Business Law

Business Law
Exam
Instructions
Answer the following exam questions on separate paper. Be thorough in defining terms, and provide an example
where appropriate.
1. Fred owns a sole proprietorship and decides to turn it into a corporation. He will take his company public
to raise money. Explain all the steps Fred will need to go through to do this, including the steps of the
initial public offering. Explain, Discuss.
2. The WTO is a treaty between countries. If a country ratifies these treaties, the laws of the WTO become
domestic law in that country. Name and explain the big three laws/principles of the WTO to which all
member countries agree to adhere to. Explain, Discuss.
3. The government wishes to slow international trade in the country. What kinds of laws and trade policy
instruments can it use to do this? Name and explain each one and how they would slow trade.
4. Country A is not a member of the World Trade Organization, but wants to join. Explain the steps of
accession for Country A to finally become a member of the WTO. Explain, Discuss
5. My friend Joe works at a drug company, and he heard that in a week, the drug company is going to approval
for its newest blockbuster drug to cure cancer. Before the world knows about this, Joe tells me. I tell my
brother Jim. Then Jim goes and buys lots of stock in this drug company. A week later, the world learns of
the drug approval, and the stock price increases by 200%. Jim is a millionaire from his trades. The SEC
learns of this and investigates. Who might be in legal trouble? How would we decide? Explain why.
6. Explain the Administrative Procedures Act (administrative law). What does it require, and why?
7. Explain the Sarbanes-Oxley Law and its significance.
8. Explain a proxy war that occurs before a shareholders meeting. Make an example and explain. Why to
these occur, what is their function. Explain.
9. US companies that operate in Russia complain that the Russian government taxes them at a higher rate
than they tax domestic Russian companies. What legal recourse does the US company have to dispute
this? Explain and Discuss.
10. Explain how a TRQ works in international trade law.
11. If a MacDonald’s restaurant in Guangzhou operates as a franchisee of corporate MacDonald’s of the US,
what happens if an old lady slips on the floor in the restaurant and breaks her leg. She wants to sue for
negligence. What must she prove? Who will have to pay her? Explain.
12. Explain what the concept of Promissory estoppel means. Provide an example to illustrate. Explain.
13. Define a “Covenant not to compete.” Explain.
14. Define Caveat emptor. Explain.
15. Define Specific performance. Explain.
16. Define implied warranty of merchantability. Explain.
Part B Essay Questions
1. Assume Jinan University and an American Professor signed a contract for a summer business
arrangement. In the contract, the professor promised to teach for the summer in Guangzhou, and in
return, Jinan University promised to pay the professor $1 million. In preparation for the arrival of the
professor, Jinan paid $20,000 for a fancy Guangzhou apartment for the professor. Jinan also bought
$2,000 plane tickets, $500 in weekend tours, and $200 in equipment for the professor.
In addition, Jinan spent $12,000 in advertising, showing possible students that the professor was coming
to teach. 500 students saw the advertising. Each paid $20,000 to Jinan to enroll. The students gave up
the opportunity to attend a different program in Guangzhou. The other program would have cost each
student $30,000.
All of the students fly to Guangzhou, spending $2,500 on airfare. Each also paid $10,000 for excellent
apartments near the university. The university was ready to go.
Then the night before classes start, the professor calls and says he decided not to come. In the above
story, who can sue whom? What will each party argue in each case? What legal concepts are involved
from our class? Discuss how much (if anything) different parties would pay. Explain. Be thorough.
2. For $300,000, Michael agreed to build a new home for Ashton, who is very picky. Michael built the
home to Ashton’s specifications with one exception: the faucets and flooring in the upstairs bathroom
were not exactly what Ashton specified. That was a mistake on Michael’s part, but he did not
intentionally fail to follow the specifications. When Ashton saw the bathroom, she went ballistic and told
Michael that she would not pay Michael anything for the house. It will take $300 to put in the correct
faucets and flooring. Michael responded that he is willing to pay $300 to put Ashton in the position she
would have been in had the correct faucets and flooring been used, but that is all he is willing to pay.
Analyze the legal issues at stake here and who would win any lawsuit and why.