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Coffee shops

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Question

Coffee shops. Bernice wants to open a chain of coffee shops and begins by asking her friends in various states

around the country to invest through the purchase of securities in the coffee shops. Her friend Robbie says that he would like to invest but that she should be sure that she satisfies requirements of the SEC. He tells her that she has to provide information to the SEC involving a description of the securities, an explanation of how proceeds will be used, information regarding the management of the company, and other matters. He tells her that she also has to provide a document to the SEC that will be provided as an advertising tool to potential investors who can rely on it to decide whether they should buy securities. Bernice says that she does not want to do that. She explains to Robbie that insofar as the coffee shop venture is concerned, she does not want to advertise; and she wants to offer securities only to a limited number of wealthy friends. Particularly, she has in mind Scott who has a net worth of at least $3 million and Mary, a psychiatrist. Mary recently filed bankruptcy because of some bad decisions involving an elaborate decoration of her office. Although her income for the past couple of years has been in the range of $80,000, business is improving based on her recent involvement with a number of patients suffering anxiety based upon a fear of alien invasion. Considering only the information available, which of the following is a term that would describe Mary as an investor?

A. Approved

B. Sophisticated

C. Accredited

D. Unapproved

E. Unaccredited

 
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Skateboard Growth

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Question

Skateboard Growth. Both Bernie and John were presidents of small businesses manufacturing and selling skateboards.

Bernie’s store was called “Skateboard City” and John’s business was called “Skateboard for Health.” Because a large sports store was coming into town, they, along with the boards of directors decided that it would be a good idea to combine the businesses. They decided to retain the name “Skateboard for Health” and simply amend the articles of consolidation. Bernie was concerned, however, with the change because he was contemplating filing a lawsuit against Hank who had purchased 10 custom skateboards and had not paid for them. He was excited, however, about the prospect of not being liable for a lawsuit he expects to be filed by Greg who fell when a wheel came off on a skateboard sold by Bernie’s corporation resulting in a serious ankle sprain and medical bills. After investigation, Bernie is aware that the wheel was negligently attached to the skateboard. Bernie told John that one reason he wanted to retain John’s name was to prevent Greg from being able to recover against him. Which of the following is true in most states regarding Bernie’s concern that the surviving company might not be able to sue Hank for the price of the skateboards?

A. The surviving company will not be able to sue Hank.

B. The surviving company will be able to sue Hank only if Hank purchased the skateboards within 30 days of the joinder of the businesses.

C. The surviving company will be able to sue Hank only if Hank approves in writing the joinder of the businesses.

D. The surviving company will be able to sue Hank only if Hank is notified by certified letter of the joinder of the businesses.

E. The surviving company will retain the right to sue Hank.

 
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Peanut Allergy

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Question

Peanut Allergy. Kitty, who had a love of baking, decided to open her own bakery. She decided that she did not need

and did not want to pay for a lawyer to advise her on different forms of ownership. Unfortunately, Kitty had not paid attention in business law class. She proceeded, with little thought, to simply open her business called Kitty’s Baking. Bobby came in to order some cookies for his girlfriend, Bitsy, who was allergic to peanuts. Bobby told Kitty that he needed some cookies for Bitsy but that Bitsy had allergies to peanuts. Kitty told him not to worry because she would make up a special batch just for him. Kitty had hired some assistants because she was so busy. She told an assistant, Cathy, to make up several batches of cookies for different customers including Bobby and to leave out the peanuts in Bobby’s order. Cathy, however, forgot the instruction and proceeded to make Bobby’s cookies with crushed peanuts. Bobby picked up the cookies and gave one to Bitsy in the car while they were on the way to the movie in Bobby’s new car. Bitsy became violently ill, vomited in Bobby’s car, and had to have her stomach pumped. Bobby and Bitsy sought recovery from Kitty who told them that Bitsy’s doctor bill and Bobby’s car cleaning bill were business debts, that the business was new and not making any money at the moment, and that she had no personal liability. Following the incident involving Bobby and Bitsy, Kitty discussed with her parents her problems with the bakery. Kitty’s parents would like to invest in her business and share in any profits, but they do not want to share in the management responsibilities. Which of the following is true regarding Kitty’s statement that she had no personal liability?

She was correct.

She was correct only if she can establish that she has paid all her business taxes on time.

She was correct only if she can establish that she has at least 5 employees.

She was incorrect.

She was incorrect unless she signed an agreement with a financial institution in order to get a loan for the business and agreed in the document that she would not accept personal liability for any losses.

 
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disadvantage associated with activities performed by forward channel partners

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Question

Remedying a cost disadvantage associated with activities performed by forward channel partners (wholesale

distributors and retail dealers) would not involve

Multiple Choice

 
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