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0-SFCPA-REG > Business Law (10-20%) > Flashcards

Business Law (10-20%) Flashcards

1
Q

The Principal and Agent are two parties in what type of relationship?

A

Agency agreement/relationship, when one party designates another to act on their behalf

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2
Q

What type of agency is a General Agent?

A

has broad authority to carry out transactions on behalf of principal, but usually related to specific business transactions

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3
Q

What type of agency is a Universal Agent?

A

authority to handle all affairs (business & personal) - usually have general power of attorney

ex: couple going abroad for few years, can designate adult child of theirs to be universal agent while gone

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4
Q

What type of agency is a Power of Attorney?

A

authority to act on behalf of principal in specific matters, or even able to sign on behalf

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5
Q

What type of agency is a Special Agent?

A

authority in specific or designated instances

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6
Q

What type of agency is an Independent Contractor?

A

authority to act on behalf in limited and specific capacity, and you do not control their day-to-day activities.

ex: hiring attorney to draft your will

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7
Q

How can an agency agreement/relationship be created?

A
  • expressed/explicit/direct: specifically gives authority
  • implied/apparent: actions cause 3rd party to believe has authority

agreements can be written, oral or implied

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8
Q

What is ratification of an agency agreement/relationship?

A

principal can ratify the contract before it is binding, if an agent acted on behalf without express/apparent authority

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9
Q

What is a fiduciary duty with agency agreement/relationships?

A

highest standard of care, agent required to make known any material facts to principal in fulfilling the agency agreement

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10
Q

Who is the contract between when agent has express/implied authority and there is disclosed principal (3rd party knows who principal is, agent has made clear working on behalf)?

A

contract is between principal and 3rd party, even if agent has done all negotiating/working with 3rd party

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11
Q

Who is the contract between when agent has implied/apparent authority?

A

principal is only liable to the 3rd party, but the agent is liable to the principal for acting with apparent authority

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12
Q

Who is the contract when there is disclosed principal, but agent is acting without any authority from principal?

A

agent is liable to 3rd party for any contractual obligations

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13
Q

Who is the contract when there is an undisclosed/partially disclosed principal, and agent is acting with actual authority from principal?

A

agent and principal can be held liable to 3rd party, however, because agent was acting with authority, principal would be liable to agent if 3rd party sued agent

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14
Q

Who is the contract when there is an undisclosed/partially disclosed principal, and agent is acting with without authority from principal?

A

agent is liable to 3rd party

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15
Q

What are the exceptions of a principal (employer) not being liable, if an agent commits a tort acting outside of the agreement?

A
  • principal was negligent in hiring that agent (not screened properly)
  • principal was negligent in supervising agent
  • was a pattern of behavior and was not corrected previously (implicit approval)
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16
Q

What type of agency agreement cannot be terminated by the principal and what does it involve (normal agency relationships can be terminated at any time by the principal)?

A

Agency coupled with an interest

Agency agreement in writing that gives the agent an interest in the subject matter of the agreement

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17
Q

to have a proper formation of a contract, there needs to be?

A
  • offer
  • acceptance
  • consideration
  • (lack of) defenses to formation (legally valid reasons the contract could be voided)
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18
Q

When is a contract bound and considered an enforceable contract?

A

acceptance

if offeror wants to take back (revoke) their offer, they must do so before their offer is accepted

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19
Q

If acceptance to a contract is sent by an authorized medium (USPS mail), when is the contract considered accepted?

A

as soon as acceptance is sent in the mail, the contract is formed

“mailbox rule” - only for acceptance, does not apply to counteroffers or rejections

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20
Q

What are certain circumstances that can void a contact later (defenses to formation)?

A
  • mistakes (unilateral/bilateral)
  • fraud (intentional deception)
  • misrepresentation
  • undue influence (duress)
  • illegal acts/subject matter
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21
Q

What are certain types of contracts required by law to be in writing?

A
  • sale of real property
  • contract will take more than 1 year to fulfill
  • contracts for items (goods, not services) over $500
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22
Q

What is the Parole Evidence Rule?

A

any evidence besides what is written in contract is not admissible. once contract is written and accepted, one party cannot claim other things were agreed to orally

*exception is with fraudulent statements, will be admitted as evidence in court

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23
Q

What is considered precedent conditions in performance of a contract?

A

something must happen before a party has duty to perform

examples:

  • qualifying for loan before purchasing a house
  • hired to clean carpets, must move furniture first
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24
Q

What is considered subsequent conditions in performance of a contract?

A

something must happen after a duty to perform has arisen

ex: having to return a TV within 30 days to receive full refund

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25
Q

What is considered concurrent conditions in performance of a contract?

A

each parties duty to perform under a contract simultaneously

ex: shopping at a store - you choosing what food to buy, take to register, cashier is there who takes your payment, goods are then yours. performance is happening concurrently.

26
Q

What is the statute of limitations regarding contracts?

A
  • written: 10 years
  • oral: 5 years

if statute of limitations has run out and one party has not performed, but other party also has not sued for nonperformance, the duty to perform is discharged.

27
Q

What are several ways when the duty to perform can be discharged (discharge of duty)?

A
  • failure of conditions (precedent or subsequent does not occur)
  • parties agree to release one another
  • novation (new party replacing another in contract)
  • discharge by accord & satisfaction
28
Q

What are several ways when the duty to perform can be discharged (discharge by operation of law)?

A
  • statute of limitations
  • bankruptcy
  • discharge by impossibility
  • death
  • insanity
  • destruction of subject matter
  • illegality
29
Q

What is a punitive damage for remedies for breach?

A

when money is awarded to punish a wrongdoer

30
Q

What is a compensatory damage for remedies for breach?

A

when money is awarded to compensate for costs or loss actually suffered

31
Q

What is a suretyship?

A

surety/guarantor is someone who agrees to be liable for someone else’s debt (like co-signing)

can be liable for their chosen amount and will be pro-rata

32
Q

What is Chapter 7 bankruptcy?

A

Liquidation bankruptcy

everything sold to try and pay a few things back. voluntary/involuntary.

33
Q

What is a means test for bankruptcy?

A

a test to determine if a debtor can pay back their debts or if there is bankruptcy abuse.

specific income less specific monthly expenses = disposable income

34
Q

Who can go through Chapter 7 bankruptcy?

A
  • individuals
  • corporations (dont qualify for general discharge of debts)
  • partnerships (dont qualify for general discharge of debts)
35
Q

What is Chapter 11 bankruptcy?

A

purpose is to re-organize and to stay in business. re-organization plan is created. voluntary/involuntary.

most complex/most costly.

36
Q

How is reorganization plan in Chapter 11 bankruptcy approved?

A

must be approved by 1/2 of the creditors that make up at least 2/3 of the total claims, and the court must approve this plan

37
Q

What is Chapter 13 bankruptcy?

A

AKA wage-earners plan

allows for adjustments of debts of an individual with regular income. 3-5 year plan is created. always a trustee. voluntary.

debt limits, if exceed, must file Chapter 11.

38
Q

Who can go through Chapter 13 bankruptcy?

A
  • individuals only
39
Q

What is considered part of the estate in a bankruptcy? and what is not?

A

held at the beginning of bankruptcy proceedings:

  • all tangible property
  • all intangible property
  • any income generated from such property
  • any appreciation in value of the property as well
  • any gifts received or property via inheritance within 180 days of bankruptcy petition

*alimony and social security payments received after the filing are NOT considered part of the estate

40
Q

What is the order of priority in dividing up a debtors estate after a bankruptcy?

A

1) perfected secured parties
2) claims for domestic support (child support/alimony)
3) administration costs (bankruptcy costs/expenses)
4) employee wages (limited to earned within 180 days of filing, with maximum of 13,650)
5) employee benefit plan contributions (limited to performed within 180 days of filing, maximum of 14,650)
6) farm producers/fisherman claims
7) consumer credits (maximum of 3,025 per creditor)
8) government units for taxes claims
9) death/personal injury claims
10) all general unsecured creditors (including items over max earlier)
11) remainder goes back to creditor - should not occur

41
Q

What items are not discharged in a bankruptcy?

A
  • child support/alimony claims
  • student loans
  • federal tax liens (unpaid taxes)
  • debt acquired through false representations (lying about income or some fraud in order to get a loan)
42
Q

What is a artisan’s/mechanics lien?

A

work done to improve/repair property gives the artisan/worker a security interest in the property

  • mechanic’s lien - one based on improvements to real property that have not been paid for, requires the holder to give notice before selling the property
  • artisan’s lien - one based on amounts unpaid for work done on personal property, also requires notice be given before sale of the property (ex: auto mechanic)

creditor can take possession of property, sell it to satisfy debt owed. any amount from sale over debt, returned to owner.

43
Q

How do you perfect a security interest?

A

filing a finance statement (lasts for 5 years, can be re-filed indefinitely), OR if sale is made to a consumer on credit (PMSI - purchase money security interest)

*debtor must agree to the creation of security interest

44
Q

When does a security interest attach?

A
  • secured creditor gives value (provides loan)
  • debtor has rights in collateral (cannot offer friends car as collateral)
  • security agreement exists
45
Q

What is the amount of time to file a financing agreement for a secured interest when the debtor moves to a new jurisdiction?

A

4 months

oldest security interest has superiority during that time (first filed)

46
Q

The Anti-Discrimination rules are enforced by who?

A

EEOC - Equal Employment Opportunity Commission

47
Q

What were some of the biggest impacts of the ACA (Affordable Care Act)?

A
  • pre-existing conditions cannot be refused
  • coverage cannot be cancelled for illness
  • eliminated pricing discrimination (gender, others)
  • eliminated lifetime limits (cannot cap spending’s)
  • large employers required to provide minimum coverage to full-time employees
  • penalties for required employers not providing coverage
  • TCJA repealed individual mandate (no penalty for not having insurance)

(large employer = 50 employees or more)

48
Q

How long does COBRA cover an employee?

A

18 months after losing their job

29 months if insured was disabled

*includes spouse of employee

49
Q

What is FMLA (Family Medical Leave Act) and who is eligible?

A

provides employee with up to 12 weeks of unpaid leave without losing their job

  • child birth
  • adoption
  • serious health condition
  • serious health condition care for: child, spouse, parent
  • impending order of active duty for: child, spouse, parent

eligible if:

  • worked for employer at least 12 months
  • at least 1,250 hours worked during past 12 months
  • have an employer with over 50 employees
50
Q

What is a disadvantage to having a sole proprietorship?

A

unlimited personal liability

51
Q

Under a general partnership, who is responsible for liabilities?

A

partners are personally liable for business debts

tort committed by one partner, can result in all partners being held liable

52
Q

Under a limited partnership, who is responsible for liabilities?

A

general partners - fully liable for the business debts
limited partners - limited liability for business debts

*limited partners cannot be involved in day to day operations of the business (essentially investors)

53
Q

Under a limited liability partnership, who is responsible for liabilities?

A

general partners - fully liable for the business debts
limited partners - limited liability for business debts
*provides more protection for professionals-protects partners from malpractice of other partners

*limited partners cannot be involved in management activities

54
Q

Under a corporation, who is responsible for liabilities?

A

limited liability for owners, can buy share of stock, and your liability is limited to amount you invested

corporation is legal being separate from its owners

55
Q

What is considered a promoter?

A

solicits people to invest money into a corporation, including setting up the corporation (finding/leasing office space) - (cannot profit from)

can be a shareholder in the corporation

liable for debts/contracts until corporation is formed, and the corporation then assumes the debts/contracts through a novation

56
Q

What does piercing the corporate veil mean? and what causes this?

A

corporations shareholders become personally liable

caused by corporation being thinly capitalized and when shareholders commingle their funds with the funds of the corporation or using corporate assets for shareholder’s personal uses

57
Q

What do shareholders have rights to?

A
  • reasonable inspection of corporate records (if public)
  • preemptive rights to purchasing newly issued shares (allows original owners to maintain control)
  • board of directors (fiduciary duty)
58
Q

What does Rule 504 of Regulation D of the Securities Act of 1933 entail?

A

company is required to file a notice with the SEC within 15 days after the first sale of offering

59
Q

What does Rule 506 of Regulation D of the Securities Act of 1933 entail?

A

can be sold to an unlimited number of accredited investors and up to 35 sophisticated investors

60
Q

When does the statute of limitations time period start computing? From the date the…

A

statute of limitations will begin to run when a cause of action accrues

ex: construction contract… contract is breached

61
Q

What is considered a preferential payment under bankruptcy?

A

A debtor who declares bankruptcy may not give one creditor better treatment than others. Any payment or security interest made to a particular creditor within 90 days of declaring bankruptcy is a preferential payment if the payment is made on an antecedent debt.

An antecedent debt is one that existed at the time bankruptcy was declared.

0-SFCPA-REG (5 decks)

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