Final Exam – BUSI 2301
This is your final exam. It consists of 5 short essay questions. You should be responding in no shorter than 4-6 sentences. This does not mean you cannot go over 4-6 sentences in length. It is important that you respond to what is being asked and respond with thoughtful answers. I want to see your reasoning and thoughts! It is also important to use facts to support your answers. This means, you should be using the terminology discussed in this course along with references to legal concepts, also discussed in this course.
**Each questions is worth 20 pts!
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Please submit your final in THIS DOCUMENT. Do not delete anything and respond below each questions/scenario.
1. Sophia negotiated a contract with Pete under which she would buy his company for $10 million plus the amount of the company’s outstanding debt (approximately $1 million). But when Pete sent a draft of the contract, it stated that the purchase price would be $10 million less the company’s debt. What is Sophia’s ethical obligation to Pete? Should she tell him about the mistake? What Life Principles would you apply in this situation?
2. Jake is the manager of a café in Houston, Texas. Jake opened a bank account under the café name. He signed the account signature card as “owner.” Melissa who often went to the café, had open access to Jake’s office. She also told others that she was the “owner” and a “partner of the café. She also opened a bank account in the café’s name and signed the account signature card as “owner.” Jake told their coffee supplier that Melissa was a member of a partnership that owned the café. Considering this basis, the coffee supplier supplied its goods to the café on credit. The café was wholly owned by a Texas corporation. Eventually the unpaid account from the coffee supplier totaled $50,000. The supplier then filed a suit in Harris County, Texas against Melissa to attempt to collect on the debt. On what basis, if any, might Melissa be liable for the debt?
3. Three decades ago, corporations and corporate directors were rarely prosecuted for crimes, and penalties for crimes were relatively light. Today, this is no longer true. Under the current corporate sentencing guidelines and the Sarbanes-Oxley Act of 2002, corporate wrongdoers can and do now receive substantial penalties. Do these developments mean that corporations are committing more crimes now than in the past? In your opinion, will stricter laws be effective in curbing corporate criminal activity? How can a company avoid liability for crimes committed by it employees?
4. Amy is a student at UTPB. In need of funding to pay for her tuition and fees, Amy asks Priority Bank for a short-term bank loan. The bank agrees to make a loan if Amy will have someone who is financially responsible guarantee the loan payments. Darnell, a well-known business person and friend of Amy’s family, calls Priority Bank and verbally agrees to pay the loan if Amy cannot. Because of Darnell’s reputation, the bank agrees and gives Amy the loan. Amy signed a loan guaranty agreement. Amy is making the payments, but because of an injury, she is unable to work for one month. She asks Priority Bank to extend her loan for three months. The bank agrees, raising the interest rate for the extended period. Darnell is not notified of the loan extension. One month later, Amy drops out of school and stops making the payments on the loan. All attempts to collect the remaining amount of the loan from Amy fail. Priority bank is not able to get in touch with Amy to discuss the out standing balance. Can Priority bank assert a valid and enforceable claim against Darnell on the debt? Why or why not?
5. Tamara, Justin, and Kiera are active members of a Texas general partnership called “Sunny Times.” This Dallas-based partnership manufactures, sells, and installs outdoor fountains and swimming pools in the state of Texas and Louisiana. The partners want to continue to be active in the management and they also want to expand the business into other states. They need additional funding to expand; however, they do not want to lose control of the business. They are also concerned about relatively large judgements entered against this type of company through out the Unite States. Based on these facts, what is their best options in terms of business organizations to achieve and attain their goals?