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BUSINESS ORGANIZATIONS SPRING 1995 FINAL EXAM
(Professor Hamermesh)
INSTRUCTIONS

1. complexity. IMPORTANT!

The exam consists of questions

In each of your answers,

controlling,

however,

which vary in

identify any statutes

that are

and explain the effect of the statute upon your analysis of the question

posed.
2.
answering

Above all, answer the questions posed.

Time and words spent

questions not posed do not receive grading credit; to the contrary,

detract from your opportunity

to demonstrate

they

your ability to answer the questions

that are posed.
3.

Do not assume facts not specified in the question.

conclude that the question cannot be answered without however, knowing

If you

additional facts,

note and explain that conclusion as part of your answer.
5.

Since professors are only human (more or less), legible writing

and clear sentences will make your depth of knowledge

and analytical

to perceive.

,

ability easier

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Todd Martinez and Linda Cerullo are graphic arts students in Long
BerJch, California in 1989.

Playfully sketching

fantasy scenes in the cafeteria one

day, they notice a cluster of children admiring their work, and explain that they are developing a game in which fantasy creatures do battle with each other.

The

children are fascinated.
Entrepreneurial

instinct takes over:

Martinez and Cerullo copyright their

creatures and the game rules they concoct,

and begin marketing it under the name

"Creed of the Sorcerer," or "Creed," for short. to produce the game in quantity,

They find they need some money

and they persuade Martinez'

uncle (Nick

Rodriguez) and Cerullo's older sister (Agnes DiBlasi) each to invest $5,000, understanding on the

that all profits from the business will be shared equally among the

four participants.

(At no point is any formal agreement among the participants

prepared.)
By mid-1990,

the game is a big hit in the Long Beach area, and Rodriguez

suggests that an effort be made to expand the business into new geographic areas. The other participants

concur, so Rodriguez gets in touch with two of his

friends (one in Anaheim and the other in San Diego) and persuades them to develop and market Creed in their home towns based on a $5,000 investment from each.

They, too, are quite successful,

cash

and by June 1991,

Martinez and Cerullo are delighted that their one-sixth shares of profit (profit now being divided among all six participants)

are sufficient

to pay'for their entire tuition.

Rodriguez is delighted, too, and begins to take an even more active role in

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.the

business.

He pursues

establishes

relationships

established

in Anaheim

to be a problem.
Commission

and San Diego.

She is fined

for improper

if so, on what

in promoting

Rodriguez

entitled

recovers

the relationships and Cerullo

with

own

in order to continue

further

business

organization
3.
differences:

the business

by Rodriguez upset with

to invest

out

Affairs school from

children;

Martinez

and

in question.

Martinez

comes

from

and Cerullo,

and,

to all of their

the business.

weeks

after

and San Francisco business colleagues

they will be setting
Having

and has no desire

business

whatsoever

that

up their

only recently

in the San Francisco

What are her rights

and Cerullo,

Rodriguez?

to light --within

with the Phoenix

$5,000

Martinez

have against

is over, and that

at this news,
Rodriguez.

individuals

announce