Question

Assumptions:
It is assumed that all questions concern general United States law, unless the question specifically states otherwise.
With True/False questions, any element of falsity makes the question a false statement. With multiple-choice questions, there may be more than one answer which is “good,” or none of the answers may be “perfect,” so choose the best one you can.

1. Ken is an employee of Big Box Stores, Inc. He is using a company vehicle to deliver supplies to one of the local stores operated by Big Box Stores, when he dies from a heart attack. Unfortunately his vehicle crashed into another car, seriously injuring a passenger in that car. Big Box Stores, Inc. only has the minimum liability insurance coverage that Washington State requires on vehicles - $25,000 per person injured.   If the victim of the crash makes a claim against Big Box Stores, Inc. the victim will only be able to recover from the car-insurance policy, not from the assets of the company. True/False

2. Mark, a resident of Olympia, Washington, signed a Will (on Nov 1, 2017) to give all of his property to his sister Mariella, in case something happened to him, on his upcoming trip to Nepal, where he would be attempting to “summit” one of the tallest mountain peaks in the world. Mark did not have much real estate or investments, but he had valuable copyrights based on books he had written on mountain climbing. He had downloaded the Will form, from a free site on the internet. He did not have time to get Witnesses to sign it before he left, so he mailed the Will to Mariella (on Nov 15, 2017), with directions for her to get a couple of his friends to sign it, when she had time. Unfortunately, on Nov 20, 2017 Mark was buried in an avalanche in the mountains. When Mariella heard of Mark’s death, she then asked a couple of Mark’s friends to sign the Will so she could submit it to the probate court. Mark’s friends did sign and date it on the day they received it (Nov 25, 2017). Now Mark’s brothers are challenging this Will – how should the judge rule under Washington law?
a. The judge should rule that the Will is valid and enforceable, based on Washington law. Mariella should get everything, just like Mark wanted.
b. The judge should rule that the Will is not valid, and should not be enforced. The state “intestate law” should govern Mark’s estate. Mariella will have to share the estate with Mark’s brothers.

3. Sargent Riley Cooper, a resident of the State of Washington, buys 20 acres of land just East of North Bend, Washington, paying $200,000 from his savings account. He signs a two-year lease, from December 1, 2017 to November 30, 2019, to a local farmer, for $15,000 per year. What kind of tenancy is this?
a. A Tenancy at Will
b. A Tenancy at Sufferance
c. A Periodic Tenancy
d. A Tenancy for Years

4. Jensen, a resident of the State of Washington, in 2010 had his attorney set up a Revocable Living Trust, and he transferred title to all of his real estate holdings into the Trust. He named himself as the primary Beneficiary of the Trust, to receive all of the rental income during his lifetime. Upon his death, the real estate is all to go to his sister Monica. Jensen also has a bank account that he co-owns with his brother Bro, as Tenants-in-Common, with about $50,000 in it. In 2017, Jensen signed a holographic Will, that gave a valuable painting, and all his other property as well, to his girlfriend Gabby. There were no witnesses to this holographic Will. Last week, Jensen died in a freak circus-act accident. Now, his three closest people (Monica, Bro, and Gabby) find themselves in a fight, because they each think they should get all of Jensen’s property! Who will get Jensen’s stuff?
a. Monica gets everything – all the real property, the bank account, and the painting.
b. Monica gets the real property. Bro gets all of the bank account. Gabby gets the painting and everything else that didn’t go to Monica and Bro.
c. Gabby gets everything, because the Will is valid, so all of Jensen’s property (real estate, bank account, painting, and everything else) goes to Gabby.
d. Monica just gets the real estate; Bro gets half of the bank account. Gabby gets half of the bank account, and everything else (painting, back account, etc.)
e. Gabby gets nothing. Monica gets the real estate. Bro gets half of the bank account. The other half of the bank account, and all other remaining assets in Jensen’s estate, get split equally between Monica and Bro.

5. Susannah needed to buy a car, so she went to a car dealer (Reasonably Honest Bob’s Used Cars), and signed a contract to buy a 2005 Honda for $10,000 total price. She had saved up $2,000, which she used as a “down payment” on the car. Then she went to her bank, and asked for a loan for the $8,000 balance on the contract. The Bank only asked Susannah to sign a Promissory Note to promise repayment of their $8,000 loan. This is an example of:
a. A secured loan
b. An unsecured loan
c. A mortgage

6. Second National Bank loaned $400,000 to Thomas, so that Thomas could buy inventory of 1,000 carpets for his Oriental Carpet Store at Northgate Mall. The Bank asked Thomas to sign a Promissory Note for the $400,000, and a UCC Financing Statement, giving the Bank a security interest in all of the inventory, in case Thomas defaulted. After Thomas had been in business for 6 months, he had only sold one carpet for $5,000. He used the $5,000 to pay one month’s rent on his store space in the mall. Thomas made none of the monthly payments to the Bank like he had promised. If the mall sues Thomas for the unpaid rent on the mall store, and the Bank sues Thomas for the unpaid loan, who will have the best legal claim on the remaining inventory of carpets?
a. Whichever creditor completes their lawsuit, and gets a court Judgment against Thomas first will have top priority.
b. The mall will have top priority in claiming the proceeds from sale of the inventory.
c. Second National Bank will have top priority in claiming the proceeds from sale of the inventory.

7. True or False. Most credit cards issued by the banks are “unsecured lending” to the holders of those credit cards.

8. The filing fee with the Washington Secretary of State, Corporations Division, for the initial filing of Articles of Incorporation, to create a new corporation, is about:
a. $   50
b. $ 100
c. $ 200
d. $    500
e. $ 1,000

9. The annual license fee to the Washington Secretary of State, Corporations Division, to renew the corporation’s existence for another year, is about
a. $10
b. $70
c. $150
d. $250

10. A corporation is the same legal entity as an LLC. True/False

11. A regular corporation (also known as a "C-corporation") can have more than one “class” of stocks. For example, it could have one class of common stock with voting rights, and it could also have a class of preferred stock with no voting rights. True/False

12. A sole proprietorship is the most common form of doing business in the United States, probably because it is quick, cheap, and easy to set up! True/False

13. A sole proprietorship is also the safest form of business entity for the owner, because of the limited personal liability given to the owner. True/False

14. Read the definition of “employer” under RCW 49.60.040, which is part of the Washington Law Against Discrimination (the whole chapter is Chapter 49.60 of the Revised Code of Washington). Joshua (who is of Irish heritage) has just started a new small business in Seattle, and only has one employee so far, and it turns out that person also has Irish heritage. For his second employee, he is thinking of just hiring a person who is also of Irish heritage. It would be legal for him to only interview prospective employees who have Irish heritage. True/False

15. Reeya and Alec are two friends who want to go into business together, making different types of Naan bread to sell at Seattle Mariner baseball games, just outside the stadium.   Reeya suggests that they call the business "Reeya’s Naan Bread Delights” and file for a business license as a sole proprietorship under Reeya's name, so they can “save on legal costs.” They plan to buy $100,000 in liability insurance. This arrangement would:
a. Adequately protect both Reeya’s and Alec’s legal rights if the company is successful and gets sold to a large corporation.
b. Adequately protect Reeya’s assets if a customer dies from food poisoning, and the business gets sued.
c. Be dangerous for both Reeya and Alec.

16. Robert was hired for a full-time teaching position at NSC in Art, starting Summer Quarter 2017.   He was highly qualified (having both a Master's degree in Fine Arts, and many years’ experience in the art world). Just before the quarter starts, Robert comes to school in a wheelchair - he has been injured in a car accident and will be in the wheelchair for about a year while he is healing and going through “rehabilitation.” The Humanities Division Dean is concerned that Robert will not be able to effectively teach the class, maneuver around the Art classroom, etc. Robert explains that he will only need a wheelchair ramp built through part of the classroom, and he has gotten bids from two contractors, both for approximately $2,000. The ramp will also cost about $1,000 to remove after Robert has recovered from the accident and no longer in need of the ramp. You may assume that NSC has an annual equipment budget of about $300,000. Under the Americans with Disabilities Act (commonly known as the “ADA”) is NSC obligated to provide the ramp for Robert, as a reasonable accommodation for Robert?
a. No, $2,000 to build, and $1,000 to remove the ramp, are too high a percentage of the NSC total annual equipment budget, to have to spend to assist just one employee.
b. NSC should only half to pay half of the cost, with Robert assuming the other half of the cost.
c. Yes, this is only 1% of the total annual equipment budget. NSC should have built into its budget a contingency amount, to handle such special needs each year.   

17. The facts are the same as in question 16. However in this case, the special ramp that Robert would need to be able to teach would cost $100,000. Is NSC obligated to provide this special equipment, as a reasonable accommodation for Robert?
a. Yes, this would be a reasonable accommodation.
b. No, the high cost of this equipment, compared to NSC’s total annual equipment budget, would make this an unreasonable accommodation.

18.   Gebby has incorporated her online business, in which she sells knitted sweaters and scarves that she imports from Thailand. She owns 60% of the stock in the corporation. The other 40% of the stock is owned by her two sisters, who helped her financially in setting up the business. She takes out a regular monthly salary, like the other employees. From the annual profits of the company, she also pays a reasonable dividend to each of the shareholders (including herself), based on what they each contributed to buy shares in the corporation. She keeps a separate corporate bank account for the business, deposits all the sales receipts into this account, and pays all corporate expenses from this account. Gebby pays all of her own personal expenses from her personal checking account. Gebby also has official “Shareholder Meetings” and “Directors Meetings” each year, and she does talk with her two sisters every month about how business is going, and they make mutual decisions regarding the business on an ongoing basis that she has email records for. They also keep their annual corporation license paid with the Secretary of State’s office. Gebby did buy some basic liability insurance for the business, but it is only for $100,000. Recently, one of the customers notified Gebby that the customer’s daughter committed suicide by hanging, using one of Gebby’s scarves. The customer has indicated they will probably file a lawsuit soon against Gebby’s business. How safe are Gebby and her sisters legally?
a. Gebby and her sisters are in big trouble, as they are not carrying a very large liability insurance policy. So they will probably lose any limited liability they may have had. The liability insurance company will not have to defend them, and would only have to pay if the Plaintiff gets a judgment against them.
b. Gebby and her sisters have probably handled the corporation well enough that a court will not let the lawsuit Plaintiff "pierce the corporate veil" and go after Gebby and her sisters’ personal assets. The liability insurance company will have to defend the corporation, and will have to pay up to the policy limit, if the Plaintiff gets a judgment against them.
c. The liability insurance company will have to defend the corporation, and will have to pay whatever judgment is awarded.

19. An officer of a corporation can be legally responsible for some debts of the corporation, if he/she personally guarantees the debts of the business (such as bank loans), and then the business fails and goes out of business. T/F

20. Kazuki is negotiating with a major national corporation (like McDonalds), for a franchise to operate a new location near NSC. Assume Kazuki is successful in his negotiations with this company, and is ready to set up his new business. What type of business entity can he choose to operate his business? He will be the only person with an ownership interest in the business.
a. Kazuki would have to set up a corporation.
b. Kazuki would have to operate it as a sole proprietorship, as he is the only owner.
c. Kazuki can choose to operate as any of the following: sole proprietorship, general partnership, limited partnership, LLP, LLC, S-Corporation, or C-Corporation.
d. Kazuki can only choose to operate as one of the following: sole proprietorship, LLC, S-Corporation, or C-Corporation.

21. First, read RCW 49.60.180. Can a restaurant-employer (with 5 full-time employees) legally refuse to hire a woman bartender for a bar in the State of Washington?
a. Yes, this does not violate the state statute noted above.
b. No, that would be illegal under the statute noted above.

22. Fred has been hired by a manufacturing company in Seattle, to make metal parts for a new product. He has to use a "metal-stamping" machine that applies pressure of 2,000 pounds per square inch (psi) to bend flat metal into the appropriate shapes. If Fred's fingers get injured by the machine while he is stamping metal parts, he will
a. Have to sue his employer to receive any compensation for his injuries.
b. Be able to get compensation from the State Worker's Compensation program (sometimes called “Labor & Industries”).

23. True-False   A company can discriminate in hiring, if it can establish that it has a Bona Fide Occupational Qualification (BFOQ) for a particular type of employee. For example, a movie-producer is making a movie to tell the story of an eight-year-old girl who dies from cancer, but succeeds in raising $10 Million for cancer research before she dies! The movie-producer’s film company could legally just interview girls about eight-years-old, to play the part.

24. An agent has been hired by Nordstrom, to purchase clothing to be made by a clothing company in Indonesia. The agent negotiates a $20 Million contract, and signs the agreement "as agent for Nordstrom Corporation". Unfortunately, once The Nordstrom Corporation President sees the finished products when they arrive in Seattle, the President announces that he is canceling the order! The Indonesian company could sue the agent for breach of contract, and the agent would be personally liable on the contract. T/F

25. Fred owes money to the Internal Revenue Service on his 2014, 2015, and 2016 income tax returns, amounting to about $20,000 total. If he files for a Chapter 7 total liquidation bankruptcy, these debts will all be discharged by the bankruptcy court. True/False

26. Donald Trump wants to buy your property, located in downtown Seattle, to create his newest private hotel development, to be called “Trump Tower Seattle.” You do not want to sell to Mr. Trump.
a. Mr. Trump can force you to sell, under the power of eminent domain.
b. Mr. Trump can force you to sell, under the power of foreclosure.
c. Mr. Trump can force you to sell, under the power of judicial review.
d. Mr. Trump is out of luck – you do not have to sell to him.

27. An “S-Corporation” can have up to 200 shareholders. True/False

28. Duc has promised to wash Anh's car this next Saturday. Anh has promised to pay Duc $20 for his work. They are both over 18. The promises are oral. This is an example of a(n) _______________ contract.
a. void
b. voidable
c. formal
d. executed
e. executory

29. Marnie and Joel are brother and sister. They are given a gift from Mom of $20,000 by a check made out to both of them. They set up a bank account with both of their names on it, as Joint Tenants With Right of Survivorship. Joel dies. Joel’s only surviving relative besides Marnie, his son Johnny, is claiming Joel’s half of the bank account. Marnie has never liked Johnny, and has refused to give Johnny any money from the account. If this matter goes to court, how should the judge rule, according to the law?
a. Johnny is entitled to half of the account as a matter of law.
b. Johnny is not entitled to anything. It is a Joint Tenancy account, so the whole account now belongs to Marnie.
c. Mom is now entitled to get back half of the account, since she was the person who gave it to Joel and Marnie in the first place.

30. Manuel takes his family to the Space Needle Restaurant for a special dinner celebration. He drives to the valet parking area, where the staff takes his keys and parks the car for Manuel. They give him a “claim check” for when the family is ready to pick up the car. The valet service costs $10. When Manuel and family have finished dinner, they present their claim check, but are informed that the car is missing – it must have been stolen! When Manuel complains, the valet points to the back of the claim check, where it is printed as follows: “Valet Parking is not responsible for theft or other loss of property.” Unfortunately, Manuel did have car insurance, but he had not noticed that the insurance policy had lapsed one week before this incident. If Manuel sues the Valet Parking Service for the value of his stolen vehicle, how should the judge rule?
a. The Valet Parking Service was legally responsible for returning the vehicle, under the legal doctrine of “bailment,” regardless of what the claim ticket said, so Manuel will win.
b. Manuel had a “license” to use the property – and the claim ticket clearly stated that the Valet Parking Service was not responsible for theft or other loss, so Manuel will lose.
c. This is an “easement” to use the parking space – it is a temporary ownership interest in the parking space. Manuel should have gotten insurance. So Manuel will lose.

31. Donald is an artist – he creates both sculptures and oil paintings. One of his paintings – he named it “Sex in the Country” – showed a farm setting, with several farm animals apparently engaged in sexual intercourse. He recently sold this painting for $50,000 through a local art gallery, to a wealthy art collector (Richard). Once Richard had possession of the painting, he took photographs of the painting, and had thousands of posters created using the photographs of the painting. Richard is now selling these posters in hundreds of art galleries all across the US, with an estimated total sales of $1 million or more for this year alone!
a. Donald has a valid legal claim against Richard for Copyright violation.
b. Donald has a valid legal claim against Richard for Patent violation.
c. Richard has the legal right to sell these posters, as he is now the owner of the painting, and he created the photographs of Donald’s painting to use on the posters.

32.   Max read one of the breach-of-contract cases in his textbook, in which an un-scrupulous real-estate developer had apparently cheated 10 customers by signing contracts to build homes for them, but then took their $25,000 down payments (each), and went on a big around-the-world vacation for several years! During his absence, the developer was convicted (in absentia) of the crime of “theft by deception” by the local criminal court. Max was outraged at this guy, and posted a note on an internet website, where he named this developer a “thief” who should be “tarred and feathered” and “thrown into the nearest lake with concrete shoes”!   Somehow the developer found out about Max’s internet post, and the developer filed suit against Max for $5 million, claiming Max had committed libel against the developer.
a. The developer will probably win this lawsuit against Max, as Max has clearly committed libel against the developer.
b. The developer will probably lose this lawsuit against Max, because Max’s actions did not constitute libel – it was just slander.
c. Max has a good defense against this lawsuit, as the developer had actually been convicted of theft in court.

33. Sal (owner of a small apartment building) signed a one-year apartment rental (from June 1, 2017, to May 31, 2018) agreement with a new tenant, Minnie, for $2,000 per month, for a 3-bedroom, 2 bathroom apartment.   Minnie then talked with two of her friends from NSC (Lynn and Leila), and rents them each one of the extra bedrooms and use of the common areas of the apartment, for $1,000 each. Lynn and Leila each sign a one-year sub-lease with Minnie, for the June 1, 2017 to May 31, 2018 time period. On June 1, 2017, all three of the women move into the apartment. All is well until January 1, 2018, when Lynn moves home to Nebraska (she had flunked out of NSC, and was quite depressed!). Minnie is later able to rent out Lynn’s bedroom to another friend Paula, but just for 3 months (March 1 through May 31), for only $800 per month.
a. Minnie can successfully sue Lynn for $5,000 – the five months Lynn did not pay Minnie.
b. Minnie can successfully sue Lynn for $2,600 – the net rental amount Minnie lost out on ($5,000 less $2,400 from Paula).
c. Minnie cannot recover anything from Lynn, because Lynn had a valid reason for leaving Seattle.
d. Minnie cannot recover anything from Lynn, because Minnie should have been paying some of the rent to Sal in the first place!   

34. Ramos is a serious student at NSC. He has been hired to work part-time at the college bookstore, as a part-time cashier. The head cashier (a woman just a couple of years older than Ramos) constantly makes statements to him like these: "Ramos, bring that beautiful body of yours over here and lift this box of books for me." and "When are you going to come over to my place for dinner - and breakfast?" etc.   Ramos already has a romantic relationship, and is not interested in the head cashier. He has asked the cashier not to make such comments, as it is embarrassing to him, but she just won't stop. It is bothering him so much he is starting to get a stomach ulcer. He has asked the bookstore manager to step in, but the manager says he is too busy to get involved. This is an example of:
a. Quid-quo-pro sexual harassment
b. Hostile work environment sexual harassment
c. Just normal workplace "bantering" and Ramos should just get used to it

35. Barrett’s father Rupert (a resident of the State of Washington) has recently died. Rupert left a Will, signed at a lawyer’s office back in 2010, with two witnesses and a Notary Public notarizing all the signatures, in which he left all of his property to Barrett, and left nothing for Barrett’s older brother Chris.   There are no other surviving family members. Barrett has been working for several years and supporting himself, and taking college classes. Chris has spent most of his time hanging around the pool hall, drinking beer, and not doing anything much to earn income, always borrowing money from his father Rupert. Rupert’s Will stated, in part: “I give nothing to my lazy son Chris, and I hope he learns how to work for his living!”   Chris thinks this is unfair, and wants to challenge the legality of the Will. Likely result?
a. In Washington, it is perfectly legal for a parent to “disinherit” a child, and leave nothing for them in his/her Will. So the judge will probably enforce the Will as it is written.
b. In Washington, a parent cannot legally “disinherit” a child, so the judge will have to ignore the Will, and split Rupert’s estate equally between the two sons.

36. Max sets up a Revocable Living Trust, naming himself as the initial Trustee, and his son Fred as the successor Trustee. Max transfers the following property into his Trust: his personal home in Seattle; a rental house in Portland, Oregon; and a condo on the beach in Kona, Hawaii; and his stock investment account of about $200,000. Because there is real estate in three states, Fred will have to open up a Probate Court action – once Max dies - in all three states to deal with the legal issues around the ownership of the three properties. True/False

Facts for Questions 37 - 43.
Keith and Estelle have been married for twenty years. They have one child, Jin, age eighteen. Keith owned a house prior to their marriage, that was completely paid off before they got married – this is where Keith and Estelle and Jin have lived. Keith also owned a rental house, also paid off before they got married. The rental income is deposited into a KeyBank account that Keith owned before marriage, that provides Keith with enough income to pay all the expenses for the rental property, and all the expenses for the home they live in. From the KeyBank account Keith had prior to marriage, he pays for a $200,000 term life insurance policy that names their son, Jin, as the Beneficiary.   The KeyBank account had about $20,000 in it when Keith died. Keith never changed the titles to the houses when he and Estelle got married. Keith and Estelle are both working, and they deposit their wages into a Joint Tenancy (JTWROS) bank account with Umpqua Bank, from which they buy their groceries, bought a car, pay for car expenses and vacations, pay for medical and life insurance for both of them, and pay for clothing and household furnishings. The Umpqua Bank account currently has about $10,000 in it. Neither Keith nor Estelle have written a Will. From their Umpqua Bank account, they pay for a joint life-insurance policy that will pay the survivor $100,000 upon the death of either husband or wife.    Estelle is worried about her financial situation – she has come to you to find out what property she will receive from Keith’s estate. What do you tell her, based on the State of Washington “intestate” law? (a copy is in “Files” on the Canvas website for the class)

37. The rental house is Keith’s Separate Property, so the ownership will be divided between Estelle and Jin (one-half each). True/False

38. The home they live in is Community Property, because that is the house they lived in while married, so Estelle will get 100% title to that. True/False

39. Jim will receive the $200,000 life insurance proceeds from the policy that named him Beneficiary. True/False

40. If the car accident victim sues Keith’s estate for her serious injuries, she will be limited to the $25,000 liability policy payment provided by the car insurance company. True/False

41. Estelle will receive the $100,000 life insurance policy proceeds. True/False

42. Jin will have a 50% claim on the $10,000 Umpqua Bank account. True/False

43. Jin will have a 50% claim on the $20,000 KeyBank account. True/False   

44. Will is an excellent portrait painter. He has made a painting of Governor Jay Inslee, that he recently sold to the Washington State Democratic Party, to display in their offices in downtown Seattle. Who owns the copyright to Will’s painting? In other words, if either Will, or the Washington State Democrats want to copy the image that Will created, so they can make thousands of political posters for next election, who owns the rights to make those copies?
a. Will does, as he was the creator of the portrait.
b. The Washington State Democratic Party does, as they now own the physical portrait.
c. Both of them have equal rights to make the copies.   

45. Meltzer Corporation has thirty employees as of the beginning of 2017. They are about to hire two more employees in June. They have received way too many applications (500!) for the jobs, and are trying to think of some way to “weed out” most of the applicants, so they can get down to a reasonable group of qualified people to interview. One of the people on the hiring committee has suggested that they just toss out all the applications that are from men, because twenty of the existing thirty employees are men, and that would “even things up a bit” for women.
a. This would be a violation of the federal Civil Rights Act of 1964.
b. This would be a violation of the Washington Law Against Discrimination.
c. Both A and B are correct.
d. This would not be a violation of either the federal Civil Rights Act of 1964 or the Washington Law Against Discrimination, because this business does not have enough employees for these laws to cover this business.

46.   Under the federal Equal Pay Act of 1963, it is:
a. Illegal to pay more to a female nurse than a male nurse, if they have the same qualifications and are doing the same job.
b. Illegal to pay more to a female nurse who has more years experience than a male nurse who is doing the same job.
c. Illegal to pay more to a male nurse who has more education than a female nurse who is doing the same job.
d. Illegal to pay more to a female nurse who is from the US, than to a female nurse who is from the Philippines, if they have the same qualifications and are doing the same job.

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1. False
2. b
3. d
4. e
5. b...

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