Biz Law - Other Topics Flashcards
Scienter
Intent to deceive, manipulate or fraud (on the CPA’s part)
Documents of title
Governed by UCC Article 7
Warehouse receipt: document of title to goods being stored.
Bill of lading: document title to goods being shipped.
Warehouse man or common carrier is bailee of the goods.
Can be negotiable or nonnegotiable. To be negotiable, must provide that goods are to be delivered to bearer to order of a named person.
Warehouseman will be liable to anyone injured due to warehouse receipt not including the following:
– Location of warehouse
- Date of issue of receipt
– Consecutive number of receipt
– Whether goods are to be delivered to bearer to order of a named person
– Rate of storage and handling charges
– Description of the goods or packages in which they are contained
– Signature of warehouse man or agent
– Whether warehouse man is owner of goods solely, jointly, or in common with others
– Statement of amounts of advances made or liabilities incurred for which warehouse man claims a lien or security interest
Warehouse man’s duties
– Can be liable for non-receipt or misdescription of goods
– Can qualify description of goods by language like “content, condition, and quantity unknown”
– Owes holder of warehouse receipt the duties of mutual benefit bailee and is required to exercise reasonable care
– If goods are ready to deteriorate or threaten other goods, may terminate bailment through notification
– Generally must keep goods in each receipt separate, but fungible goods can be mingled
Negotiable documents of title
Negotiated in same way as negotiable instruments.
If made out to bearer, can be negotiated by delivery.
If made to order of named person, must be indorsed and delivered.
Bona fide holder
Person taking negotiable document of title in good faith and in regular course of business. Has same advantages as holder in due course of negotiable instrument.
Holder receiving negotiable document title acquires:
– Title to the document
– Title to the goods
– Rights to the goods delivered to bailee after document is issued
– Direct obligation of issuer to hold or deliver goods according to document’s terms
Bankruptcy
Intended performance of debtor becomes impossible due to excessive debt. Solution is to take debtors property and distribute it to unpaid creditors through a uniform process.
It gives honest but overextended debtors a fresh start to discharge of debts or postponement of time for payment.
Bankruptcy law
Constitution allows Congress to enact uniform bankruptcy laws. Major laws were enacted in 1898, 1938, 1978 and 2005: Bankruptcy Prevention and Consumer Protection Act of 2005.
Bankruptcy law chapters:
1 – General provisions
3 – case administration
5 – creditors and their claims, debtors duties and discharge, and handling of debtors estate
7 – liquidation of debtors estate to pay creditors
9 – adjustment of debt of a municipality
11 – reorganization of debt
12 – adjustment of debts for family farmers
13 – adjustment of debts of individual with regular income
15 – US trustees
Chapter 7 bankruptcy
Liquidation of debtors estate to pay creditors
Can apply to business or nonbusiness debtor, like individual.
Can be voluntary or involuntary.
These debtors are not eligible for bankruptcy relief. They are covered by special statutes, and their liquidations are supervised by certain regulatory agencies.
Chapter 7 debtor requirements
Must reside in US and have domicile, place of business or property in US.
Debtor cannot be: – Railroad – Insurance company – Domestic bank – Any other lending institution – Governmental unit
Obligations of attorney for debtor in chapter 7 bankruptcy
– Filing affidavit with bankruptcy court stating they have informed debtor of various forms of bankruptcy and their details
– Reasonably verifying info contained in bankruptcy petition and supporting schedules
Chapter 9 bankruptcy
Available only to municipalities and must be voluntary
Chapter 11 bankruptcy
Reorganization of debt.
Applies to chapter 7 debtors and railroads. Primarily for businesses.
Use if felt continuing business is preferred to liquidation. Restructure finances so that debtor can continue to operate. It binds nonconsenting creditors while common law composition does not.
May be voluntary or involuntary.
Chapter 11 bankruptcy details
– Trustee may or may not be appointed. Debtor may remain in possession of property at court’s discretion. If trustee appointed, they take over business and have same basic powers as in liquidation proceeding.
– Proof of claim need not be filed by creditors because list of creditors is required to be filed by debtor.
- May be converted to chapter 7, one conversion only.
Chapter 11 bankruptcy approved plan
Chapter 11 must end with approved plan.
Plan can divide creditors into classes but all creditors in each class must be treated equally. Court will approve reorganization plan if one is true: – Each class has approved plan or – Court ruled plan is fair and equitable to all classes
After plan confirmed:
– Debts in plan not discharged until court grants so
– Debts not in plant are discharged
– Non-dischargeable debts are same in Chapter 11 as in chapter 7
If parties involved cannot produce acceptable plan or plan does not work, court can dismiss case and convert to liquidation proceeding: chapter 7.
Chapter 13 bankruptcy
Applies only to individual (and spouse) with regular income who owes unsecured debts of less than $383,175 and secured debts of less than $1,149,525.
Must be voluntary.
Small sole proprietorship can qualify as individual if requirements met. No partnership or corporations.
Chapter 13 bankruptcy details
– Repayment. Cannot exceed five years
– Confirmation of plan must result in hearing no sooner than 20 days or more than 45 days after meeting with creditors
– For disposable income, excludes up to 15% of debtors gross income for charitable contributions
– For disposable income, reasonable cost of health insurance considered
Bankruptcy process: written notice to consumer debtor
Bankruptcy clerk must give individual over to nose containing:
– Brief description of chapter 7, 11, 12 and 13 and general purpose, benefits and costs of each.
- Brief description of services available from credit counseling agencies
– Statement: person who fraudulently conceals assets or commits perjury will be subject to fine, imprisonment or both
- Statement: all info supplied by debtor is subject to examination by Attorney General
Bankruptcy process: voluntary petition
Filed by debtor, which automatically subjects debtors and their property to jurisdiction of bankruptcy court.
- Debtors need not be insolvent, only need to show they have debts.
– Debtor must receive credit counseling from approved agency within 180 days before filing voluntary bankruptcy petition. Certificate must be filed with petition.
Bankruptcy process: voluntary petition dismissed by the court for several reasons:
- Unreasonable delay by debtor that is prejudicial to creditors
– Nonpayment of fees or charges
– Debtor fails to file required documents in required time.
– Debtor has income above average median family income for state
– Debtor fails to pay post petition alimony or child support - Debtor convicted of drug trafficking crime or violent crime and victim files motion to dismiss petition
Bankruptcy process: involuntary petition
Filed by debtor’s creditors.
– 12 or more creditors: three or more must file against debtor if their total unsecured claims are at least $15,325
– Fewer than 12 creditors: one or more must file if their total unsecured claims are at least $15,325
Bankruptcy process: involuntary petition allowed for and disallowed against
Allowed only for:
- Chapter 7
- Chapter 11
Disallowed against: – Farmers – Wagers – Railroad, insurance, or banking corporations – Building and loan associations – Nonprofit corporations
Bankruptcy process: involuntary petition jurisdiction
- When filed, debtor and their property comes under jurisdiction of court if debtor doesn’t challenge
– if debtor contests, creditors must prove either: debtor has not paid debts as they come due, or that his property is in receivership or assignment for benefit of creditors within 120 days before petition was filed
If debtor succeeds in dismissing petition, can recover:
– Court costs and attorneys fees
– Compensatory damages
– Punitive damages
Filing a petition stays all pending actions of creditors against the debtor.
