IHI 59.doc


4. Tech, Inc., sells its brand-name computer equipment directly to its franchised retailers. Depending on how existing franchisees do, Tech may limit the number of franchisees in a given area to reduce intrabrand competition. Tech’s restriction on the number of dealers likely is
A) a per se violation of the Sherman Act.
B) exempt from the antitrust laws.
C) subject to continuing review by the appropriate federal agency.
D) subject to the rule of reason.
5. Francis owns a small motel in Sugarloaf Key. She notices by means of public advertising that her competitors in Big Pine Key and Ramrod Key have extended by two weeks their “winter season” and thus their winter season higher rates. Francis also notices the “no vacancy” signs at her competitors’ motels. So, Francis decides to extend the winter season at her motel too. Francis has engaged:
A) Illegal horizontal price-fixing by means of an express agreement.
B) Illegal horizontal price-fixing by means of an implied agreement
C) Legal action by means of the doctrine of Conscious Parallelism
D) Legal action since anti-trust law does not apply to small motels, only large ones and hotels.
6. General Construction contracts to build a store for Home Stores for $1 million. In mid-project, Home repudiates the contract, and General stops working. General incurred costs of $600,000 and would have made a profit of $100,000. General’s measure of damages likely is
A) $1 million.
B) $700,000.
C) $100,000.
D) nothing.
7. The four shareholders of Delta, Inc., want to prevent each other from selling the shares to third parties without first being given the opportunity to buy them. The shareholders can provide for this in
A) a buy-sell agreement that includes a “take-along” clause.
B) a buy-sell agreement that includes a right of first refusal.
C) a key-person clause that specifies who can sell what to whom.
D) none of the above.
8. Eagle Manufacturing, Inc., contracted with Digital Repair Services to maintain Eagle’s computers. A “Liquidated Damages Clause” provides that Digital will pay Eagle $500 for each day that Digital is late in responding to a service request. If Digital is three days late in responding, and Eagle sues to enforce this clause, Eagle will
A) lose, because liquidated damages clauses violate public policy.
B) lose, unless the liquidated damages clause is determined to be a penalty.
C) win, because liquidated damages clauses are always enforceable.
D) win, unless the liquidated damages clause is determined to be a penalty.
9. Fast Ed, a stock trader, engages in a “pump and dump” scheme whereby he goes into Internet chat stock rooms and “hypes,” praises, and extols certain stocks he owns. He says such things as: “This is the best stock ever.” “This stock is great and will make us a fortune.” “You MUST own this stock in your portfolio.” He does repeatedly and uses several aliases. Then, when Fast Ed has “pumped up” the price of the stock to a certain level, he calls his broker to sell, that is, to “dump,” the stock. He makes a lot of money with this scheme. Fast Ed is likely acting:
A) Illegally pursuant to the common law tort of deceit since he did not disclose the aliases.
B) Illegally pursuant to the Securities Act of 1934 for engaging in stock manipulation.
C) Legally since he was careful not to make any misrepresentations of material fact regarding the stock, and just used “puffing” or sales talk.
D) Legally since everyone knows not to put any credence behind what people say in chat rooms, especially about stocks, and thus “Let the buyer beware.”
10. Stan buys a CD player from Tom, his neighbor, who agrees to keep the player until Stan picks it up. Before Stan can get it, the player is stolen. The loss is suffered by
A) Stan only.
B) Tom only.
C) Stan and Tom.
D) none of the above.