MGMT 520 Week 8 Final Exam (new)

1. (TCO A & F) Ownership of property has long been a major benefit of businesses in the U.S. and on the World Stage. Such property varies from Real Property, Tangible Property, and Intangible/Intellectual Property. Define these three types of property in daily business terminology, and give examples of each such property. (Points : 30)

2. (TCO I) A group of Oil Traders from Switzerland who partnered with their American counterparts, sought to gain control of Russian Oil Exports from the highly productive areas in West Siberia. Rather than having to bid on a dollar per barrel of oil basis every day for the 2 million barrels per day of oil that was exported from this highly productive area, the traders invited the regional executives of the Russian oil production districts to meet with them in Davos, Switzerland. The oil traders sent a chartered airliner to Moscow to transport the Russian oil executives to Geneva, and then provided rail transport to Davos, for a five-day series of business meetings. Each day involved a skiing trip on the slopes of Davos for the oil executives accompanied by a trained skiing instructor. The business meetings were limited to about 1 hour per night, following an elegant evening dinner. The Swiss Oil Traders’ and their U.S. Partners’ defense of this entertainment was that there was no direct payment to the Russia oil executives, and therefore not a violation of the Foreign Corrupt Practices Act. Do you think this is a violation of the FCPA? There is no exchange of payments, but is such elaborate entertainment acceptable under the FCPA? (30 Points) (Points : 30)

3. (TCO C) JetWave, Inc. (JWI) is a large manufacturer of appliances for use by average consumers in single-family homes and apartments. JWI’s bestseller is a digital, top loading dryer. The digital readout on the dryer alerts the consumer when the lint filter is full and/or if the vent line is clogged. Consumers have found that the dryer sends off false alerts about the lint filter. As a result, the dryer will shut down from these false alerts. The problem can be remedied in one of two ways: JWI sends out a repair person (during the warranty period only) and replaces the defective digital panel or the consumer can install a shorter aluminum vent line on their own. JWI only provides a 60 day warranty on their products. For consumers to pay for the panel to be replaced it would cost $300. On the JWI website under “Troubleshooting”, they do not recommend a particular length of aluminum vent line to replace the existing line, but do suggest “more than 6 feet.” As this is a quick and cheap fix, many consumers are opting to replace the aluminum vent line on their own. However, several consumers have reported that if the vent line is over 9 feet, sparks occur from the dryer lint. JWI does not report this on their website, nor do they modify their “Troubleshooting” Guide. Eric VonEckert is having the issue with the digital panel on his JWI dryer at home. He goes to his local home improvement store and buys a 10-foot aluminum vent line and vents the dryer through the front of his house. The error is remedied and his dryer is running fine. However, one night he puts a load of laundry in the dryer and heads off to bed. During the dryer cycle, sparks are generated and unbeknownst to Mr. VonEckert, his aluminum vent line passes next to the hot water heater. The sparks fly out of the end of the vent line and are sucked into the bottom of the water heater by the pilot light, catching fire to his home. Mr. VonEckert dies in the house fire. His wife and three children are seeking to file a lawsuit against JWI for damages on the grounds that the product was defective. In addition, they claim JWI did not protect the consumers by continuing to sell the defective dryer and not alerting the consumer to the issue with the longer vent line should the consumer choose to make the repair on their own.

You are the in-house attorney for JWI, Inc. and the Board of Directors at JWI have requested you develop a business strategy that includes ethical considerations to minimize liability for claims of product liability and breach of warranty relating to the dryer at issue. (Points : 30)

4. (TCO D) Mr. Big Dealer offered to sell 5 luxury cars to Mr. Little Reseller for $300,000 – $60,000 for each car. The offer to sell was sent by Over-Night FedEx. Mr. Little Reseller call Mr. Big Dealer on the phone, and said he could not pay the $60,000 per car, but might consider a lower offer if Mr. Big Dealer would cut the price. Mr. Big Dealer said he would think about cutting the price, and Mr. Little Reseller should watch for another FedEx Delivery. Mr. Big Dealer sent a revised offer of $55,000 per car by FedEx. Mr. Little Reseller received the FedEx revised offer on Friday, but was busy and did not respond until the following Wednesday, when he called Mr. Big Dealer on the phone and accepted the $55,000 per car offer. But, Mr. Big Dealer said he had already sold all five cars for $53,000 each, and immediately sent a FedEx to Mr. Little Reseller withdrawing the offer to sell for $55,000 each. Mr. Little Reseller’s lawyer told him to send a FedEx to Mr. Big Dealer immediately accepting the $55,000 per car offer, and the deal would be legally enforceable. Assume you are the Judge hearing the law suit filed by Mr. Little Reseller, how will you rule on the contractual issues in this case? Is this case to be decided on Common Law or under the Uniform Commercial Code? What is the “Mail Box Rule”, how will it affect this case? (Points : 30)

5. (TCO E) For the first 180 years of our county’s existence, there was no protection in the work place, schools, retail outlets, or virtually anywhere for individuals based on their race, gender, religion, age, etc. Discrimination was common in the work place, schools, restaurants, etc., until the 1960s. Four pieces of Federal Legislation in 1963, 1964, 1967, and 1990 have succeeded in establishing strict legal standards to prevent discrimination in our society. Identify and summarize these four pieces of Federal Legislation, and the protection they provide to prevent discrimination in our society. List the Five Protected Classes under our current laws. (Points : 30)

6. (TCO G) You have been serving as a legal/financial advisor to a family of small business owners who operate under several different company structures in the retail business. There are five active members of the family running four different companies. The family members have all accumulated a significant amount of personal wealth, averaging about $750,000 each. The family members have used two of the four companies which have been incorporated to accumulate significant debt. The equity in the two corporations is in the RED (negative), and the family members are transferring additional debts into these corporations. The family is considering further such debt transfer, and then filing Bankruptcy to try and unload the total family and business debts. As their lead Legal/Financial Advisor, the family members have ask you to define the three Chapters of the Bankruptcy Code, Chapters 13, 11, and then 7, and then recommend which one they should pursue. They also tell you to advise them on any risk they may incur in shifting debt and possibly funds among themselves personally, and between themselves and the two corporations that are absorbing the debt in preparation for the Bankruptcy Filing. (Points : 30)

7. (TCO H) Given that only 12 percent of the Business Organizations functioning in the United States are Corporations, what factors of business characteristics and operations result in Corporations generating 89 percent of business revenue? (Points : 30)

8. (TCO B) The San Diego Parachute Club practiced their parachute exercises every weekend, and usually they did so in the air space approaching the San Diego, California, international airport. The airport management never objected to the parachute club, but asked the Federal Aviation Agency (FAA) to block the parachuting in the airport air space. The FAA issued an Administrative Rule that did not require publication that prohibited the parachuting in the air space. The San Diego Parachute Club immediately challenged the rule saying it should have been a Substantive Rule that had to be published, and giving them the opportunity to protest the rule. The FAA agreed and published the Substantive Rule in the Federal Register; The San Diego Parachute Club filed a written objection. Consider the rights the San Diego Parachute Club have going forward. What are their initial rights in protesting the FAA Substantive Rule forbidding their parachuting at the San Diego Airport? What additional rights can they pursue if the FAA continues to move forward on the restriction? Include the details of the parachute club’s rights to protest all the way into the Federal Court System? (Points : 40)