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SEC 575 Midterm Exam

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1. (TCO A) Over time, law (Points : 10)

evolves and changes.
is enriched, defined, and interpreted by court decisions.
provides a prediction about how courts will decide cases.
All of the above
B and C only

Question 2.2. (TCOA) Long-arm statutes enable state courts to have jurisdiction over nonresidents in all but which of the following situations for nonresident persons? (Points : 10)

Nonresidents who commit a within-the-state tort
Nonresidents who bought a product in another state and consumed it in the state in which the plaintiff is alleging jurisdiction
Nonresidents who signed a contract within the state
Nonresidents who bought a product in this state and consumed it in the state in which the plaintiff is alleging jurisdiction

Question 3.3. (TCOB) When a website makes outlandish claims regarding age longevity products, the FTC can pursue an action against which of the following groups? (Points : 10)
The owner of the site
The website designer
The advertising agency
All of the above
A and C only

Question 4.4. (TCOC) Which best describe describes what is not provided by the Internet Tax Freedom Act of 1998? (Points : 10)
A 3-year moratorium on special taxation of the Internet
A 3-year moratorium, then a federal tax on Internet access or electronic commerce
A 3-year moratorium on multiple and discriminatory taxes on electronic commerce
A 3-year moratorium on taxation of goods or services that are sold exclusively over the Internet with no comparable offline equivalents

Question 5.5. (TCOE) Additional terms in the acceptance are proposals under the UCC, which become part of the contract if which (if any) of the following occurs? (Points : 10)

The offer expressly limits acceptance to the terms of the offer.
They materially alter the acceptance.
They alter a nonmaterial term of the offer.
Notification of objection to the terms has already been given or is given within a reasonable time after notice of them is received.

Question 6.6. (TCOC) Ralph must provide a good bit of personal information to become a website member for an online auction company. He chooses “brains” as his password. If the website uses commercially reasonable procedures for identifying a customer, then (Points : 10)

the risk of unauthorized use of a password stays with the vendor.
the risk of unauthorized use of a password shifts from the website vendor to Ralph.
the risk of unauthorized use of a password shifts to Ralph, but Ralph will not have to pay if anything is charged to his account, provided he can show that he did not order the items.
None of the above

7. (TCOE) When a customer purchases software that displays a clickwrap agreement at the time of installation, the consumer has already purchased the product and is being asked to consent to the contract that purportedly memorializes the payment. Is the contract formed at the moment of purchase or later, when the buyer assents to the terms of the clickwrap agreement? Explain your answer. (Points : 30)

Clickwrap agreements are agreements shaped on the Internet. A site supplier by and large posts terms and conditions and the client clicks an “I Accept” catch. The courts have for the most part held these agreements to be enforceable. As of late, some site suppliers have been avoiding the “I Accept” process for apprehension that online clients won’t have any desire to experience this additional progression and may rather leave for another site. Click-wrap understandings are contracts framed completely over the Internet. A gathering posts terms on its site compliant with which it offers to offer products or administrations ((CREATE, 2011). To purchase these products, the buyer is required to show his consent to be bound by the terms of the offer by his behavior – ordinarily the demonstration of tapping on a catch expressing “I concur.” Once the buyer demonstrates his consent to be bound, the agreement is shaped on the posted terms, and the deal is fulfilled. No paper record is made nor is the mark of the buyer required.

Click-wrap agreements get their name from shrink-wrap agreements, by which most programming is sold today. The product merchant offers to offer or permit the utilization of her product as indicated by terms going with the product ((CREATE, 2011). The buyer or licensee concurs by his behavior to be bound by such terms. Such direct normally appears as the maintenance or utilization of the product subsequent to being given a chance to audit the agreement’s terms and give back the product for a full discount in the event that they are unsatisfactory.

The agreement is formalized when the purchaser consent to the terms of the clickwrap agreement by clicking “I Acept” or “I Agree” that is verified by mouse clicks in an onscreen button ((CREATE, 2011). Thusly this understanding is the most ideal route from merchant’s perspective to guarantee an agreement by the client to the terms since it serves as an electronic variant of an End-User License Agreement, and it is lawfully enforceable.

(CREATE, B. (2011). Legal Environment of Business In the Information Age. McGraw-Hill Companies, Inc.

8. (TCOB) State taxation of out-of-state businesses is based upon establishment of “minimum contacts.” Describe the theory of minimum contacts and explain how that theory affects whether or not a state can tax goods sold or services rendered. (Points : 30)

Minimum contacts: Indicators of whether a nonresident (to a state) firm has taken advantage of the benefits of having a presence of some type within a host state, enabling the host state to exert jurisdiction over the nonresident firm.

With regard to jurisdiction over the person, the sovereignty of a state’s authority extends to the borders of the state. A court in the state of Florida cannot adjudicate a dispute between New York City and a citizen of New Jersey ((CREATE, 2011). The general rule is that state courts only have jurisdiction to decide disputes that arise within the borders of the state, though this general rule is subject to a number of exceptions. Illustratively, state courts can exercise jurisdiction over not only citizens of the state but also residents of the state (who are not citizens). State courts also can exercise jurisdiction over an out-of-state business that does business within the state. What determines whether a firm is “doing business” within a state for jurisdictional purposes is subject to argument, and is addressed in litigation by application of a legal doctrine referred to as the “minimum contacts” rule.

For businesses, the minimum contacts test is applied to activities of out-of-state businesses in order to determine whether a state court has jurisdiction. Certainly, if a business is incorporated within a state or has a branch of its operations within a state, it is subject to the jurisdiction of that state ((CREATE, 2011). In general, courts look at whether the out-of-state business has purposely availed itself of the benefits of operating within the state. If the out-of-state business owns property within the state, sends employees to the state, or even directs advertising to the specific state, it is subject to jurisdiction of that state’s courts.

(CREATE, B. (2011). Legal Environment of Business In the Information Age. McGraw-Hill Companies, Inc.