BL 300 Final Exam Review Packet
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Oakland Community College *
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402
Subject
Law
Date
Jan 9, 2024
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10
Uploaded by janedoe12308
BL
300:
B
USINESS L
AW &
E
THICS
F
INAL E
XAM R
EVIEW Q
UESTIONS (FA
2023) Final Exam:
Monday, December 11, from 1:30 PM to 3:30 PM
The following sample questions are somewhat representative of the style and topics of questions you will encounter on the final exam, but may not cover all the material that will be tested. The goal of this exam packet is not to be a “practice exam.” Instead, we have drafted these questions so that students can use them to clarify and learn the material in preparation for the final exam. The length of the fact patterns in the multiple-choice questions may vary. There are multiple-choice questions in this review packet that do not have
answers
. You should work on those under test conditions and bring your answers to the in-class review session for discussion. For the multiple-
choice questions that do have answers
, the answers are provided on a separate page so you are able to work on those under test conditions as well. There are also some short answer questions (with answers) that are intended to help you work through the concepts that may be tested on the exam. Remember, the final exam does not have any short answer questions. You should also review the multiple-choice questions provided throughout the second half of the semester, including the Pre-Class Quizzes, Mini Cases, and Weekend Warrior optional assignments. Sample Multiple-Choice Questions with Answers ...............................................................................................................
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Answers to Multiple Choice Questions ...............................................................................................................................
6
Multiple-Choice Questions for In-Class Discussion .............................................................................................................
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BL300–Final Exam Review Packet 2 S
AMPLE M
ULTIPLE
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HOICE Q
UESTIONS WITH A
NSWERS
Identify the letter of the choice that best completes the statement or answers the question. The Final Exam questions generally will have longer fact situations similar to those used on Quizzes and the Team Project. The shorter questions included here are intended to review some basic topics we covered before the exam. 1.
Under Section 10(b), for a person to be liable for securities fraud, which of the following must be true? a.
The plaintiff must establish that she actually encountered the misstatement and relied upon it. b.
The plaintiff must establish both direct reliance and fraud on the market. c.
The plaintiff must establish either direct reliance or fraud on the market. d.
The plaintiff must establish that the securities are publicly traded in an efficient market. 2.
Which of the following promises does not have to be evidenced by writing to be enforceable? a.
Fred’s purchase agreement with Barney to sell his 10-acre hunting property for $10.00 an acre. b.
Harbaugh’s promise to coach the football team for 7 years. c.
George’s agreement with Robert to buy his baseball card collection for $425. d.
Answers B and C are correct. 3.
If there is no time specified for the acceptance of an offer under common law, when does the offer terminate? a.
After 24 hours. b.
After 48 hours. c.
After two weeks. d.
After a reasonable period of time. 4.
Tony and Junior have discovered a fool proof way to produce fake IDs for their fellow students at Fel University. Tony and Junior execute a written contract, whereby Tony will take the lead on pro-
ducing the fake IDs and Junior will handle “customer relations.” Junior tells Tony the success of the business is completely dependent on Tony’s ability to produce the fake IDs. Tony has a change of heart and tells Junior he is backing out of the contract. What is Tony’s best argument to get out of the contract? a.
The agreement is voidable by Tony as he revoked the contract. b.
The two never formed a valid contract. c.
This is an example of economic duress. d.
All of the above. 5.
Karen sold Tom a used car from her used car lot for $5,000. Karen purchased the car from Julie “as is.” Karen’s contract with Tom included a term stating that “the tires will last another 2,000 miles.” The day after Tom purchased the car, he drove it for 20 miles before all of the tires fell apart. Tom told Karen that he wanted a refund. Karen told him that he was not entitled to a refund because as far as she knew the tires did not need replacing. Which of the following is true? a.
Tom is entitled to a refund from Karen because of a breach of an express warranty. b.
Tom is entitled to a refund because of a breach of the implied warranty of fitness for a particular purpose.
BL300–Final Exam Review Packet 3 c.
Karen is entitled to a refund from Julie as she was the original owner of the car. d.
Tom is not entitled to a refund under any circumstances because the vehicle was used. 6.
Gulo has a robust policy to prevent and correct sexual harassment in the workplace. The technical support team at Gulo regularly worked through lunch and sometimes ordered in Chinese food. They began a habit of reading out the fortunes from their cookies and ending each fortune with the phrase “naked between the sheets.” Margie, one of the team members, was present during the many months that the team had been reading their fortunes in this way. One day, Roger, another team member, added “naked between the sheets with Margie” to the end of his fortune as he read it. The other team members (all except Margie were male) followed Roger’s lead and added the same phrase to their fortunes. Margie had laughed and taken part when they had only added “naked between the sheets.” But she did not find the added words to be funny and after the 5
th
person, Frank, did it, she threw a packet of hot mustard at him and stormed out of the room. The next day they again ordered Chinese food and this time all the men added the phrase “naked between the sheets with Margie and hot mustard.” Margie decided to respond by adding “with Roger and a bottle of Viagra.” Sauce packets started flying through the room. At the end of the day, Margie called a lawyer and demanded that she file a sexual harassment lawsuit against Gulo. Which of the following statements is the most accurate? a.
Gulo will be liable for quid pro quo sexual harassment. b.
Gulo will be liable for hostile work environment sexual harassment if the team’s actions are severe and pervasive enough to create a hostile working environment, even if the company never knew or could have known about the harassment. c.
If the team created a hostile work environment, Gulo will be liable if it knew or should have known about the harassment but failed to stop it. d.
Roger and Frank will be personally liable for sexual harassment. 7.
A recent study showed that the Gulo’s website is far more popular among males than females. Shawn and Schneider decided that the site had to become much more female friendly. They got Mark to approve the hiring of 10 more content developers to focus solely on female-friendly content. Shawn and Schneider interviewed Sarah (a 25 year old female) and Lamar (a 23 year old male), both of whom were qualified for the position. They decided to hire Lamar thinking he would get along better with the other content developers because he was male. Which of the following statements best represents the type of claim that Sarah should file against Gulo? a.
Sarah should bring a claim for age discrimination under Title VII of the Civil Rights Act. b.
Sarah should bring a disparate impact sex discrimination claim under Title VII of the Civil Rights Act. c.
Sarah should bring a disparate treatment sex discrimination claim under Title VII of the Civil Rights Act and use direct evidence of discrimination to prove her claim. d.
Sarah should bring a disparate treatment sex discrimination claim under Title VII of the Civil Rights Act using the quid pro quo standard. 8.
Joe goes to a store specializing in the sale of goods related to travel and camping. He asks the sales-
person for a travel drink container that will keep his beverage warm for at least 12 hours. The sales-
woman informs Joe that the HotBev brand of drink containers “are awesome” at keeping drinks “warm.” Joe purchased a HotBev drink container, and is dismayed when he uses it for the first time.
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BL300–Final Exam Review Packet 4 The container drips constantly and fails to keep his drink at a temperature that is acceptable to him. Which of the following claims should Joe file against the store? a.
Breach of implied warranty of merchantability. b.
Breach of express warranty. c.
Breach of implied warranty of products. d.
Answers A and B. 9.
Elom Nusk, an entrepreneur pushing the boundaries of battery technology, is building a next gen battery factory in a remote location in the Arizona desert. Nusk has gone to great lengths to protect the technology to be used by the plant, including fencing, security, nondisclosure agreements, etc. In order to get access to the plant technology, would-be-competitor, Shor Kut, Inc., installed an eaves-
dropping microphone in the office of Nusk’s VP of Construction, had one of its employees break into the offices of the architects to steal copies of the plant plans, and conducted drone overflights of the plant using high-powered zoom lenses to photograph the plant construction. Which of these actions would constitute “improper means” for purposes of proving misappropriation of a trade secret? a.
Use of the eavesdropping microphone. b.
Trespassing and theft (breaking into the offices and stealing the plans). c.
Drone overflights with photographs from high-powered zoom lenses. d.
All of the above. 10.
Coach Harbaugh has traded in his contacts for some very stylish Wooby Parker glasses. He can see the plays on the field much better now. Coach and the University decide to renegotiate his employ-
ment contract after UM wins the national championship. Coach tells the University – “These Wooby Parker glasses are the best, I can see the field and players more clearly now.” The University offers Coach an unlimited supply of Wooby Parker glasses worth up to $10,000.00 per year in exchange for his agreement to continue coaching the team. Coach says – “of course, I’ll forego a salary and instead take my compensation in the form of glasses.” Coach and the University sign a written con-
tract for a 5-year extension beyond his existing contract. Coach later realizes he would prefer the salary instead of the glasses and challenges the contract. What is the best answer below? a.
Coach has a valid Statute of Frauds defense. b.
Coach and the University have a valid contract as there was adequate consideration. c.
Coach and the University do not have a valid contract as there was not adequate consideration. d.
Answers A and C. 11.
Susan is a director of Fulmer’s, Inc., a company that owns and operates a rapidly-growing, nation-
wide chain of drug stores that is seeking to expand. Susan’s brother, Gerald, is a commercial real estate developer in Denver. Gerald calls Susan and tells her that a plot of land near a heavily-traf-
ficked intersection in suburban Denver just went up for sale. Gerald suggests that he and Susan buy the land and build a gas station. May Susan make the investment? a.
No, because the corporate opportunity belongs to Fulmer’s. b.
No, because Susan has a duty of care to Fulmer’s. c.
Yes, but only if she first offers the opportunity to Fulmer’s and Fulmer’s rejects it. d.
Yes, because a gas station is not in Fulmer’s line of business.
BL300–Final Exam Review Packet 5 The following fact pattern applies to Questions 12–15. Greg decides to open a store selling cheesecakes and other dessert items. To do this, he decides to form a corporation and seek out investors. When GC, Inc. is finally formed it has 50 shareholders, but Greg owns 80% of the shares. Greg is the CEO and Chair of the Board of Directors. Arnold is hired as a store man-
ager and is also a member of the board of directors. Don and Darla also serve as board members.
After a year, business is going very well, so GC, Inc. decides to open its own coffee shop, where it will serve its desserts. After studying an in-depth market analysis, Greg and the other board members agree that GC, Inc. should stop selling cakes to other coffee shops and restaurants in town. The directors agree that, this way, their coffee shop will offer something unique and draw in more customers, potentially allowing GC, Inc. to open more coffee shops in the future. GC, Inc., will, however, continue to sell whole cakes to cus-
tomers at the GC, Inc. retail store and sell whole cakes to catering companies.
Sam, a shareholder, believes that the above strategy will cost the company a lot of money. Based on the value of GC, Inc.’s current contracts with other restaurants and coffee shops, he shows that GC, Inc.’s strategy will lose money unless the coffee shop draws in four times as many customers as any existing coffee shop in town and each customer eats four pieces of cake on each visit. 12.
If Sam files a lawsuit against GC, Inc. and its directors to force them to continue to sell cakes to other restaurants and coffee shops, which of the following is the most accurate? a.
Sam will argue that the directors breached their duty of loyalty, and Sam will win because the company breached its contracts with the other coffee shops and restaurants in town. b.
Sam will argue that the directors breached their duty of care, and Sam will win because GC, Inc. did not have an appropriate compliance program in place. c.
Sam will argue that the directors breached their duty of care, and Sam will lose because the directors reasonably believed that their strategy would increase the popularity of the coffee shop and would allow GC, Inc. to open more coffee shops in the future. d.
Sam will argue that the directors breached their duty of obedience, and he will win because shareholders did not tell the directors to stop selling cakes to the other coffee shops and restau-
rants. 13.
Darla, one of the directors, owns a restaurant supply store. She enters into a contract to supply the coffee shop with a large quantity of coffee mugs, plates, etc., at a 10% discount off the usual retail price. Darla did not get the approval of the other directors or shareholders. If Sam challenges the contract in court, claiming that Darla breached her duty of loyalty, which of the following is most accurate? Disregard any issues related to contract formation and only analyze Sam’s argument re-
garding breach of the duty of loyalty. a.
Sam will lose. Darla did not need to get approval of the board and/or shareholders because she gave the company a discount off the usual retail price. b.
Sam will lose because it is reasonable for the company to purchase restaurant supplies for its business and that is the only issue that matters in this case. c.
Sam will win if Darla usually gives customers a 25% discount on orders of a similar quantity in order for Darla’s unusually high prices to be competitive. d.
Sam will win because Darla is not allowed to serve as a director of GC, Inc. and own a restaurant supply store at the same time.
BL300–Final Exam Review Packet 6 14.
Arnold—one of the directors—manages the coffee shop, while Greg focuses all his energies on the retail cake business. One day, a regular customer, Ernie the Entrepreneur comes into the coffee shop. He tells Arnold of a new patent he just received from the government that he thinks will revolutionize the coffee shop business. The patent is for a new type of coffee machine that will make twice the coffee with half the beans – and do it 4 times faster than the current machines. Finally, the secret process ensures that the coffee stays hot for at least 30 minutes after it is made. Ernie also states that he lost all his money on his last business and therefore he cannot start manufacturing the product by himself and needs a partner. Arnold just won $25,000 in the lottery and is considering investing the money in a new business with Ernie to manufacture and sell the coffee machines. a.
Assuming that the coffee machine is within GC Inc.’s line of business, GC Inc. is entitled to have Arnold offer it an opportunity to acquire the rights to the coffee machine. b.
Assuming that the coffee machine opportunity is within GC Inc.’s line of business and Arnold takes the opportunity without receiving approval from GC, Inc., then GC, Inc. is entitled to ownership of Arnold’s interest in the coffee machine. c.
Arnold may take the opportunity without offering it to GC, Inc. if he resigns from the board before accepting the opportunity. d.
All of the above are correct. 15.
Paul is the global sales representative of AirCor company in Toronto, Canada. AirCor manufactures ultraviolet sanitizers which eliminate viruses in air ducts and is incorporated in Delaware. Paul needs to meet his sales goals by selling at least 10 more units. Each unit costs approximately $500,000. Paul meets with Jose, the purchasing director of the government of Belize which has issued a request for quote for sanitizers for its buildings. In order to get the order, Paul tells Jose that he can provide certain incentives. One of the incentives is that Paul’s cousin, Pierre, can give a $5,000 discount on a new Tesla. Jose accepts the discount and orders a 2020 Tesla from Pierre. He also orders 5 sani-
tizers from Paul and Paul makes his sales target. Unfortunately, one of the competing bidders for the project alerts the DOJ to certain suspicions about the transaction. When the SEC and DOJ investigate, what would be the most accurate statement below. a.
The SEC would not find a violation of the FCPA as there is no government official involved in the transaction. b.
The $5,000 discount given by Pierre does not constitute a bribe under the FCPA. c.
Paul and AirCor will be found to have violated the FCPA, having met all three prongs which are prohibited actions under the FCPA. d.
None of the above. A
NSWERS TO M
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HOICE Q
UESTIONS 1.
c 2.
c 3.
d 4.
b 5.
a 6.
c 7.
c 8.
a 9.
d 10.
b 11.
c 12.
c 13.
c 14.
a 15.
c
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M
ULTIPLE
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HOICE Q
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N
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LASS D
ISCUSSION
Note: Below is a sampling of multiple-choice questions. We will discuss these questions and provide the answers during the final exam review session. 1.
Rosseur Corporation purchased 100 acres of land for a new facility from Steve, a board member of the company who was also the CFO. After full disclosure of the situation by Steve, a majority of disinterested board members voted on and approved the transaction because they believed that the purchase would be beneficial to Rosseur. The purchase of property from Steve is: a.
clearly improper and may be the basis of a shareholder derivative lawsuit. b.
improper because Steve is the CFO and, thus, an employee. c.
improper because Steve is a director. d.
the answer depends on whether Steve sold the land for more than he paid for it originally. e.
proper. 2.
Carole is the CFO of KK Donuts, a publicly traded company, and has been thinking about what to do with all the company’s extra cash. Carole talks to the CEO about KK acquiring Up-N-Rising, a competitor. The KK Board approves the potential acquisition so long as it does not involve a tender offer and KK hires an investment bank and a law firm to provide advice. Before the potential acqui-
sition, which will not involve a tender offer, is announced Carole buys 0.5% of Up-N-Rising stock. After the acquisition is announced the price of Up-N-Rising increases and she makes $1.1 million. Which of the following is most true? a.
Carole has violated section 10b-5 if her sale was within 6 months of her purchase. b.
Carole has violated 10b-5 through the classic insider theory. c.
Carole has not violated 10b-5. d.
Carole has violated 10b-5 through the misappropriation theory. 3.
Sally is a 25-year-old woman who recently applied for a job as a personal trainer at Mega Gym (MG). The job requirements required that all applicants weigh at least 170 pounds and be strong enough to assist the mostly male MG body building clients with lifting 150-pound weights. Sally is in excellent physical shape, is able to meet the 150-pound lifting requirement, and is a certified personal trainer, but she only weighs 155 pounds. MG refuses to hire her because she weighs less than 170 pounds. In this situation, assuming for purposes of this question only that men generally weigh more than women, which of the following is true? a.
Because she is qualified for the job MG must hire Sally. b.
The requirement about an applicant’s weight violates Title VII of the Civil Rights Act in this instance because even though the requirement may be related to safe and efficient job perfor-
mance, there is a less discriminatory alternative test – the gym can test applicants’ ability to assist in lifting 150 pounds. c.
The weight requirement is allowable because it is a justifiable qualification for being an MG trainer. d.
The weight requirement is a clear instance of disparate treatment discrimination against women. e.
There is no discrimination in this situation because both men and women may weigh over 170 pounds.
BL300–Final Exam Review Packet 8 4.
Diane offered to provide graphic design services to Jethro’s firm. She sent the offer to Jethro in a letter that listed the three specific design services that were included in the offer. Jethro immediately mailed an acceptance to Diane, but in the acceptance stated “I accept your offer for the services you propose but also want a fourth service – web ads to post on other sites.” Both Diana and Jethro had authority to enter into this type of contract. Diane and Jethro did not discuss price in their letters or on the telephone. Which of the following is the best description of the situation? a.
Diane and Jethro have a contract because their exchange has all of the required elements of a contract. b.
Diane and Jethro do not have a contract because their agreement did not contain all necessary terms. c.
Even if the agreement contains the necessary terms, Diane and Jethro do not have a contract because although Jethro wrote: “I accept…”, his response does not meet the legal require-
ments for an effective acceptance as the mirror image rule was not met. d.
Answer B and C are correct. e.
None of the above are correct. 5.
Big Bank hired Larry and ten other recent college graduates as management trainees. As part of their training, Larry and the other new hires were required to take and pass a test to assess their knowledge of relevant banking rules and regulations. Larry was nervous about his ability to pass the test, so he cheated by obtaining a copy of the test ahead of time and memorizing the answers. The other new hires did not cheat on the test. Big Bank learned of Larry’s cheating and fired him and all of the other new hires. Larry and the other new hires were employed at will. Which of the following statements is the most accurate? a.
Big Bank wrongfully discharged Larry since passing the assessment wasn’t required by law. b.
Big Bank wrongfully discharged the other new hires since they did not cheat on the test. c.
Big Bank lawfully discharged Larry but only if they can prove that he cheated on the test. d.
There is no evidence that Big Bank wrongfully discharged Larry or the other new hires. 6.
Gwyn has worked at Peak Performance LLC in Chicago for five years. Recently, the President of the company informed Gwyn that she (Gwyn) must sign a noncompete agreement with the com-
pany. Gwyn’s employment isn’t governed by any type of employment agreement and Peak Perfor-
mance didn’t offer her an employment agreement in conjunction with the noncompete agreement. Which of the following is Gwyn’s strongest legal argument to support her position that the noncom-
pete would be unenforceable? a.
Only California allows noncompete agreements. b.
The 10 year term and 50 state geographical restriction included in the agreement are overly broad. c.
Noncompete agreements are never subject to the statute of frauds. d.
Noncompete agreements are always unreasonable. 7.
Before lights were installed at historic Wrigley Field in the late 1980s, the Chicago Cubs baseball team played all of its home games during the day. All of the other major league baseball teams played some of their home games at night, and attendance and concession sales were generally higher at night games than day games. The board of directors of the Cubs’ parent company, however, refused to schedule night games because the directors believed that night games would have a deteriorating effect on the neighborhood surrounding Wrigley Field. A shareholder of the Cubs’ parent company
BL300–Final Exam Review Packet 9 sued the board, alleging that they failed to exercise reasonable care in the management of corporate affairs. Which of the following is most accurate? a.
The shareholder will prevail because the board of directors had an impermissible conflict of interest. b.
The shareholder will prevail if he can prove that holding night games would maximize the Cubs’ profits. c.
The shareholder will prevail because it is not rational for the directors to consider the effect on the surrounding neighborhood. d.
The board will prevail if it can show that the directors had no unacceptable conflict of interest, were informed, and acted in good faith and in the honest belief that playing only day games was in the best interest of the company. e.
The board will prevail because directors are immune from lawsuits by shareholders. 8.
Meghan is an analyst with Silverman Sachs, an investment banking firm. Meghan used her work email account to send a personal email to her mother stating “I am SO over this place. Being in the office by 9 a.m. is a drag. Starting a job search pronto.” Silverman flagged Meghan’s email as part of its routine email monitoring system. After reading the email, Meghan’s boss fired her. Meghan sued Silverman for invasion of privacy. Which of the following is the most accurate statement? a.
Meghan will lose because employees don’t have a reasonable expectation of privacy as to their work email accounts. b.
Meghan will lose because the public policy exception to wrongful discharge doesn’t apply to this case. c.
Meghan will lose because she can be terminated at any time for any reason. d.
Meghan will win because it’s unreasonable for Silverman to read her personal emails. 9.
Laurel is the CEO and chairman of DonEnterprises, Inc, a publicly-traded company. Cat Co. has repeatedly offered to buy DonEnterprises for $10/share, but DonEnterprises’ board has refused because it believes that the companies’ cultures would not integrate well. When Laurel is hired as President and CEO of a new company, she resigns from her roles at DonEnterprises. The board of DonEnterprises decides that without her, it is necessary to sell the company. Cat Co. again offers to acquire DonEnterprises for $10/share in cash. Which of the following is the most accurate? a.
The DonEnterprises board members should seek out other bidders in order to fulfill their fiduciary duties. b.
The DonEnterprises board may continue to take into account Cat Co.’s culture. c.
The Unocal rule applies to this situation. d.
The Revlon rule applies to this situation. e.
Answers A and D are true. 10.
Jireh is a wealthy citizen of Indonesia who owns 100 percent of a number of companies, including Pagi, Inc., but does not do any work. The CEO of Pagi, Wayan, is in negotiations with Selamat, Inc., a U.S. company, to sell Selamat 100 tons of betal nuts. Wayan tells Selamat’s purchasing manager, Jennie, that Pagi will provide the betal nuts to Selamat if Selamat pays market price for the nuts and an additional $100,000 to Wayan. Which of the following is most accurate? a.
Selamat will violate the Foreign Corrupt Practices Act if Selamat makes the $100,000 payment to Wayan because it is providing something of value in order to get business. b.
Selamat would not violate the Foreign Corrupt Practices Act if Selamat makes the $100,000 payment to Wayan because Selamat is buying goods not selling them.
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BL300–Final Exam Review Packet 10 c.
Selamat would not violate the Foreign Corrupt Practices Act if Selamat makes the $100,000 payment because Selamat is a U.S. company and the FCPA only applies to non-U.S. compa-
nies. d.
Selamat will not violate the Foreign Corrupt Practices Act if it pays the $100,000 to Wayan. 11.
John is an investment banker and represents Pasteur, a company incorporated in Delaware. Pasteur breeds cows in Mexico for their milk products which are shipped worldwide. It retains local veteri-
narians to treat the cows and ensure that they are raised compliant with Mexican laws. Pasteur has advised John that they need to expand the cow farms because of the increased demand for milk. Pasteur will also need to hire additional veterinarians from the local school which is government run and funded. The veterinarians are certified by the government and receive an annual subsidy from the Mexican Health department. John donates $5000 USD to the veterinarian school in the hopes of obtaining priority in hiring the veterinarians. What is the best answer below: a.
John is liable under the FCPA because he has made a payment to the veterinarian school, which is government funded. b.
Pasteur is liable because John was acting as an agent for Pasteur. c.
Neither John nor Pasteur will be liable under the FCPA because John is an investment banker and is not an employee of Pasteur. d.
Both A and B are correct.