Q&A Hero

Q: Mona asks Ned if she can store her furniture in his garage while she serves a tour of duty with the U.S. Marines Corps. Ned agrees. This is a bailment for A.neither party's benefit. B.the parties' mutual benefit. C.the sole benefit of the bailee. D.the sole benefit of the bailor.

Q: Jill loans her laptop to Kyle. This is a bailment for A.neither party's benefit. B.the parties' mutual benefit. C.the sole benefit of the bailee. D.the sole benefit of the bailor.

Q: Inadvertently, Morris leaves his backpack at NuWay Launderers when he stops to pick up his clothes. The backpack is A.abandoned property. B.gifted property. C.lost property. D.mislaid property.

Q: Rhett works at Scarlett's Sandwich Caf. After work, in the parking lot, Rhett finds a diamond ring lost by Thalia. Title to the ring is possessed by A.Rhett. B.Scarlett's. C.Thalia. D.the state.

Q: Grain from Harvest Farms is wrongfully commingled with grain from Idyllic Fields, which obtains possession of all of the grain. This is A.a bailment. B.accession. C.confusion. D.production.

Q: Idaho Farms mistakenly puts its potatoes in Jackson Co-op's storage bin, which already contains Kelly Spud Farm's potatoes. It is impossible to tell which potatoes originally belonged to which party. This is A.a bailment. B.accession. C.confusion. D.production.

Q: Bowie owns a 1957 Chevrolet coupe, which Danica customizes and details to Bowie's specifications. The car earns several awards at regional vehicle customizing competition shows. The result of Danica's efforts is A.accession. B.acquisition. C.conversion. D.dominion.

Q: Kade and Lila each press certain quantities of olive oil to sell to Mediterranean Products, Inc., and agree to share storage costs until Mediterranean can take delivery. The oil is commingled so that Kade's cannot be distinguished from Lila's. This is A.accession. B.confusion. C.conversion. D.dominion.

Q: John steals an old, battered bicycle that is parked, unlocked, in front of a convenience store. He repairs, paints, and replaces parts on the bike until it is like new. The original owner, Kim, claims the bike. The bike belongs to A.John and Kim as tenants in common. B.John because he made substantial improvements to it. C.John because Kim claimed it only after John improved it. D.Kim because John stole it.

Q: Before undergoing surgery that could cause death, Donnelly, a guitarist, gives his of guitars to Cathy. The surgery is successful, and Donnelly does not die. The gift of the guitars is A.not revoked because it was a gift causa mortis. B.not revoked because it was a gift inter vivos. C.revoked because it was a gift causa mortis. D.not revoked because it was a gift largesse.

Q: Procter, who is not in contemplation of imminent death, tells his daughter Opal that she can have his Dodge truck on his death, whenever that happens. This is A.a valid gift causa mortis. B.a valid gift inter vivos. C.a valid gift largesse. D.not a valid gift.

Q: Rikki sells shares in Sunn Energy Company to Telsa. Rikki does not deliver the actual possession of the shares to Telsa, but gives her the key to a safety-deposit box in Unity Bank in which the stock certificates are locked. Presenting the key is A.accession. B.constructive delivery. C.confusion. D.conversion.

Q: Ansel owns Bar-B Ranch. Ansel's only son Cy owns Double-D Ranch in the same county. Ansel gives 90 percent of the Bar-B to Etta, a short-term employee. This gift A.may lack the required element of "donative intent." B.may lack the required element of "donor's acknowledgement." C.may lack the required element of "heir's acquiescence." D.meets all of the requirements for an effective gift.

Q: Nouri is declared mentally incompetent. Omar, Nouri's friend, insists that she transfers her assets to him "for safekeeping." A court might conclude that this gift is not effective on the ground that there was no A.acceptance. B.delivery. C.donative intent. D.relinquishment of control.

Q: Patty's parents give her a car as a graduation present. While Patty spends the summer in Europe, her friend Rita agrees to keep the car in her garage. On Patty's part, this is acquisition of property by A.bailment. B.capture. C.find. D.gift.

Q: Rocco gives Sequoia a computer as a gift. Using the computer, Sequoia develops a new computer game, for which she obtains intellectual property protection, and forms Titan Games, LLC, to make and market the game. Sequoia's acquisition of the game is by A.gift. B.accession. C.confusion. D.production.

Q: Fanny buys clay to throw pottery, which is glazed and fired in a kiln. The finished products are sold to Gifte Shoppe, which sells these items and others to customers who often present them as gifts. Thus, property can be acquired in various ways. The most common way to acquire personal property, however, is to A.buy it. B.commingle it. C.produce it. D.receive it as a gift.

Q: Klondike and Leola own 10,000 shares of stock in My-T Gro Corporation. On the death of ether owner, that owner's interest in the stock passes to the surviving owner. This is A.a joint tenancy. B.a tenancy by the entirety. C.a tenancy in common. D.ownership in fee simple absolute.

Q: Edna and Flavia buy a boat that they dock in a marina near Gulfport, Mississippi. On the death of either owner, that owner's interest in the boat passes to her heirs. This is A.a joint tenancy. B.a tenancy by the entirety. C.a tenancy in common. D.ownership in fee simple absolute.

Q: Faye owns the land on which Golden Spurs Ranch is situated, plus the ranch house, barn, and other structures permanently attached to the land. Faye's brother Huey owns everything else in the ranch's operation-livestock, feed, and so on. The personal property is owned by A.Faye and Huey. B.Faye only. C.Golden Spurs Ranch. D.Huey only.

Q: Helen owns heavy construction equipment and the tools to service it, as well as office furniture, including computers. Ilya owns a number of patents, trademarks that identify the products made under those patents, and stock in the company that sells those products. Personal property includes the items owned by A.Helen and Ilya. B.Helen only. C.Ilya only. D.neither Helen nor Ilya.

Q: Unlike an ordinary bailee, a warehouse company cannot limit its liability.

Q: Common carriers are held to a standard of care based on strict liability in protecting bailed property in their possession.

Q: In most bailments, the bailor must notify the bailee of hidden defects that the bailor knows or could have discovered with reasonable diligence.

Q: In an ordinary bailment, a bailee has the right to limit his or her liability.

Q: In most bailments, the bailee has a right to place a lien on the bailed property until he or she is fully compensated.

Q: In a gratuitous bailment, a bailee has a right to be compensated for costs incurred in keeping bailed property.

Q: All bailments include a bailee's right to use the bailed property.

Q: A bailment must be in writing to be valid.

Q: Constructive delivery does not satisfy the delivery requirement for an effective bailment.

Q: In a bailment, possession of the property is transferred to the bailee.

Q: For an effective bailment, the bailor must deliver possession of the bailed property with its title.

Q: Property voluntarily discarded by its owner with no intention of reclaiming it is lost property.

Q: Estray statutes determine ownership rights in fungible goods that have "strayed."

Q: Those who find abandoned property cannot acquire ownership rights through mere possession of it.

Q: A finder acquires title to lost property good against the whole world, except the original owner.

Q: Property voluntarily placed somewhere by its owner and inadvertently forgotten is abandoned property.

Q: If confusion occurs as a result of the act of a third party, that third party acquires ownership rights in proportion to the amount confused.

Q: A person acquires title to fungible goods by mixing them.

Q: A gift causa mortis is effective only if the donor dies and the donee lives.

Q: A gift to a dying donee is a gift causa mortis.

Q: Delivery of intangible personal property must be done by constructive delivery.

Q: A promise to deliver a gift is constructive delivery.

Q: Constructive delivery occurs when property is physically transferred.

Q: A gift is a voluntary transfer of property for which no consideration is given.

Q: Property used by a government for a public purpose such as a park is community property.

Q: If property is owned as community property, each spouse owns an undivided one-half interest in it.

Q: One way to acquire ownership rights to property is merely to possess it.

Q: The most common way to acquire personal property is to produce it.

Q: A deceased joint tenant's interest in jointly held property passes to his or her heirs.

Q: It is presumed that a co-tenancy is community property unless there is a clear intention to establish a joint tenancy.

Q: A joint tenant's sale of his or her interest terminates the joint tenancy.

Q: Only two persons can hold property as tenants in common.

Q: A person who holds all rights in property owns the property in fee simple.

Q: Personal property is sometimes referred to as personalty or chattel.

Q: Tangible personal property represents a set of rights and interests but has no real physical substance.

Q: When Looking Glass Corporation wishes to issue certain securities, it must provide sufficient information for Alice, and other unsophisticated investors, to evaluate the financial risk involved. Specifically, the law imposes liability for making a false statement or omission that is "material." What sort of information would Alice consider material?

Q: In May 2012, National Biotech Corporation generally advertises that it will make a $4 million offering of stock in June. National makes the offering as advertised and, ten days after the first sale, notifies the Securities and Exchange Commission (SEC). All buyers of the stock are given material information about the company, its business, and the stock. Before the end of the year, the offering is completely sold out. The buyers include forty unaccredited investors and fifty accredited investors. National does not register the offering. The SEC files a suit against National, seeking civil sanctions on the ground that this offering was not exempt from registration. National argues that the applicable exemption is Rule 505 of Regulation D of the Securities Act of 1933 and that because of this exemption, any resale of the stock is also exempt. Who is correct?

Q: Catalina promises high returns to Darby and other investors, who then agree to trust their funds to Catalina. She uses these funds to pay previous investors. This is A.a Ponzi scheme. B.a stock option. C.an accredited investor. D.a tombstone ad.

Q: Madison is the chief executive officer of Nitro Medico, Inc., which is required to file certain financial reports with the Securities and Exchange Commission (SEC). Under the Sarbanes-Oxley Act of 2002, Madison must A.certify that the reports are complete and accurate. B.designate a corporate official to assume liability for inaccuracies. C.do nothing. D.read the reports and be prepared to answer questions about them.

Q: Heavy Hauling, Inc., is a public company whose shares are traded in the public securities markets. Under the Sarbanes-Oxley Act of 2002, to ensure that Heavy Hauling's financial results are accurate and timely, the firm's senior officers must set up and maintain A.internal "disclosure controls and procedures." B.external "release and reveal timetables." C.personal "peruse and review liability policies." D.public "information and discussion forums."

Q: Maple Products Corporation is a public company, which New Hampshire regulates and in which Orin invests. The Sarbanes-Oxley Act of 2002 introduced direct federal corporate governance requirements to A.public companies. B.private investors. C.state regulators. D.none of these choices.

Q: Hi-Five Aero Corporation is required to register its securities under Section 12 of the Securities Exchange Act of 1934. Section 14(a) of the act regulates A.the declaration of dividends by Hi-Five's board of directors. B.the later re-registration of Hi-Five's securities. C.the short-swing activities of Hi-Five's insiders. D.the solicitation of proxies from Hi-Five's shareholders.

Q: North American Properties, Inc., and its officers, directors, and shareholders, buy and sell securities. Section 16(b) of the Securities Exchange Act of 1934 covers A.all purchases and sales of securities. B.only purchases and sales of securities involving misappropriation. C.only purchases and sales of securities involving short-swing profits. D.only purchases and sales of securities involving tippers and tippees.

Q: Della, an officer for Energy Petrol Corporation (EPC), buys 100 shares of EPC stock. One week later, EPC announces that it will merge with a competitor, Fuel Oil Company, and the price of EPC stock increases. One month later, Della sells her shares for a profit. Under Section 16(b) of the Securities Exchange Act of 1934, Della would not be liable if, after buying the stock, she had waited A.less than fourteen days to sell it. B.more than six months to sell it. C.ninety days to sell it. D.two months to sell it.

Q: Dee, an accountant, does not work for Emergent Company, but wrongfully obtains inside information concerning Emergent. Based on the information, Dee buys and sells Emergent stock for personal gain. The Securities and Exchange Commission prosecutes Dee, arguing that she is liable because she stole information rightfully belonging to another. This argument is A.the blue-sky theory. B.the misappropriation theory. C.the red-herring theory. D.the tipper/tippee theory.

Q: Riley, an engineer for Shur-2-Gro Seed Corporation, learns that Shur-2-Gro has developed a corn hybrid to triple the output of any farm. Riley buys 20,000 shares of Shur-2-Gro stock. He tells Tess, who buys 15,000 shares. After the new hybrid is announced publicly, the price of Shur-2-Gro stock increases. Riley and Tess sell their shares for a profit. Under the Securities Exchange Act of 1934, liability may be imposed on A.none of these parties. B.Riley and Tess only. C.Riley only. D.Riley, Shur-2-Gro, and Tess.

Q: Fact Pattern 26-3Dhani, an accountant for Eureka, Inc., learns of undisclosed company plans to market a new laptop. Dhani buys 1,000 shares of Eureka stock. He reveals the company plans to Fay, who buys 500 shares. Fay tells Geoff, who tells Hu. Both Geoff and Hu buy 100 shares. They know that Fay got her information from Dhani. When Eureka publicly announces its new laptop, Dhani, Fay, Geoff, and Hu sell their stock for a profit.Refer to Fact Pattern 26-3. Under the Securities Exchange Act of 1934, Hu is most likelyA.liable for insider trading.B.not liable because Hu is only a tippee, not a tipper.C.not liable because Hu is too far down the chain of disclosure.D.not liable because Hu traded on the basis of a TRUE fact.

Q: Fact Pattern 26-3 Dhani, an accountant for Eureka, Inc., learns of undisclosed company plans to market a new laptop. Dhani buys 1,000 shares of Eureka stock. He reveals the company plans to Fay, who buys 500 shares. Fay tells Geoff, who tells Hu. Both Geoff and Hu buy 100 shares. They know that Fay got her information from Dhani. When Eureka publicly announces its new laptop, Dhani, Fay, Geoff, and Hu sell their stock for a profit. Refer to Fact Pattern 26-3. Under the Securities Exchange Act of 1934, Geoff is most likely A.liable for insider trading. B.not liable because Geoff did not prevent others from profiting. C.not liable because Geoff did not solicit information from Dhani. D.not liable because Geoff does not work for Eureka.

Q: Fact Pattern 26-3 Dhani, an accountant for Eureka, Inc., learns of undisclosed company plans to market a new laptop. Dhani buys 1,000 shares of Eureka stock. He reveals the company plans to Fay, who buys 500 shares. Fay tells Geoff, who tells Hu. Both Geoff and Hu buy 100 shares. They know that Fay got her information from Dhani. When Eureka publicly announces its new laptop, Dhani, Fay, Geoff, and Hu sell their stock for a profit. Refer to Fact Pattern 26-3. Under the Securities Exchange Act of 1934, Fay is most likely A.liable for insider trading. B.not liable because Fay did not prevent others from profiting. C.not liable because Fay did not solicit information from Dhani. D.not liable because Fay does not work for Eureka.

Q: Fact Pattern 26-3Dhani, an accountant for Eureka, Inc., learns of undisclosed company plans to market a new laptop. Dhani buys 1,000 shares of Eureka stock. He reveals the company plans to Fay, who buys 500 shares. Fay tells Geoff, who tells Hu. Both Geoff and Hu buy 100 shares. They know that Fay got her information from Dhani. When Eureka publicly announces its new laptop, Dhani, Fay, Geoff, and Hu sell their stock for a profit.Refer to Fact Pattern 26-3. If Dhani is liable under the Securities Exchange Act of 1934, it will be because the information on which he based his purchase of Eureka stock wasA.a forward-looking forecast.B.not material.C.not yet public.D.not yet TRUE.

Q: Fact Pattern 26-2 Sid, a director of Tech Software Company, learns that a Tech engineer has developed a new, exciting video game. Sid buys Tech stock and tells his friend Uri, who also buys Tech stock. When the new game is released three weeks later, Sid and Uri sell their stock for a big profit. Refer to Fact Pattern 26-2. Regarding Sid's profits on the purchase and sale of Tech stock, under Section 16(b) of the Securities Exchange Act of 1934 Tech may recapture A.all of Sid's profits. B.half of Sid's profits. C.10 percent of Sid's profits. D.none of Sid's profits.

Q: Fact Pattern 26-2 Sid, a director of Tech Software Company, learns that a Tech engineer has developed a new, exciting video game. Sid buys Tech stock and tells his friend Uri, who also buys Tech stock. When the new game is released three weeks later, Sid and Uri sell their stock for a big profit. Refer to Fact Pattern 26-2. Under SEC Rule l0b-5, Sid would not be liable if he had waited to buy Tech stock until A.after Sid told Uri of the new game. B.after Uri bought Tech stock. C.after the public release of the game. D.just before the game was released.

Q: To raise capital to form Plasticity Corporation with Quinn, Rona sells bonds and stock in other companies, and plans to register an initial public offering under the Securities Act of 1933. SEC Rule l0b-5 covers A.most forms of securities. B.only bonds. C.only securities registered under the Securities Act of 1933. D.only stock.

Q: Lexy, a salesperson for My-T-Fine Corporation, learns that My-T-Fine will increase the dividend it pays to shareholders. Lexy buys 10,000 shares of My-T-Fine stock. When the price increases, Lexy sells the shares for a profit. Lexy would not be liable for insider trading if the information about the dividend was A.material when she sold the stock. B.public after she bought the stock. C.public before she bought the stock. D.speculative when she bought the stock.

Q: Nouveau Riche Corporation's officers, directors, and shareholders buy and sell securities. SEC Rule 10b-5 applies to A.only the purchase or sale of a security by a financial corporation. B.only the purchase or sale of a security involving an officer or director. C.only the purchase or sale of a security involving a shareholder. D.the purchase or sale of any security.

Q: Global Investments Corporation buys and sells securities. Section 10(b) of the Securities Exchange Act of 1934 applies to A.only the purchase or sale of a security involving misappropriation. B.only the purchase or sale of a security involving short-swing profits. C.only the purchase or sale of a security involving a tipper and tippee. D.the purchase or sale of any security.

Q: Fresh Seasonal Fruit Company has assets of less than $10 million and fewer than fifty shareholders. Gourmand Pastries, Inc., has assets of more than $50 million and more than five hundred shareholders. The Securities Exchange Act of 1934 applies to A.Fresh Seasonal Fruit and Gourmand Pastries. B.Fresh Seasonal Fruit only. C.Gourmand Pastries only. D.neither Fresh Seasonal Fruit nor Gourmand Pastries.

Q: GR8 Stuf Company files a registration statement with the SEC before making an offering to the general public. The registration contains false, immaterial statements of which the investors are unaware. GR8 Stuf is charged with violating the Securities Act of 1933. GR8 Stuf's best defense isA.the investors were not aware of the misrepresentations.B.the issuer reasonably believed the misstatements were TRUE.C.the offering was made available to the general public.D.the un TRUE statements were not material.

Q: Players Video Game Centers, Inc., wants to issue stock of $1 million in a single offering. Players must provide all investors with material information about itself, its business, and its securities if A.all investors are accredited. B.under any circumstances. C.any investors are accredited. D.any investors are unaccredited.