MGMT 520 Final Exam Latest VERSION

BUY MGMT 520 Final Exam Latest VERSION

(TCO A & F) Farmer Joe Andrews, who owned 350 acres of farm land, was approached by Ajax Oil Company that offered to buy the front 30 acres of his land, which bordered on a four-lane highway, so they could build a gasoline station. Ajax Oil asked Mr. Andrews if he had complete ownership of the land, and he assured them he did. The two parties negotiated on the price and terms of the land sale for several days and finally agreed on a price of $60,000 for the 30 acres and Mr. Andrews signed a Quit Claim Deed transferring ownership to Ajax Oil. Ajax Oil developed the land and built the gasoline station with a typical small grocery store, and a car wash. The gasoline station functioned well for the next eight years, and was very profitable. The State Highway Department contacted Ajax Oil, and told them the state had acquired the right to take the land 30 years ago for expansion of the highway through a Special Warranty Deed from farmer James Barnes, who had owned and operated the farm before Joe Andrews. The issue quickly goes to court with the State Highway Department, Ajax Oil, farmer Joe Andrews, and farmer Barnes’ Heirs, all parties to the legal activity. What issues are involved here in regard transfer of right to land? Who do you think will prevail?

2. (TCO I) An American Petroleum Engineer, who has been on an Offshore Nigerian Oil Platform for 30 days, enters Lagos harbor in a work boat with 15 Nigerian oil rig workers. The work boat is stopped by the Lagos Harbor Police. The Police Captain immediately spots the American and demands to see his Work Visa. The Engineer surrenders his Passport and Business Visa to the Police Captain. The Police Captain says the paperwork is not complete, and demands the Engineer jump into the Harbor Police boat to be taken to the Immigration Bureau for prosecution. The Engineer says he has a plane ticket out of Nigeria for 10:00 PM that night, and cannot afford to miss his flight. The Police Captain says, you will miss your flight unless you will give me $500 for my kids for Christmas. The Engineer says, I only have $300, and the Police Captain says that will do. The Engineer gives the Police Captain the $300, and the Captain pushes his boat away and says “Have A Nice Trip”. This issue is simple, “does this payment to the Harbor Police Captain constitute a bribe under the Foreign Corrupt Practices Act”? What provisions of the FCPA cover such payments?

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.

4. (TCO A, D, E) Nursing Homes ‘R Us engaged Nurse Bob on a contractual basis to care for residents on its Alzheimer’s unit. Sam is a resident in the unit under Bob’s care. Sam’s wife noticed welts and bruises on Sam. Upon investigating Sam’s injuries, the Nursing Home discovered that Bob had showed up for his shift the night before “under the influence.” Bob had been hired without a background check, and the Nursing Home discovered Bob had a felony conviction for aggravated assault. Additionally, as part of the investigation, the Nursing Home discovers that Bob has been selling nutritional supplements on the side, on and off the job. As part of his advertising for the supplements, he has a picture of Sam on the bottles. Consider the following:

1.Did Nursing Homes ‘R Us have an ethical duty to conduct a background check on Bob? Apply one of the models for resolving ethical dilemmas from Chapter 2 and consider the need for business practices to conform with ethical practices.

2.Can the Nursing Home be held legally liable for Bob’s conduct since he is an independent contractor? Identify potential legal claims, whether or not you believe they may be successful, and their elements.

3.If patients and family members become sick from the nutritional supplements, can the Nursing Home be held legally liable? Consider whether there is a agency relationship in this situation and, if so, what type. Also consider when a principal may be held liable for contracts entered into by its agent and for any personal injury caused by the supplements. (30)

5. (TCO E) Mr. Andy Gray had been injured in a car accident 5 years ago that left him paralyzed from the waist down, and confined to a wheelchair. Mr. Gray had been a skilled electronic technician for many years prior to his injury. After 5 years of living off the damage payments he received from the auto accident and Disabled Social Security, Mr. Gray decided to go back to work. He applied to XYZ Computer Company for a job assembling their product. The problem was that XYZ relied on an assembly line to produce their product, and Mr. Gray could not access or stand at the assembly line to work on producing the computers. XYZ declined to hire Mr. Gray. Mr. Gray then filed a law suit, claiming that under the 1990 Americans With Disability Act, XYZ should be forced to abandon the assembly line operation and assemble the computers at individual cubicle work sites where someone in a wheel chair could work. The computer company’s lawyer rejected this request, noting that abandonment of the assembly line would cost the company $175,000,000 to restructure, and increase their computer production cost by 30%. So, as the Judge in this case, how will you rule? What options do you have in this case? (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. (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? (30)

8. (TCO B & I) The ChevTex Oil Company has been operating successfully offshore West Africa for many years. They recently made a large offshore oil discovery that extends into the area of the state of Cabinda, which is part of the country of Angola. The oil company begins negotiations with government officials from both Angola and Cabinda. The Angola officials are primarily concerned about tax rates and the generation of maximum amounts of government revenue from the oil project. The Cabinda officials are primarily concerned about the creation of local jobs for their citizens from the oil project, and the limitations on use and abuse of their land and harbors. As ChevTex’s lawyers and executives begin drafting the Production Agreement, they agree with the Angola and Cabinda government officials that the contract will be governed by Angola/Cabinda Laws, but any dispute will be resolved in the London Court of Commercial Arbitration rather than a local court. This is common terms in West African Oil and Gas Agreements. Why do international oil companies insist on Arbitration Clauses in production agreements? Why do local governments usually agree to these Arbitration Clauses in such contracts?(40)