1. Sal A. Mander towed a tiny house to a 20 acre farm property and lives
in the tiny house (see photo). The tiny house has a composting toilet and
uses water collected from rain. Sal pays the landowner $100/month to live
in the house on the farm. Is Sal’s tiny house real property or personal
property? Real property
2.7 points QUESTION 2
1. Examine the Northchase Industrial Park Warehouse Lease (below)
between H.R. Puffinstuff Properties, Inc. and Hipster Hats LLC.
Hats LLC occupied Space A (10,000 square feet) of a warehouse. H.R.
Puffinstuff Properties, Inc. was acquired (purchased) by South Carolina
Realty, Inc. in on March 1, 2015.
Does South Carolina Realty, Inc. have to
honor (abide by) the contract between H.R. Puffinstuff Properties, Inc.
and Hipster Hats LLC? Yes
No 2.7 points QUESTION 3
1. In the mid-2000s, plaintiff EPA added the Ward Transformer Company’s
facility in Raleigh, which had become contaminated with polychlorinated
biphenyls, to its National Priorities List and initiated a costly removal action
under the Comprehensive Environmental Response, Compensation, and
Liability Act (CERCLA), for which defendants Consolidated Coal Company
(Consolidated) and PCS Phosphate Company (PCS) have borne much of the
cost. Which of the following terms (under CERCLA) applies to Consolidated
2.75 points QUESTION 4 1. Sassy Pantz is owned by Sassy Sauzie, Ellie Pantz, and 50 other
shareholders. The company suffers from double taxation, but the owners are
shielded from personal liability. Is Sassy Pantz a “legal person” for purposes
of doing business?
No 2.7 points QUESTION 5
1. The photo shows two energy drinks. The company that
manufactures “5 Hour Energy” drink (Innovation Ventures) has
manufactured the drink for well over a decade and has used the
mark ever since beginning production of the product. The company
that manufactures “6 Hour Energy Shot” (N2G Distribution) began
manufacturing the drink a couple years ago and admitted to copying
the “warning” information on their bottle from the “5 Hour Energy”
bottle. Innovation Ventures (the “5 Hour Energy” drink) filed a
trademark infringement lawsuit against N2G Distribution (“6 Hour Energy
Shot”) because the “6 Hour” drink too closely resembled the trademark and
trade dress of the “5 Hour Energy” drink. Question: Is this trademark infringement? Yes
No 2.7 points QUESTION 6
1. Cloud-computing company Rackspace Hosting Inc. has a two-story tube
slide as the centerpiece of its headquarters in San Antonio, Texas. (see
photo) Daniel Dunkel, an executive of New Era Associates LLC, broke his
leg on the slide while touring the Rackspace office. Dunkel’s company was
about to hire Rackspace for cloud computing services. The Rackspace
employee giving Dunkel a tour told him “the only way down from” the
building’s upper floor was by the slide and that the slide was a “rite of
passage.” Dunkel took a ride on the slide. Unfortunately, Dunkel’s leathersoled dress shoe caught on the inside of the slide, causing him to break his
tibia and fibula which had to be surgically repaired one month later. Dunkel
sued Rackspace, Wiegand Sports LLC (the Utah company that built the slide),
and Metropolitan Contracting Co. LLC (which installed the slide). Each
defendant company follows all the formalities of running a corporation or LLC.
Rackspace argues that the warning sign at the top of the slide says that
wearing rubber-soled shoes on the slide could result in injury and to keep feet
raised while using the slide. Which of the following statements is FALSE? In general, Rackspace Hosting Inc. is liable for injuries to invitees that occur on the
The sign at the top of the slide is an effort to transfer responsibility (assume the
risk) from Rackspace to the individual person using the slide. Dunkel will be able to reach the personal assets of the individual
owners of Rackspace, Wiegand Sports, and Metropolitan
2.7 points QUESTION 7
1. In Nov. 8, 2015, the parking lot of an IHOP (International House of Pancakes)
caved in (collapsed) and swallowed 12 cars that became submerged in mud and
pavement pieces. Fortunately, no person was injured, but the customers who lost their
cars want compensation for the loss of their cars. The lease agreement between the
IHOP franchisee (Lessee Lala Enterprises, Inc.) and the lessor of the land (Meridian
Hospitality, LLC) stated: The construction company responsible for the parking lot was the lessee of the land,
Lala Enterprises, Inc. The founder of the company, Abdul Lala, had two engineering
degrees and used these skills to construct several hotels in the area as well as the
Investigators immediately concluded that this was NOT a typical sinkhole, but was a
construction defect. The photograph shown demonstrates that the drainage pipe
collapsed under the weight of the cars and pavement. There is no doubt that the cause
of this collapse was faulty and inadequate design and construction of the parking lot and
drainage system. Which of the following statements is TRUE about this situation? Along with their companies, the individual owners of Lala Enterprises and Meridian
Hospitality are personally liable for payment of compensation to the car owners.
Lala Enterprises is liable for the damage to the cars.
Meridian Hospitality, LLC is liable for the damage to the cars.
Lessor Meridian Hospitality, LLC breached the warranty of habitability.
Owners cannot sue IHOP, Lessee or Lessor and their only remedy is to file a claim
with their automobile insurance companies. After all, accidents happen.
2.75 points QUESTION 8
1. Tom’s Turkeys is owned by Thomas Jeffs, sister Jenny Jeffs, plus 300
other shareholders. A competitor turkey farm in the Wilmington regional
area is Heartline Turkeys, which opened in 2009. Anna Graham and Ima
Nutt are the sole owners of the company. Anna and Ima are both members
and managers of the company. Their company is known for turkeys “raised
with love,” and the turkeys are very large-sized and priced for major grocery
store chains (e.g., Food Lion, Wal-Mart).
Of the following, which
is false about Heartline Turkeys?
Heartline Turkeys is taxed like a partnership
Anna Graham and Ima Nutt have full personal liability for the busines
Anna Graham and Ima Nutt are member-managers, sharing in management and sharing profits and losses in accordance with an
Heartline Turkeys, in its current form, cannot sell ownership shares on a
national stock exchange
2.7 points QUESTION 9
1. For Sale: 3.82 Acre lot available in the Dollar General Plaza shopping
center. Lot 2 is accessed by a 30 feet access easement that runs across the
northern side of the Dollar General store parking lot. Other tenants of the
Dollar General Plaza shopping center include Subway and a Pawn Shop.
There is an existing 0.92 acre retention pond located at the northeastern
corner of the property. There is no other way to get to Lot 2 except by using
the easement. See the photos. Do the tenants of the Dollar General Plaza
shopping center have the right to block the road leading to Lot 2? No, because the road to Lot 2 is an easement by necessity.
Yes, because the road belongs to the Dollar General Plaza
shopping center, not Lot 2.
Yes, but the tenants of the Dollar General Plaza shopping center
could also decide to charge a fee to the owner of Lot 2 to reach
the Lot 2 property through the Dollar General roadway.
2.7 points QUESTION 10
1. In February 2014, a pipe collapsed under a coal ash dump at the Duke
Energy Eden plant, spilling tons of coal ash into the Dan River and coating 70
miles of the river in gray sludge. Duke Energy was not permitted to dump
the coal ash into the river. What law did Duke Energy violate? Clean Water Act
National Environmental Policy Act
Toxic Substances Control Act
Comprehensive Environmental Response, Compensation,
and Liability Act
2.7 points QUESTION 11
1. Tom’s Turkeys is owned by Thomas Jeffs, sister Jenny Jeffs, plus 300
other shareholders. Residents of Wilmington, NC, Thomas and Jenny formed
the company twenty years ago under North Carolina laws. Tom’s Turkeys
made a large profit last year and the company’s management team decided
to make some real estate investments. If Tom’s Turkeys buys a parcel of
land in Georgia in order to sell it later at a higher price, is it “doing business”
there? No, because an investment isn’t “doing business.”
Yes, because the company will have a legal and physical presence in
Maybe, but only if Tom’s Turkeys earns a profit in Georgia
No, because “doing business” only applies if the company organizes
under Georgia law
2.7 points QUESTION 12
1. Bud Light lives in a beautiful apartment on the top of his company’s
building. Bud’s penthouse apartment has a living area with bookcases built
into the wall next to the fireplace. (see photo) Are the decorative items on
the shelves of the bookcases real or personal property? Real property
Trade fixtures that Bud will take with him if he moves
2.7 points QUESTION 13
Sondra rented a house in Carolina Beach, North Carolina, from Landlord “Beach
Rentals, Inc.” for one year at the price of $1,200 per month.
A couple months after living
there, Sondra began to have trouble breathing a noticed an odd smell in the house.
Sondra’s friends noticed the smell as well and after an investigation, discovered there was
black mold in the air conditioning and heating vents and in various places in the corners of
the ceiling; this indicated that some water damage had occurred and mold had started to
develop. Sondra notified the Landlord about the problem, but the Landlord said that there
wasn’t a problem and they weren’t going to fix it.
North Carolina law states that black mold renders an apartment or house “uninhabitable”
because it is an environmental and health hazard. Sondra has 3 more months of her
lease. Can Sondra do anything to protect her health and get out of the lease? Yes. Sondra can claim that the property is uninhabitable and that the Landlord has
constructively evicted her from the property; however, Sondra will have to immediately
move. Sondra should report the problem to the NC Attorney General’s Office. If the
Landlord sues for the remainder of the rent, Sondra will have a legal defense and the
Landlord will lose the case.
No. Sondra is doomed and will have to stay the remainder of the 3 months and
continue to pay rent in a timely manner.
2.7 points (Extra Credit) QUESTION 14
1. Maggie Smart lived in a planned community like Northchase,
Porter’s Neck, Brunswick Forest, or Landfall in Wilmington. Maggie
Smart was angry with her Home Owners’ Association for charging
her a late fee when she was one day late paying her annual
homeowner dues, so she decided to paint her house like a rainbow
in protest (see photo). The HOA bylaws and rules, which are in Ms.
Smart’s deed to her house, state that houses may only be painted
one of eight (8) colors approved by the HOA. A multi-colored house
is not one of the approved colors (or combination of colors) in the
planned community. The HOA fined Ms. Smart for the house color
and ordered her to repaint her house in an approved color. May Ms.
Smart keep the unique paint job on her house? No. The HOA covenants, bylaws and rules are part of her deed and she must paint
her house an approved color to comply with the rules or be subjected to additional
fines. No, because she lives in a community and you must always
comply with the rules established by other community members.
Yes. She is engaging in free speech and free speech always prevails in disputes.
2.7 points QUESTION 15
1. Schreder Lighting hired Edmund Morel to sell and perform “tunnel and transit”
lighting projects to regional governmental units (e.g., cities). Morel worked a 40 hour
work-week and, for his labor, Schreder Lighting paid Morel a monthly salary as well as
his employment taxes. Morel also had an office in the Schreder Lighting headquarters,
health insurance, and a company car. However, in 2006, Morel formed his own lighting
company and from 2006 to 2010, Morel began to use and disclose Schreder’s confidential, proprietary and trade-secret information for his own personal benefit
business. Which and
of the benefit
the of his covert following personal
is true? Morel used the free market to create and grow his own company
As an independent contractor, Morel has the right to use his experience
and information gained on the job to his own benefit.
Morel breached his fiduciary duty to Schreder Lighting
2.7 points QUESTION 16
1. In the photo below, how would you classify these display cases? Trade fixtures (and personal property) Personal property Trade fixtures that are part of the
2.7 points QUESTION 17
1. The Dog House Day Care and Boarding opened in 2014 and the photo
below shows the image used to identify the company. The Dog House Day
Care and Boarding caters to both large and small dogs, but most of their
customers own large dogs. Another company called The Dog House (image
also shown) opened in January 2015 just three miles away from the The Dog
House Day Care and Boarding facility. Both companies offer pet boarding,
grooming, and day care. Both companies have a very similar color scheme
and offer indoor and outdoor play areas with toys and games for the dogs.
The Dog House that opened in 2015 tends to cater to small dogs, but takes
all dogs. Shortly after The Dog House opened in 2015, The Dog House Day
Care and Boarding (that opened in 2014) noticed a decline in sales.
owners of The Dog House Day Care and Boarding (that opened in 2014) want
to file a lawsuit against The Dog House (that opened in 2015) and have
asked you for business law advice. Which of the following statements would
you tell them? Under the Constitution, The Dog House (that opened in 2015) has an
absolute right to free speech and can create any name or image it
desires to identify its company, including one just like that of The Dog
House Day Care and Boarding (that opened in 2014).
The two names are similar, but the big difference in logo design and
target market means that The Dog House Day Care and Boarding (the
2014 company) probably would not win a lawsuit against The Dog House
(the 2015 company) for intellectual property infringement.
In order for The Dog House Day Care and Boarding (that opened in 2014)
to have a legal claim against The Dog House (that opened in 2015), The
Dog House Day Care and Boarding company must have registered its image with the U.S. Copyright Office.
The images and names are so similar that they would be confusing to
customers. The Dog House Day Care and Boarding should file a lawsuit
against The Dog House for intellectual property infringement.
2.7 points QUESTION 18
1. Hobie Carpenter was the sole owner of Carpenter’s Carpentry, a small
contracting company that builds sheds, pergolas, decks, and room additions
for customers. The company was never formally organized under any state
law. Hobie has about 10 employees working for him, but he does all the
design, planning, and purchasing for the finished product. Hobie and his
company began working on a very large, 9 month construction job for the
University of North Carolina. The contract between UNCW and Carpenter’s
Carpentry had a non-assignment and non-delegation clause. About half
way through the UNCW project, Hobie decided that he could make more
money working at Lowe’s Home Improvement and decided to close his
company. But Hobie found another company, Dewey Cheatum Contractors,
to finish the project. Unfortunately, Dewey Cheatum Contractors was not
nearly as good as Carpenter’s Carpentry. UNCW found out that Hobie left
the project when a major problem arose with the construction and Dewey
Cheatum Contractors was responsible. UNCW decided to sue Hobie
Carpenter and Carpenter’s Carpentry for breach of contract. Which of the
following is false?
Non-assignment clauses are illegal, so Hobie is not liable, and UNCW
may only sue Dewey Cheatum Contractors for damages.
Hobie Carpenter will be personally liable for any damages caused by his
Hobie, Carpenter’s Carpentry, and Dewey Cheatum Contractors are all
liable to UNCW for any damages UNCW suffers.
Dewey Cheamtum Contractors are liable for negligence in construction.
2.7 points QUESTION 19
1. Jennifer Lynn Pedroza (Pedroza) and Amanda Hayward created The
Writer’s Coffee Shop (TWCS) in 2009 as a fan-based website. In 2010, it
became a publishing house. In May 2011, it published “Fifty Shades of
Grey.” From 2009 through 2011, evidence shows that Pedroza and Hayward
shared profits and losses of the company, jointly made decisions about
company strategy, referred to each other as “partner,” and third parties
considered them to be partners.
After the book reached the top of the
bestseller lists, Hayward signed a contract with Random House to sell
publishing rights, but never gave a copy of the contract to Pedroza. Instead, Hayward arranged for all payments (in the multi-million dollar range) to go to
a bank account she controlled in Australia. In Nov. 2012, Hayward made a
one-time payment of $100,000 to Pedroza from the “Fifty Shades” trilogy and
forced Pedroza to sign an agreement under which Pedroza would receive
$50,000 and $5,000 per month for work as a marketing manager for TWCS.
In Oct. 2013, “TWCS/Hayward” terminated Pedroza’s employment. Pedroza
sued Hayward for breach of fiduciary duty, fraud, and partnership
Will Pedroza win her case against Hayward?
Given the evidence and behavior by Hayward, yes,
Pedroza will win.
Pedroza cannot win because there is no written
2.7 points QUESTION 20
1. Ed “Bat” Masterson owns and operates a cattle operation called The
Cattle Range, Inc.
The company boards (shelters and feeds) and provides
other services (including breeding facilities) for cattle and their owners.
Connie Mann owned four prize Santa Gertrudis bulls that he boards at The
Cattle Range, Inc. Under a contract, The Cattle Range, Inc. agreed to (a)
board all four bulls, (b) sell one of the bulls (Brazos) for Connie Mann, and (c)
in return for 10% of the sales price as commission, distribute the remainder
of the sales proceeds (profit) to Connie Mann. Which of the following
(The photo shows Brazos, but it is not essential for answering the
question.) The contract between The Cattle Range, Inc. and Connie Mann
was a lease contract
The Cattle Range, Inc. and Ed “Bat” Masterson are bailors
Connie Mann is a bailee Connie Mann is a bailor
2.7 points QUESTION 21
1. Tom’s Turkeys is owned by Thomas Jeffs, sister Jenny Jeffs, plus 300
other shareholders. Residents of Wilmington, NC, Thomas and Jenny formed
the company twenty years ago under North Carolina laws. Thomas and
Jenny are shareholders and officers of Tom’s Turkeys. The company suffers
from double taxation, but Thomas and Jenny like knowing that none of the
302 shareholders are personally liable for company activities. Also, they plan
to list the company on a national stock exchange someday soon. As stated
in the company’s bylaws, the company is known for free-range turkeys fed
organic grains. Of the following, which best describes the organizational
form of Tom’s Turkeys?
Tom’s Turkeys is a “Regular C”
Tom’s Turkeys is a partnership
Tom’s Turkeys is a Limited Liability
Tom’s Turkeys is a “Subchapter S”
2.7 points QUESTION 22
1. Bling Inc. has been in business for 10 years manufacturing jewelry and
hair accessories in New York City. Bud Light formed the corporation in New
York State to protect his personal assets. The company is currently owned
and operated solely byBud Light (Bud). Bud filed paperwork with the
Internal Revenue Service so that he can record annual profits and losses on
his personal income tax. Since Bud is the only owner, he has never had an
annual meeting or kept any corporate records, but does pay the annual fee
to maintain the business as a New York state entity. What type of company
is Bling Inc.? A trust corporation
A general partnership
A regular “C” corporation
A “sub-chapter S” corporation
2.7 points QUESTION 23
1. Jill raised 5 chickens in the backyard of her Wilmington home.
Jill sold her house to Jack. Jill wants to take her chicken coop with
her and argues that the coop is her personal property. Jack will let Jill keep her 5 chickens, but demands that the chicken coop is part of
the real property and must stay in the backyard. The disputed
chicken coop is built of red cedar and “chicken wire” and is 4 feet
tall by 8 feet long by 3 feet wide. The coop has a closed “box” area
for nesting and open wire mesh area for the chickens to move
about. See the photo of Jill moving her coop to a different location
in her backyard. Who is correct about the chicken coop? Jill is correct that the chicken coop is her personal property; she may
take it with her when she moves out.
Neither Jack nor Jill since the chicken coop is a fixture and only a judge
can make the final decision.
Jack is correct that the chicken coop is real property and must remain in
the backyard of the house when Jill moves out.
Neither Jack nor Jill since the chicken coop is both real property and
intellectual property; a judge must make the decision.
2.7 points QUESTION 24
1. Before he died, Joffrey Lanister sued Roberts & Finger for one million dollars.
Roberts & Finger is a Limited Partnership with Roberts as general partner and Finger as
limited partner. Which of the following is true? Roberts and Finger are both personally and fully liable for any claims
against the partnership
Roberts and Finger both have limited personal liability for any claims
against the partnership
The partnership is taxed as an entity and the funds are taxed again when Roberts and Finger earn a salary or partnership profits
Roberts has full personal liability for claims against the partnership, but
Finger has liability only to the amount he invested in the firm
2.7 points QUESTION 25
1. A full-time, salaried employee who writes a new software program
while working at his/her company has made a work-for-hire and the
employer owns the intellectual property.
False 2.7 points QUESTION 26
1. H.R. Puffinstuff Properties, Inc. leased warehouse property to Hipster
Hats LLC (see contract).
On November 12, 2014, Auden Ames (President
of Hipster Hats LLC) left work late when it was dark outside. Walking to his
car, Auden stepped in a large pothole in the parking lot and fell, breaking his
ankle. Auden might have been able to see the pothole if all the security
lights had been working, but only a few lights were working. Two weeks
earlier, several tenants had complained about the pothole to H.R. Puffinstuff
Properties, Inc. The day after Auden Ames’ fall, Auden had one of his
employees mark the pothole with chalk (see photo).
Given the lease
agreement, which party (if any) is liable to Auden Ames for his injury? Tenant Hipster Hats LLC is liable because tenants are responsible for
maintaining areas that their employees might use. Landlord H.R. Puffinstuff Properties, Inc. is liable because the landlord is
responsible for maintaining common areas.
Only Auden Ames is liable for his injury because neither landlord nor
tenant can be responsible for potholes.
Only Auden Ames is liable for his injury because if it was dark, he should
have had a flashlight, especially since every hipster has a flashlight on
2.7 points QUESTION 27
1. Examine the Northchase Industrial Park Warehouse Lease (below).
H.R. Puffinstuff Properties, Inc. rented a building in Wilmington, NC to T.
Ruble Enterprises, LLC. No express warranties were stated in the lease. One
week after the lease began and while T. Ruble Enterprises, LLC was still
moving in to the warehouse space, the roof collapsed due to heavy snow and
ice (and inadequate roof beams) during a major winter storm. T. Ruble
Enterprises, LLC told H.R. Puffinstuff Properties, Inc., “We are moving out!
We are NOT repairing the roof!” The next day, T. Ruble Enterprises, LLC
actually did move out and found another warehouse to lease just one mile
away from the Northchase Industrial Park warehouse.
H. R. Puffinstuff Properties, Inc. filed a lawsuit against T. Ruble Enterprises,
LLC in Richland County, South Carolina because Columbia, South Carolina
(Richland County) is where H.R. Puffinstuff Properties, Inc. is headquartered.
T. Ruble Enterprises, LLC argued to the South Carolina Court that the Court
should dismiss the case. Is T. Ruble Enterprises, LLC correct in their…