Question: Laura and Bruce Trethewey hired Basement

> Triec, Inc. is a small electrical contracting company in Springfield, Ohio, owned by its executives, Yeazell, Jones, and Heaton. Employees contracted the International Brotherood of Electrical Workers, which began an organizing drive, and six of the 11 e

> Hugo’s sister posted a message on his Facebook page asking him how his evening as a bartender had gone. He responded with complaints that he had not had a raise in five years and that his tips “sucked.” He also called customers “rednecks” and stated that

> When Walton Weiner interviewed for a job with McGraw-Hill, Inc. he was assured that the company would not terminate an employee without “just cause.” Weiner also signed a contract specifying that his employment would be subject to the provisions of McGra

> Sally is sent home from school with the chicken pox. Her father takes her to a pediatrician who says that she will be fine in about a week and in the meantime just needs bed rest and plenty of fluids. Is Sally’s father entitled to leave under the FMLA to

> Apex gave Marcie an employment handbook stating that (1) she was an at-will employee, (2) the handbook did not create any contractual rights, and (3) employees who were fired had the right to a termination hearing. The company fired Marcie, claiming that

> Kevin was the manager of a radio station, WABC. A competing station lured him away. In his last month on the job at WABC, he notified two key on-air personalities that if they were to leave the station, he would not hold them to their noncompete agreemen

> Betsy has a two-year contract as a producer at Jackson Movie Studios. She produces a remake of the movie Footloose. Unfortunately, it bombs and Jackson is so furious, he fires her on the weekend the movie opens. Does he have the power to do this?

> Until recently, every state had a statute outlawing the burning of American flags. But in Texas v. Johnson, the Supreme Court declared such statutes unconstitutional, saying that flag burning is symbolic speech, protected by the First Amendment. Does C

> The Pharmaceutical Association holds an annual convention. At the convention, Brittany, who was president of the Association, told Luke that Research Corp. had a promising new cancer vaccine. Luke was so excited that he chartered a plane to fly to Resear

> Jesse worked as a buyer for the Vegetable Co. Rachel offered to sell Jesse 10 tons of tomatoes for the account of Vegetable. Jesse accepted the offer. Later, Jesse discovered that Rachel was an agent for Sylvester Co. Who is liable on this contract?

> What if the custodian hit one of the schoolchildren for calling him a name? Is the school district liable?

> An elementary school custodian hit a child who wrote graffiti on the wall. Is the school district liable for this intentional tort by its employee?

> Sarah went to an auction at Christie’s to bid on a tapestry for her employer, Fine Arts Gallery. The good news is that she purchased a Dufy tapestry for $77,000. The bad news is that it was not the one her employer had told her to buy. In the excitement

> One afternoon while visiting friends, tennis star Vitas Gerulaitis fell asleep in their pool house. A mechanic had improperly installed the swimming pool heater, which leaked carbon monoxide fumes into the house where he slept, killing him. His mother fi

> A soldier was drinking at a training seminar. Although he was told to leave his car at the seminar, he disobeyed orders and drove to a military club. On the way to the club, he was in an accident. Is the military liable for the damage he caused?

> After reviewing Color-Dyne’s audited financial statements, the plaintiffs provided materials to the company on credit. These financial statements showed that Color-Dyne owned $2 million in inventory. The audit failed to reveal, however, that various bank

> Wayne and Arlene Selden invested in Competition Aircraft, a fraudulent company that pretended to sell airplanes. After the company went bankrupt, the Seldens sought to recover from accountant William Burnett. He had recommended the investment to several

> Medtrans, an ambulance company, was unable to pay its bills. In need of cash, it signed an engagement letter with Deloitte to perform an audit that could be used to attract investors. Unfortunately, the audit had the opposite effect. The unaudited state

> An off-duty, out-of-uniform police officer and his son purchased some food from a 7-Eleven store and were still in the parking lot when a carload of teenagers became rowdy. The officer went to speak to them and the teenagers assaulted him. The officer

> The British Broadcasting Corp. (BBC) broadcast a TV program alleging that Terry Venables, a former professional soccer coach, had fraudulently obtained a £1 million loan by misrepresenting the value of his company. Venables had been a sports caster for t

> Penelope purchased securities offered by Hughes Homes, Inc., which sold manufactured housing. During its audit, Deloitte found that the internal controls of Hughes had flaws. As a result, the accounting firm adjusted the scope of its audit to perform in

> Recall the Quimby case. This type of fraud is increasingly common. What could Quimby have done to protect himself?

> When Steven was killed in an automobile accident, he left his wife, Debra a life insurance policy for $60,000. She decided to move from Bunkie to Sulphur, Louisiana. Debra executed a document authorizing her mother-in-law, Helen, to sign checks on Debra’

> One of Doris’s job responsibilities at Winkie, Inc .was preparing company checks for the president, Willie, to sign. Using Winkie’s check-signing machine, Doris forged $150,000 of checks on her employer’s account. Willie did not (1) look at the sequence

> Arnold and Palmer signed two promissory notes for a total of $25,000 payable to the Banking Co. The two men argued that they were not liable on the notes because they had signed as agents for Sunshine Sales. The notes made no reference to Sunshine, but t

> Melco, Inc., issued a promissory note for $12,000, payable to the order of Marjorie. On the back of the note, Charles had signed the following statement: “For and in consideration of funds advanced herein to Melco, Inc., we irrevocably guarantee Marjorie

> Merlyn borrowed money from Finance Co. to buy equipment for his farm. He promised Finance that he would accept payment for his crops only with checks that named him and Finance as co-payees. This way, Merlyn could not cash the checks without Finance’s in

> Before Parris’s lawsuit against Railroad had settled, he left town and closed out his account with Bank. Railroad then issued a check to him which somehow came to be in Eddy’s possession. Eddy indorsed the check “Railroad Eddy” and deposited it in his o

> Kendall raised hogs. The Grain Company would provide him with hogs and grain and, in return, he would sign a promissory note in an amount equal to the value of these items. Once the pigs were grown, Kendall would sell them and repay the loan. One time,

> You are a president of a small, highly rated, liberal college in California. Many of the dining hall workers are Latino. Some of these workers are trying to organize a union, which would dramatically increase the college’s costs at a time of budget pre

> On October 12, James Camp agreed to provide services to Shawn Sheth by October 15. In payment, Sheth gave Camp a check for $1,300 that was postdated October 15. On October 13, Camp sold the check to Buckeye Check Cashing for $1,261.31. On October 14, fea

> On June 30, John signed a demand promissory note for $2,000 to the Camelot Country Club. The note stated that it was being given in payment for a membership in the country club, but in fact, the club was insolvent, its memberships had no value, and John

> Catherine suffered serious physical injuries in an automobile accident and became acutely depressed as a result. One morning, she received a check for $17,400 in settlement of her claims arising out of the accident. She indorsed the check and placed it o

> Teri and Jerry entered into a contract with a real estate developer that provided he would build the house of their dreams on a lot that he owned. In payment for the property and the house, T&J signed a promissory note which was payable, “upon closing on

> Shelby wrote the following check to Dana. When is it payable and for how much? Fidelity Fiduciary Bank 0802 p20 Crest Drive Alvin, TX 54609 August 3, 2009 July 27, 2012 Pay to the order of Aana $352 00 Three hundred eighty-tws & "/100 DOLLARS Shelby

> Kay signed a promissory note for $220,000 that was payable to Investments, Inc. The company then indorsed the note over to its lawyers to pay past and future legal fees. Were the lawyers holders in due course?

> Tom was CEO of a company. He stole money from the company by writing a series of checks made out to “Cash” which he deposited in his own personal account at Bank. (Please do not try this at home.) Of course, he then spent the money. The company sued the

> Abe gives the note to his daughter, Prudence, for her birthday. Is Prudence a holder in due course? Does Duncan have to pay Prudence?

> Shifty sells that note to Honest Abe for $22,000. Does Duncan have to pay Abe?

> Duncan Properties, Inc. agrees to buy a car from Shifty for $25,000. The company issues a promissory note in payment. The car that Duncan bought is defective. If Shifty still has the note, does Duncan have to pay it?

> The Aviation Security Improvement Act (ASIA) states that the FAA can refuse to divulge information about airport security. The FAA interprets this to mean that it can withhold data in spite of the FOIA. Public Citizen and the Lockerbie family members in

> The Dannemans bought a Kodak copier worth over $40,000. Kodak arranged financing by GECC and assigned its rights to that company. Although the Dannemans thought they had purchased the copier on credit, the papers described the deal as a lease. The Dannem

> After a federal judge refused to dismiss criminal charges against him, Michael Reed took revenge by electronically filing a UCC financing statement listing the judge, the prosecuting attorney, and former Secretary of the Treasury Timothy Geithner as $3.4

> Collateral may change categories depending on its holder and how it is being used at the time of default. Classify a refrigerator in the following circumstances: (a) When sold by an appliance store; (b) When used by a restaurateur in his business; and (c

> Eugene Ables ran an excavation company. He borrowed $500,000 from the Highland Park State Bank. Ables signed a note promising to repay the money and an agreement giving Highland a security interest in all of his equipment, including after-acquired equipm

> Dupont Feed bought and sold agricultural products. Dupont borrowed $300,000 from Wells Fargo Bank and gave Wells Fargo a security interest in all inventory, including after-acquired inventory. Wells Fargo perfected its interest by filing on June 17, 1982

> The state of Kentucky filed a tax lien against Panbowl Energy, claiming unpaid taxes. Six months later, Panbowl bought a powerful drill from Whayne Supply, making a down payment of $11,500 and signing a security agreement for the remaining debt of $220,0

> Sears sold a lawn tractor to Cosmo Fiscante for $1,481. Fiscante paid with his personal credit card. Sears kept a valid security interest in the lawnmower but did not perfect. Fiscante had the machine delivered to his business, Trackers Raceway Park, the

> The Copper King Inn, Inc. had money problems. It borrowed $62,500 from two of its officers, Noonan and Patterson, but that did not suffice to keep the inn going. So Noonan, on behalf of Copper King, arranged for the inn to borrow $100,000 from Northwest

> Under the terms of a long-term supply contract, Linde supplied United Aluminum Corporation (UAC) with nitrogen at $0.23 per unit. Upon expiration, that contract gave UAC the sole option to renew the agreement for five additional years at the same price.

> Craig Newmark and Jim Buckmaster founded craigslist, the most popular website in the country for classified ads. Rather than maximizing its profits, craigslist instead focused on developing a community among its users. It was a place to find an apartme

> Lewis River Golf, Inc., grew and sold sod. It bought seed from defendant, O. M. Scott & Sons, under an express warranty. But the sod grown from the Scott seeds developed weeds, a breach of Scott’s warranty. Several of Lewis River’s customers sued, unhapp

> Mastercraft Boat manufactured boats and often used instrument panels and electrical systems assembled and/or manufactured by Ace Industries. Typically, Ace would order electrical instruments and other parts and assemble them to specifications that Master

> Clark Oil agreed to sell Amerada Hess several hundred thousand barrels of oil at $24 each by January 31, with the sulfur content not to exceed 1 percent. On January 26, Clark tendered oil from various ships. Most of the oil met specifications, but a smal

> The AM/PM Franchise association was a group of 150 owners of ARCO Mini-Market franchises in Pennsylvania and New York. Each owner had an agreement to operate a gas station and mini-market, obtaining all gasoline, food, and other products, from ARCO. The

> In March, Amy contracted for Gino Fashion Tuxedo to outfit her groom on their wedding day. The contract provided that any cancellation would automatically result in forfeiture of the deposit. Weeks later, the couple broke up and Amy notified Gino that th

> Round Tire Co. sells 1,000 tires to Green Rent-a-Car for use on Green’s fleet. The same day, it sells one new tire to Betty Blue for use on her car. For both sales, Round uses a sales agreement that includes: “LIMITATION OF REMEDIES. Round agrees to repa

> Franklin Miller operated Miller Seed Co. in Pea Ridge, Arkansas. He bought, processed, and sold fescue seed, which is used for growing pasture and fodder grass. Farmers brought seed to Miller who would normally clean, bag, and store it. In some cases th

> Boboli Co. wanted to promote its “California style” pizza, which it sold in supermarkets. The company contracted with Highland Group, Inc., to produce two million recipe brochures, which would be inserted in the carton when the freshly baked pizza was st

> Leighton Industries needed steel pipe to build furnaces for a customer. Leighton sent Callier Steel an order for a certain quantity of “A 106 Grade B” steel. Callier confirmed the order and created a contract by sending an invoice to Leighton, stating th

> Universal Consolidated Cos. contracted with China Metallurgical Import and Export Corp. (CMIEC) to provide CMIEC with new and used equipment for a cold rolling steel mill. Universal then contracted with Pittsburgh Industrial Furnace Co. (Pifcom) to engin

> Federal antitrust statutes are complex, but the basic goal is straightforward: to prevent a major industry from being so dominated by a small group of corporations that they destroy competition and injure consumers. Does Major League Baseball violate t

> John C. Clark, using an alias, rented a Lexus from Alamo Rent-A-Car in San Diego, California. Clark never returned the car to Alamo and obtained a California “quick title” using forged signatures. He then advertised in the Las Vegas Review Journal newspa

> Construction Helicopters paid Heli-Dyne Systems $315,000 for three helicopters that were in Argentina. Two were ready to fly, and one was disassembled for routine maintenance. The contract said nothing about risk of loss (the parties could have saved a l

> United Technologies advertised a used Beechcraft Baron airplane for sale in an aviation journal. Attorney Thompson Comerford was interested and spoke with a United agent who described the plane as “excellently maintained” and said it had been operated “u

> The Massachusetts Bay Transit Authority (MBTA) awarded the Perini Corp. a large contract to rehabilitate a section of railroad tracks. The work involved undercutting the existing track, removing the ballast and foundation, rebuilding the track, and dispo

> Brewster manufactured plastic bottles. Dial made personal care products at many plants around the country, including one in Salem, Virginia. The companies agreed that Dial would purchase from Brewster all of the plastic bottles it needed for its Salem fa

> The Brugger Corp. owned a farm, operated by Jason Weimer, who acted as the company’s business agent. Tri-Circle, Inc. was a farm equipment company. On behalf of Brugger, Weimer offered to buy from Tri-Circle certain equipment for use on the farm. Tri-Cir

> Nina owns a used car lot. She signs and sends a fax to Seth, a used car wholesaler who has a huge lot of cars in the same city. The fax says, “Confirming our agrmt—I pick any 15 cars fr yr lot—30% below blue book.” Seth reads the fax, laughs, and throws

> What are the advantages and disadvantages of hiring a lawyer to draft or review a contract?

> Blair Co.’s top officers approached an investment bank to find a buyer for the company. The Bank sent an engagement letter to Blair with the following language: ‘If, within 24 months after the termination of this agreement, Blair is bought by anyone with

> What are the penalties if Artist breaches the movie contract? Are these reasonable? Too heavy? Too light?

> The United Kingdom has not signed the CISG. Until recently, major world traders like Japan and Brazil had refused to sign. Imagine that you are a legislator from one of these countries. What might your objections be to ratifying a treaty on sales law?

> List three types of contracts that should definitely be in writing, and one that probably does not need to be.

> List three provisions in a contract that would be material, and three that would not be.

> Chip bought an insurance policy on his house from Insurance Co. The policy covered damage from fire but explicitly excluded coverage for harm caused “by or through an earthquake.” When an earthquake struck, Chip’s house suffered no fire damage but the ea

> Slimline and Distributor signed a contract which provided that Distributor would use reasonable efforts to promote and sell Slimline’s diet drink. Slimline was already being sold in Warehouse Club. After the contract was signed, Distributor stopped condu

> Walgreens operated a pharmacy in the Sara Creek mall. As part of this long-term lease, Sara Creek agreed not to lease mall space to another pharmacy. During an economic recession, Sara Creek’s largest tenant left and the landlord informed Walgreens tha

> PepsiCo entered into a contract to sell its corporate jet to Klein for $4.6 million. Before the deal closed, the plane was sent to pick up PepsiCo’s chairman of the board, who was stranded at Dulles airport. The chairman then decided that the company s

> John and Susan Verba sold a Vermont lakeshore lot to Shane and Deborah Rancourt for $115,000. The Rancourts intended to build a house on the property, but after preparing the land for construction, they learned that a wetland protection law prevented bu

> Parkinson was injured in an auto accident by a driver who had no insurance. Parkinson filed a claim with her insurer, Liberty Mutual, for $2,000 under her “uninsured motorist” coverage. Liberty Mutual told her that if she sought that money, her premium

> Racicky was in the process of buying 320 acres of ranch land. While that sale was being negotiated, Racicky signed a contract to sell the land to Simon. Simon paid $144,000, the full price of the land. But Racicky then went bankrupt, before he could c

> Lewis signed a contract for the rights to all timber located on Nine Mile Mine. He agreed to pay $70 per thousand board feet ($70/mbf). As he began work, Nine Mile became convinced that Lewis lacked sufficient equipment to do the job well and forbade h

> Many European nations fear the effects of genetically modified foods, so they choose to restrict their importation. The EU banned the entry of these foods and subjected them to strict labeling requirements. Does this policy contravene the principles of

> While waiting in line in a supermarket, you observe a woman trying to pay with food stamps. Under the law, food stamps cannot be used to pay for prepared items so the register would not accept the stamps in payment for a $6 container of chicken noodle s

> Mega Contractors sells to government agencies using a cost-plus contract and to private firms using fixed price contracts. What choices does Mega have in the design of its job costing system that affect the cost of the government jobs?

> When preparing cost estimates for account analysis purposes, should the costs be extracted from the historical accounting records?

> The following costs are labeled fixed or variable according to a typical designation in accounting. Under which circumstances would any of these costs behave in a manner opposite to that listed? a. Direct labor—variable. b. Equipment depreciation—fixed.

> When using cost estimation methods based on past data, what are the trade-offs between gathering more data and gathering less?

> Why is it important to incorporate learning into cost estimates?

> If one wishes simply to prepare a cost estimate using regression analysis and enters data into a program to compute regression estimates, what problems might be encountered?

> Under what conditions is the engineering estimates technique preferred to other estimation techniques?

> Luke Corporation produces a variety of products, each within their own division. Last year, the managers at Luke developed and began marketing a new chewing gum, Bubbs, to sell in vending machines. The product, which sells for $5.25 per case, has not had

> Action Games has developed a new computer game that it plans to sell for $32. The variable costs associated with each game (for materials, shipping, and packaging) amount to $7. The fixed costs associated with the game amount to $75,000 per year. Requir

> Why does it matter what allocation base is used to determine the predetermined rate?

> Hill Street Electronics has provided the following information for last year: Sales revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,000,000 Store rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

> Krylon Company purchases eight special tools annually from CO., Inc. The price of these tools has increased each year, reaching $100,000 per unit last year. Because the purchase price has increased significantly, Krylon management has asked for a cost es

> Pick a unit of a hospital (for example, intensive care or maternity). Name one example of a direct materials cost, one example of a direct labor cost, and one example of an indirect cost.

> Refer to the example in Appendix B. Assume that the company now finds that the learning rate is 90 percent, instead of 80 percent. The 90 percent learning rate coefficient is −0.152004; that is b = −0.152004 in the for

> How is job costing in service organizations (for example, consulting firms) different from job costing in manufacturing organizations?