What specific legal liability regarding manufactured products developed

1. 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? (Points : 30)

2.ABC Computers is a manufacturer and seller of personal computers and tablets. ABC entered into agreements with suppliers requiring that such suppliers not sell ABC’s computers below ABC’s suggested minimum retail price and in return, ABC would not sell its products at retail prices in the store owners’ territories. ABC decided not to sell any more computers unless an additional software package was purchased. A competitor informed the Office of the Attorney General of this policy, asserting it was illegal. Additionally, the new model of ABC’s computer has caught on fire, causing injuries to consumers. Explain what ABC should do to protect consumers. Also consider whether there have been any violations under the antitrust and related laws and the governmental agencies involved in these types of cases.

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(Points : 30)

3.Prior to the 1935 Case of “McPhearson v. Buick Motors”, manufacturers had little or no liability exposure for malfunctions of their products that lead to injuries or death to individuals from said product failure. What was the specific problem associated with this new Buick Automobile, and what two alternative legal claims did Buick Motors direct Mr. MacPhearson to pursue as opposed to his claim against them? What specific legal liability regarding manufactured products developed from this case, and what is its lasting effect in today’s world of consumer products? (Points : 30)

4.A large old brick building is being torn-down by a large well known contractor, and the bricks are just being thrown in a ditch by the road, apparently for disposal. A builder of small brick buildings on the outskirts of town notices two teenagers sitting in a large pickup truck, eating lunch, and watching the bricks being thrown into the ditch. The builder walks up to the teenagers and says, “if you guys will gather up those bricks being thrown in the ditch, put them in your truck, and deliver to my construction site at 1240 Oak Street, I will give you 6 cents a piece for the bricks”. The teenagers just smile and keep on eating their lunch. The builder leaves and goes back to 1240 Oak Street, where his crew is assembling a small brick building. At 4:00 PM that afternoon, the two teenagers drive up to 1240 Oak Street with their pickup truck loaded with bricks. They go up to the builder and say, “okay we are delivering 8,000 bricks, so at 6 cents per brick, you owe us $480”. The builder laughs and says, “I don’t really need them, you should just take them back and dump them in the ditch”. Do you think the teenagers have a contractual claim against the builder that they can recover on in court? How should they proceed? (Points : 30)


Johnson Manufacturing is a publicly held corporation that burns coal to power its plant. Johnson’s received notice today of an immediate rule change by the EPA requiring all coal burning plants to reduce their emissions by 10%. Implementing the technology to comply with this regulation would cost Johnson’s millions of dollars and could put them out of business. The CEO knows that the current emissions standards have been proven safe and acceptable but cannot find any research supporting the new standard.

Identify and apply an ethical theory from chapter 8 of our text that you think is appropriate and explain how you would advise the CEO regarding whether or not he should comply with the new standard. (15 points)
The CEO is upset that no prior notice was given concerning this rule change. As legal counsel for the company, the CEO has asked you to determine if it is legal for the EPA (or any administrative agency) to issue an immediate rule change. Explain why or why not. (15 points)
The CEO wants to approach the EPA with an alternative way of reducing pollution. He asks you if emission charges and/or marketable discharge permits would be viable options. Explain how these could potentially reduce emissions and evaluate whether or not one or both could be used instead of the regulation the EPA passed. (15 points)
Several years ago, the Board of Directors at the request of management voted against complying with a previous EPA rule change. This decision ended up costing the company $2 million in fines and penalties. Both management and the board are considering not complying with today’s rule change. Apply the business judgment rule as it relates to the board of directors and management. Include their legal and ethical responsibilities in the assessment. (15 points)

The Federal Government’s prosecution and eventual dissolution of the Standard Oil Trust under the 1890 Sherman Act before the Supreme Court in 1911 was the dominate example of antirust litigation in this country for almost 100 years. The only other Federal attack on a business as a dominate Monopoly to approach the importance of the Standard Oil Trust case was the United States v. Microsoft Corporation case, which was originally filed in 1999 by President Bill Clinton and his Attorney General Janet Reno. The Microsoft Case was resolved at the U.S. Circuit Court of Appeals in 2001 by President George W. Bush and Attorney General John Ashcroft. What was the basis, Federal Statute, for the original complaint against Microsoft? What was the basis of the specific complaint the Federal Government filed against Microsoft? What was the final result of the case, and the lasting impact on the software/computer industry? (Points : 30)

7. 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. After Justin graduated from college, he was hired by one of the largest ad agencies in the city. His first assignment involves working on the Budget Burger account. Budget Burger is owned by the daughter of the president of the ad agency (Mr. Johnson) and has three locations throughout the city. Justin’s assignment was to design T-shirts with a catchy slogan to be handed out for free at all Budget Burger locations to celebrate the grand opening of Budget Burger’s fourth location. The T-shirts said “Done your way!” Due to a lack of time, the normal approval process was skipped and the T-shirts were printed and rushed to the Budget Burger locations. Over two thousand T-shirts were handed out the day of the grand opening. The president of the ad agency doesn’t have a chance to see the T-shirts until the end of the day when he notices the customers wearing them. He is furious because their largest account is Burger King and fires Justin on the spot, and calls the head of the legal department to set up an emergency meeting. (Part 1) (10 points) Identify and apply an ethical theory from chapter 8 of our text that you think the ad agency should have applied to this situation with Justin. What should the ad agency do next based upon your analysis? (Part 2) (10 points) Identify and apply a theory of employment law the ad agency could use to justify firing Justin. Do you think it would be successful? Why or why not? (Part 3) (10 points) Identify and apply an intellectual property law theory Burger King could use if it decided to sue the ad agency. Would the theory you chose be successful? Why or why not?(Points : 40)




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