminal charges issued by the grand jury.
information
Formal criminal charges issued by a judge after a preliminary hearing.
initial appearance
In criminal procedure, the first appearance of the accused before a judicial figure; must take place shortly after arrest.
nolo contendere
A "no contest" plea; the charges are neither denied nor admitted.
omnibus hearing
In criminal procedure, a hearing held before the trial to determine the admissibility of evidence.
mens rea
Mental intent or state of mind necessary for the commission of a crime.
plea bargain
A negotiated settlement of a criminal case prior to trial.
preliminary hearing
In criminal procedure, the hearing in which the prosecution establishes there is sufficient evidence to bind the defendant over for trial.
search warrant
Judicially authorized document allowing the search of individuals' or businesses' premises.
Sixth Amendment
Amendment to U.S. Constitution that guarantees the right to a jury trial in criminal cases.
theft
Crime of taking property away from another permanently.
trial
Process in a court of presenting evidence for a determination of guilt, innocence, or liability.
warrant
Court document authorizing an arrest or a search.
white-collar crime
Crimes committed in business administration and/or professional capacity; the so-called paperwork crimes.
What are the elements necessary for a theft?
Intent to take property
Actual taking of property for permanent use
No authorization to take property
List the steps in a criminal proceeding from the time of arrest.
Warrant and/or arrest
Initial appearance
Preliminary hearing or grand jury
Arraignment
Discovery
Omnibus hearing
Trial
What are the exceptions to the warrant requirements of the Fourth Amendment?
Records are being destroyed - burning warehouse exception
"Plain view" exception - can seize items because privacy was not protected - allowed the world access to the items
List four of the ten factors that will help reduce the sentence of a corporation under the U.S. Sentencing Commission.
Have a code of ethics in place
Conduct training on the code of ethics
Have a company hotline and ombudsperson for employees to use anonymously to report violations
Protect employees who report violations
Investigate all allegations regardless of their sources
Report all violations immediately and voluntarily
Offer restitution to affected parties
Cooperate and negotiate with regulators
Admit your mistakes and shortcomings
Be forthright and public with your code of ethics
Who in a corporation is liable for crimes committed in the course of the corporation’s business?
Officers and managers who directed the activities as well as those actually engaging in the conduct.
Explain the new obstruction section under the Sarbanes-Oxley Act.
The new obstruction section makes it a felony for anyone, including company employees, auditors, attorneys, and consultants, to alter, destroy, mutilate, conceal, cover up, falsify, or make a false entry with the "intent to impede, obstruct, or influence the investigation or proper administration of any matter within the jurisdiction of any department or agency of the United States."
The ________ Amendment is the basis for requiring warrants to search private property in order to protect individual’s privacy.
Fourth
In criminal law, there are two distinct proceedings to determine whether there is sufficient evidence to prosecute a defendant, a(n) ________, which is conducted in secret and a(n) ________, which is a public proceeding. If sufficient evidence to warrant a prosecution is found, a(n) ________ or a(n) ________ will be issued against the defendant, depending on which type of proceeding occurred.
grand jury proceedings; preliminary hearing; indictment; information
The ________ doctrine, designed to protect rights guaranteed by the ________ Amendment to the Constitution, requires that an individual must be told of certain rights once he/she has been subjected to custodial interrogation. This same amendment also contains the ________ Clause, which guarantees certain procedural protections as the case is investigated, charged, and tried.
Miranda; Fifth; Due Process
Penalties for mail and wire fraud increased from a maximum of five years to twenty years in prison under the ________ Act.
Sarbanes-Oxley
To determine the extent of a sentence for a company (as well as officers, managers and employees) involved in illegal activities, the federal sentencing guidelines provide a score to the company called a ________.
culpability multiplier
The ________ is where all of the challenges are presented to the judge for ruling on the admissibility of evidence.
omnibus hearing
The term scienter, or ________, refers to the intentional element of a crime while ________ refers to the criminal act itself.
# mens rea; actus rea
The ________ Act makes it a criminal offense to steal trade secrets from an employer.
Economic Espionage
The ________ Act prohibits access to U.S. military information without authorization.
Counterfeit Access Device and Computer Fraud and Abuse
According to the ________, it is a criminal offense to infringe copyrighted material worth over $1,000 using the Internet.
No Electronic Theft Act
Bribery, arson, counterfeiting, extortion and kidnapping are all examples of ________ acts.
racketeering
The ________ requires financial institutions to disclose and report transactions involving cash transactions of more than $10,000.
USA Patriot Act
common law
Originally, the law of England made uniform after William the Conqueror; today, the nonstatutory law and the law found in judicial precedent.
Foreign Corrupt Practices Act (FCPA)
Federal law prohibiting bribes in foreign countries and requiring the maintenance of internal controls on accounting for firms registered under the Securities Exchange Act of 1934.
multilateral treaty
A treaty agreed to by several nations.
Organization for Economic Cooperation and Development (OECD)
International organization of countries committed to developing trade, initially through the elimination of corruption.
repatriation
Reaffiliating as a citizen of a country after having renounced that citizenship through expatriation.
sovereign immunity
Doctrine that provides that courts in one country are that country's law and cannot be reversed by decisions of courts in other countries; for example, a U.S. court cannot reverse a finding of not guilty by a court in Germany.
Explain the two types of trade sanctions countries can impose.
Primary trade sanctions or boycotts - companies based in home country are prohibited from doing business with certain countries
Secondary boycott - companies from other nations doing business with a sanctioned country will also experience sanctions for such activity
What are the rules on conflicts of law in international transactions?
If the parties choose which law applies, that law will apply
If no provision is made, the law of the country where the contract is performed will be used
Name the seven LESCANT factors that should be researched before companies attempt negotiations or business in another country.
Language
Environment and technology
Social organization
Contexting
Authority
Nonverbal behavior
Time concept
Explain repatriation.
Bringing profits from business back to the local government
What is the doctrine of sovereign immunity?
Officials of foreign countries are not subject to criminal trials in the U.S.
Name the ten requirements imposed by the OECD under its Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.
Criminalize bribery of foreign public officials
Define public officials to include officials in all branches of government, whether appointed or elected; any person exercising a public function, including for a public agency or public enterprise; and any official or agent of a public international organization
Include as public functions any activity in the public interest
Cover business-related bribes to foreign public officials made through political parties and party officials
Include as illegal those payments made to someone who will become a public official in anticipation of favorable treatment
Provide for "effective, proportionate and dissuasive criminal penalties" to those who bribe foreign public officials
Authorize the seizure or confiscation of the bribe and bribe proceeds, or property of similar value, or impose monetary sanctions of comparable effect
Prohibit the establishment of off-the-books accounts and similar practices used to bribe foreign public officials or to hide such bribery
Establish jurisdiction over acts that take place in their countries even if there is not extensive physical contact by those paying the bribes
Pledge to work together to provide legal assistance relating to investigations and proceedings and to make bribery of foreign public officials an extraditable offense
The ________ is charged with administering and achieving the General Agreement on Tariffs and Trade’s objectives.
World Trade Organization
The ________ eliminated nearly all of the tariffs on U.S. industrial and agricultural exports to Mexico and Canada.
North American Free Trade Agreement
The ________ is a court of voluntary jurisdiction for disputes between nations that was established by the United Nations.
International Court of Justice
The purpose of ________ is to assure monetary stability in countries, thereby enhancing and encouraging international trade.
International Monetary Fund
The U.S. and England have a ________ system where our laws are built on tradition and precedent; France and Germany have a ________ or ________ system where they rely on statutes or codes that cover all types of circumstances and there is little need for interpretation; and some other countries have a ________ system where their laws are based on religion and governs all aspects of life.
common law; civil law; code law; Islamic legal
The ________ allows joint ventures among competitors for business in other countries.
Export Trading Company Act
The ________ Act is meant to curb the use of bribery in foreign operations of companies.
Foreign Corrupt Practices
The United Nations developed the ________ in order to create more uniformity in international contract formation and performance.
Contracts for the International Sale of Goods (CISG)
The judicial body created to handle disputes and violations of regulations of the EU treaty is called the ________.
European Court of Justice (ECJ)
The ________ allows nations to have ________ or the ability to draw on a line of credit in order to maintain their currency’s stability.
World Bank; Special Drawing Rights
A country with ________ status has no restrictions on the types of goods and services they can import or export.
Most Favored Nation
Taxes on goods as they move in and out of countries are referred to as ________.
tariffs
absolute privilege
A defense to defamation; a protection given to legislators and courtroom participants for statements made relating to the proceedings; encourages people to come forward and speak without fear of liability.
assumption of risk
Defense in negligence cases that prevents an injured party from recovering if it can be established that the injured party realized the risk and engaged in the conduct anyway.
causation
In negligence, an element that requires the plaintiff to show that the defendant's lack of care caused the plaintiff's injury.
comparative negligence
In negligence, a defense that allocates responsibility for an accident between the plaintiff and defendant when both were negligent and determines liability accordingly.contract interference
contract interference
Tort involving a third party's actions resulting in a valid contract being lost or invalidated; an unfair method of competition.
contributory negligence
Negligence defense that results when the injured party acted in a negligent way and contributed to her own injuries.
false imprisonment
The intentional tort of retaining someone against that person's will.
Health Insurance Portability and Accountability Act of 1966 (HIP AA)
Federal law that provides protections and procedures for patient privacy.
intentional infliction of emotional distress
Intentional tort in which the defendant engages in outrageous conduct that is psychologically damaging to the plaintiff.
intentional torts
Civil wrongs against individuals that are committed with a requisite state of mind and intent to harm; includes defamation, false imprisonment, battery, assault, and intentional infliction of emotional distress.
libel
Written defamation; defamation in a newspaper or magazine or, in some states, on television.
negligence
Tort of accidental wrong committed by oversight or failure to take precautions or corrective action.
ordinary and reasonably prudent person
In negligence, standard used for determining the level of care required in any given situation.
product disparagement
defamation of a product.
qualified privilege
A defense to defamation available to the media that permits retraction and no liability so long as the information is not printed or given with malice or with reckless disregard for whether it is true.
shopkeeper's privilege
A defense to the tort of false imprisonment for storeowners; allows reasonable detention of shoppers upon reasonable suspicion of shoplifting.
slander
Tort of oral defamation.
strict liability
Degree of liability for conduct; an absolute standard of liability.
strict tort liability
Standard established under the Restatement of Torts that holds product manufacturers and sellers liable for injuries resulting from their products regardless of whether they knew of the danger that caused the injury.
tort
Private intentional or negligent wrong against an individual.
tortious interference with contracts
Conduct by one party that results in another's breaching her contract with a third person (applies also to corporations).
unauthorized appropriation
The use of someone's name, likeness, or voice without permission for commercial advantage.
What are the elements for defamation?
A statement about a person's reputation, honesty, or integrity that is untrue
Publication
A statement that is directed at a particular person
Damages
In some cases, proof of malice
Name the defenses to defamation.
Truth
Opinion and analysis
Privileged speech
List the elements of negligence.
Duty
Breach of duty
Causation
Proximate cause
Damages
List the defenses to negligence.
Assumption of risk
Contributory negligence
Comparative negligence
Explain what is meant by the shopkeeper’s tort. What are defenses to it?
False imprisonment; shopkeepers generally have a statutory defense: so long as they act reasonably, they are not liable for false imprisonment.
Explain the difference between a tort and a crime.
A tort is a private wrong. When a tort is committed, the party who was injured is entitled to collect compensation for damages from the wrongdoer for the private wrong. A crime, on the other hand, is a public wrong and requires the wrongdoer to pay a debt to society through a fine or by going to prison.
Unlike a crime, a ________ gives a party injured by wrongful conduct the right to collect damages to compensate for their injuries.
tort
________ is oral or spoken defamation; ________ is written or broadcast defamation.
Slander; libel
To successfully recover in a defamation action, a plaintiff must show that the untrue statements were ________, or communicated to a third party.
published
Everyone has a duty to act like an ________, which is not always what everyone else does or what the law provides.
ordinary and reasonably prudent person
When there is a strong public interest in protecting the speech regardless of whether it is true, the speakers can enjoy an ________ when they are speaking.
absolute privilege
The tort of ________ requires showing that defendant knew that a contract existed and intended to prevent its performance or to make performance difficult.
contract interference
The detention of a person for any length of time against their will, with or without physical harm, is called ________.
false imprisonment
The tort of ________ is used quite frequently by people harassed by creditors and/or collection agencies who are attempting to collect funds.
intentional infliction of emotional distress
Negligence by the plaintiff that is part of the cause of an accident gives the defendant the opportunity to use the defense of ________.
contributory negligence
________ is a negligence defense that assigns liability and damages on a percentage basis based on the contribution to the cause of the accident.
Comparative negligence
A company still has ________ regardless of precautions taken to prevent harm when using risky substances such as dynamite.
strict tort liability
________ requires doctors to get patient’s permission before releasing any of their medical information to a third party.
Health Insurance Portability and Accountability Act
assumption of risk
Defense in negligence cases that prevents an injured party from recovering if it can be established that the injured party realized the risk and engaged in the conduct anyway.
bait and switch
Term given to advertising technique in which a low-price product is advertised and then the customer is told that the product is unavailable or is talked into a higher-priced product; prohibited by the FTC.
basis of the bargain
Information the buyer relies on in making the decision to make a purchase.
caveat emptor
Latin term for "Let the buyer beware"; summarizes an attitude that once prevailed in contract law of a lack of protection for a buyer of defective goods.
celebrity endorsements
Public figures advertising products on the basis of their personal use.
comparative negligence
In negligence, a defense that allocates responsibility for an accident between the plaintiff and defendant when both were negligent and determines liability accordingly.
consent decree
For administrative agencies, a type of plea bargain; a settlement document for an administrative agency's charges.
Consumer Product Safety Commission
Federal agency that establishes safety standards for consumer goods.
contributory negligence
Negligence defense that results when the injured party acted in a negligent way and contributed to her own injuries.
corrective advertising
Potential FTC remedy required when ads run by a firm have been deceptive; requires company to run ads explaining previous ads or run a new statement in future ads.
disclaimer
A provision in a contract that eliminates liability such as a warranty disclaimer or a disclaimer of tort liability.
express warranty
Expressed promise by seller as to the quality, abilities, or performance of a product.
Federal Trade Commission (FTC)
Federal agency responsible for regulation of unfair and deceptive trade practices, including deceptive advertisements.
Federal Trade Commission Act
Federal law establishing the FTC and its regulatory role.
FTC Improvements Act of 1980
Federal act that provided change in the role of the FTC and placed some limitations on its authority after the FTC's attempt to regulate children's television advertising.
implied warranty of fitness for a particular purpose
Warranty given by seller to buyer that promises goods will meet the buyer's specified needs.
implied warranty of merchantability
Under the Uniform Commercial Code, Article 2, Sales, a warranty that the goods are of average quality; given in every sale of goods by a merchant.
misuse
In product liability, a defense based on the plaintiff's failure to follow instructions or use of a product for improper purposes.
record
Expanded form of documentation that qualifies as a "writing" for purposes of contracts under the UCC.
strict liability
Degree of liability for conduct; an absolute standard of liability.
unconscionable
Term used to describe contracts that are grossly unfair to one side in the contract; a defense to an otherwise valid contract.
List the requirements for the implied warranty of fitness for a particular purpose.
Seller has skill or judgment in use of the goods
Buyer is relying on that skill or judgment
Seller knew or had reason to know of the buyer's reliance
Seller makes a recommendation for the buyer's use and purpose
What are the defenses to a product liability suit?
Misuse or abnormal use of product
Contributory negligence
Assumption of risk
What are the responsibilities given to the Consumer Product Safety Commission?
To protect the public against unreasonable risks of injury from consumer products
To develop standards for consumer product safety
To help consumers become more informed about evaluating safety
To fund research in matters of product safety design and in product-caused injuries and illnesses
What are the three most common types of product liability cases?
Design defects
Dangers of use that were not warned about or dangers because unclear use instructions were given
Errors in manufacturing, handling, or packaging of the product
Explain what is meant by bait and switch.
Advertising a cheaper product to get customers into the store and then, by not having the cheaper product, sell them a more expensive one.
List the three requirements by the FTC in celebrity endorsement ads.
The celebrity must ascertain the truth of the ad claims.
The celebrity cannot make any claims about product use unless the celebrity has actually used and experienced the product.
If any claims are being made that are not the celebrity’s, the source of the information must be disclosed as part of the ad.
The doctrine of ________ holds that sellers were not liable for defects in products they manufactured and that it was the buyer's responsibility to be alert for defects and take precautions.
caveat emptor
A ________, which is the equivalent of a no-contest plea, is a negotiated settlement between the FTC and the advertiser.
consent decree
If a seller shows a sample to a buyer or provides the buyer with a description of the goods, he or she has made a(n) ________ to the buyer that the goods will conform to the sample, model, or description.
express warranty
The implied warranty of ________ is a promise given to a buyer by a seller that the goods are fit for their ordinary purpose.
merchantability
A(n) implied warranty of ________ arises when the buyer relies on a seller's skill or judgment to choose suitable goods and the seller knows that the buyer is so relying.
fitness for a particular purpose
The phrases "as they stand," "as is," and "with all faults," constitute ________ of implied warranties.
disclaimers
The ________ gave the FTC the power to regulate unfair and deceptive practices when the public is being deceived regardless of any effects on competition.
Wheeler-Lea Act
A products liability case based on the ________ theory requires that the plaintiff show that the defendant owed a duty which was breached.
negligence
Misuse, ________, and ________, are three defenses to a ________ action.
contributory negligence; assumption of risk; product liability
Under a ________ defense, the negligence of the plaintiff reduces the amount they are entitled to recover.
comparative negligence
The ________ has authority to recall products and order their repair.
Consumer Product Safety Commission
If your car is recalled for repair and you fail to have the repair done, you have ________ the risk of driving your car.
assumed
adverse possession
Acquisition of land title through use for the required statutory period.
air rights
Ownership rights of a surface owner to the air above the land surface.
bailee
Party who has temporary possession of the property of another.
bailment
Temporary transfer of possession of personal property.
bailor
Party who owns property and surrenders possession.
bargain and sale deed
A special warranty deed.
Berne Convention Implementation Act of 1988
Federal law that changed U.S. copyright law to comply with international agreement at Berne Convention.
bill of sale
Informal document or contract that serves to prove and transfer title to tangible personal property.
chattel mortgage
Lien on personal property.
collateral
Property subject to a lien, security interest, or chattel mortgage.
Computer Software Copyright Act of 1980
Provides copyright protection for software.
copyright
Under federal law, a right given to protect the exclusive use of books, music, and other creative works.
cybersquatting
Process of registering sites and domain names that are deceptively or confusingly similar to existing names, trade names, and trademarks.
deed
Transfers title to real property.
deed of trust
Alternative form of creditor security in land purchases.
default
Judgment entered when the defendant fails to file an answer in a lawsuit.
Digital Millennium Copyright Act (DMCA)
1998 amendment to federal copyright laws that includes use of computer technology to copy music and other copyrighted materials as infringement.
disparagement
Form of unfair competition in which a business, its trademark, or its name is maligned; business defamation.
documents of title
Formal legal document that serves to prove and transfer title to tangible personal property.
easement
Right or privilege in the land of another.
exculpatory clause
Clause that attempts to hold a party harmless in the event of damage or injury to another's property.
fair use
One of the exceptions to copyright protection; permits limited use of copyright material; for example, an excerpt from a poem.
Federal Trademark Dilution Act
Federal law that permits litigation to halt the use of a trademark that results in the loss of unique appeal for its owner.
fee simple
Highest degree of land ownership; full rights of mortgage and transferability.
financing statement
Publicly filed document reflecting security interest.
fixtures
Property that was once personal in nature that is affixed real property and becomes a part of it.
foreclosure
Process of creditor acquiring mortgaged land for resale.
general warranty deed
Deed that transfers title with highest guarantees of title.
gray market
Market in which trade name goods are sold through unauthorized dealers or without authorization from the owner of the trade name.
infringement
The use of a copyright, patent, trademark, or trade name without permission.
intangible property
Intellectual property, such as patents and copyrights.
Internet Corporation for Assigned Names and Numbers (ICANN)
Organization that registers domain names for purposes of protection of those names as intellectual property.
knock-off goods
Goods manufactured by someone other than the trademark or trade name holder without authorization and not according to the standards of the owner.
Lanham Act
Federal law dealing with trademark and trade name protection.
lease
Temporary possession and use of real property, or right of use and possession of personal property.
license
Right of access; generally oral; personal right that is not transferrable.
lien
An interest in property used to secure repayment of a debt; entitles creditor to foreclosure rights in the event the debt is not repaid; creditor's right in property to secure debt.
Madrid Agreement Concerning the International Registration of Trademarks
In international law, 1891 multilateral treaty for protection of trademarks that permits registration and protection through a centralized registrar in Geneva.
mineral rights
Ownership rights to materials beneath the land surface.
misappropriation
Intentional tort of using someone's name, likeness, voice, or image without permission.
mortgage
Lien on real property.
opposition proceedings
In non-U.S. countries, the patent process that allows third parties to appear and object to a patent application.
palming off
Unfair trade practice of passing off mock goods as the goods of another.
patent
Government license or protection for a process, product, or service.
perfection
Process of attaining priority position over other secured creditors.
periodic tenancy
Lease that runs from period to period, such as month to month.
quitclaim deed
Transfer of title with no warranties.
recording
Public filing of land documents.
security agreement
Contract that creates a security interest.
security interest
Lien in personal property; created under Article IX of the UCC.
slander of title
Slander of business.
Sonny Bono Copyright Term Extension Act (CTEA)
Federal law that amends copyright law to extend period of protection for copyrighted works.
special warranty deed
Deed that offers title protection only for grantor's period of ownership.
tangible property
Form of personal property that includes goods, but not intellectual property such as stocks, bonds, patents, trademarks, and copyright.
title insurance
Insurance purchased for buyer's benefit; insures the land title from recorded defects.
trade dress
The look, color, and decorative design of a business.
trade fixtures
Personal property used in a trade or business that is attached to real property but is considered personal property.
trade libel
Libel of a business.
trade name
Name of a firm or product; entitled to federal protection for exclusive use.
trade secret
A protected method for doing business or an item crucial to a business's success (such as a customer list).
trademark
The symbol of a firm; entitled to federal protection for exclusive use.
Uniform Commercial Code (UCC)
Uniform law adopted in forty-nine states governing sales contracts for goods, commercial paper, security interests, documents of title, and securities transfers.
warranty deed
Highest level of title protection in real property transfer; greatest number of warranties.
working requirements
Non-U.S. countries' patent requirement that the process or product be placed on the market within a certain time after the patent is granted, or the patent protection is lost.
What are the elements for disparagement?
Statement about a business’s reputation, honesty, or integrity that is untrue;
Publication
Statement that is directed at a business and is made with malice and the intent to injure that business
Damages
What are the questions that are important in determining whether an item is a fixture and part of the real property?
What did the parties intend?
How is the item attached to the real property?
What is the relationship between the attacher and the property?
Who wants to know?
Name three forms of intangible property.
Patents
Copyrights
Trademarks
Trade Names
Trade Dress
Define the following:

1. Fee simple
2. Mortgage
3. Easement
4. Deed
5. Warranty Deed
6. Special Warranty Deed
a. Highest form of land ownership
b. Lien on real property to secure debt
c. Right to use another’s property (access) or right to control use of another’s property
d. Document that transfers real property
e. Highest level of title protection in real property transfer
f. Promises of title protection only for grantor’s period of ownership
List which statutory protections would apply to each of these forms of intellectual property.

1. Song
2. Prescription drug
3. Movie
4. Software
a. Copyright
b. Patent
c. Copyright
d. Copyright or patent
Explain the Sonny Bono Copyright Term Extension Act.
The Sonny Bono Copyright Term Extension Act was sponsored by the late Sonny Bono. Representative Bono was concerned because copyrights he held and many others, such as the copyright on the cartoon character Mickey Mouse were about to expire. Even though the Constitution prohibits granting copyrights in perpetuity, the Act extended the copyright for the life of a creator plus 70 years.
________ property is property you can see and touch; while ________ property comes in the form of patents, copyrights, trademarks, trade names, and trade dress.
Tangible; intangible
If you leave your car with your auto mechanic, a ________ is created in which you are the ________ and the mechanic is the ________.
bailment; bailor; bailee
The colors, designs and shapes associated with a product are its ________.
trade dress
The colors, designs and shapes associated with a product are its ________.
trade dress
If a company misleads buyers into thinking that they are buying a competitor’s product, the competitor may successfully sue for the tort of ________, one of the oldest unfair methods of competition.
palming off
Wrongful use of a competitor’s procedures, customer lists, or business processes, which are deemed to be ________, constitute the tort of ________.
trade secrets; misappropriation
Goods that are not actually produced by the firm, but carry the trademark or trade name of a firm’s product are called ________.
knock-off goods
One who converts a novel and useful idea into tangible form, marketable as a product, should apply for a ________.
patent
A playwright who obtains a copyright to his or her successful Broadway play has a right to protect against ________ by others.
infringement
A ________, or a symbol that identifies a particular producer of a product, is protected by the ________ Act of 1946.
trademark; Lanham
A professor’s reproduction of a page from a copyrighted book does not constitute an infringement under the concept of ________.
fair use
Utility or ________ patents cover machines, processes, and improvements to existing devices; ________ patents protect the features of a product; and ________ patents are for new forms of plants and hybrids.
function; design; plant
The protection of authors of books, movies, songs and so on is called ________.
copyrighting