Business Law

Question 1

Are contracts for services governed by common law or UCC?

Answer 1

Common Law

Question 2

Are contacts to sell good and real estate governed by common law or UCC?

Answer 2

UCC

Question 3

What is a unilateral contact?

Answer 3

Is a promise in exchange for performance by only one party. The unilateral contract can only be accepted by performing an act.

Question 4

What does the parol evidence rule apply to?

Answer 4

It applies to prior or contemporaneous oral agreements that contradict the terms of final written agreements.

Question 5

When are contract generally assignable?

Answer 5

Unless the terms prohibit assignment, or the rights are personable to the person rendering them, or the assignment will materially increase or alter the risk or duties of the obligor, contract rights are generally assignable.

Question 6

What type of contracts cannot be assigned without consent of the other party to the contract?

Answer 6

Assignment of personal contracts are not permitted because we hire individuals or particular companies for personal services; they are not generic like vehicles, real estate, and business.

Question 7

What duty is owed from the principal to an agent?

Answer 7

Duty to indemnify.

Question 8

When is a principal liable for a contract?

Answer 8

A principal, whether disclosed, undisclosed, or partially disclosed, will be liable for the contracts of his agent if these agreements are within the scope of the agent’s express, implied, or apparent authority.

Question 9

When is an agent liable for a contract?

Answer 9

Acting on behalf of an undisclosed principal, remains personally liable for performance of the contract even though the agreement was within the agent’s scope of authority.

Question 10

In regards to a co-surety, what is the definition of a contribution?

Answer 10

Contribution is a right one co-surety has against another. There cannon be right between sureties if there is only a single surety.

Question 11

What would be a viable defense to successfully limit the surety liability to a creditor?

Answer 11

The incapacity of the surety. When a surety losses capacity, the surety can usually avoid liability.

Question 12

Does a surety have a right to compel the creditor to collect from the principal debtor and to proceed against the principal collateral?

Answer 12

No. A surety is primarily liable on a debt upon debtor’s default. If the creditor wishes to collect from the suety, the creditor may do so.

Question 13

What are the requirements to create an enforceable security interest?

Answer 13

A security agreement must exist, the secured party must be given value, the debtor must have right in the collateral.

Question 14

What requirements are needed for the security interest to attach?

Answer 14

Underlying debt/obligation, either a security agreement or possession of the collateral by the creditor, debtor must have interest in the property.

Question 15

At what point is a security interest perfected?

Answer 15

With the filing of the financing statements, the security was perfected because it also attached prior.

Question 16

What information needs to be included in the filing of financing statement?

Answer 16

Description of the collateral, the name of the debtor, and the address of the debtor.

Question 17

What requirements are needed for an involuntary bankruptcy petition under ch. 7.

Answer 17

An involuntary petition may succeed if the aggregate unsecured claims of the petitioners equals or exceeds $15,775.

Question 18

What is the order of priority of claims to be paid in a bankruptcy?

Answer 18

• Administrative expense
• Unpaid wages
• unpaid contribution to employee benefits
• Taxes
• General creditors

Question 19

Can corporations and partnerships go through a chapter 7 liquidation?

Answer 19

yes, but they do not qualify for a general discharge from all remaining debts as natural persons do.

Question 20

What is a prospectus, regarding the securities act of 1933?

Answer 20

Describes the issuing corporation, risks, and type of security being sold.

Question 21

What is preliminary prospectus, permitted under the SEC regulations, known as?

Answer 21

Red herring prospectus

Question 22

What is a tombstone advertisement?

Answer 22

Makes known the availability of a prospectus.

Question 23

What must be proven by a purchaser of a security under Section 11 of the 1933 Act?

Answer 23

• Material misstatement
• They can trace the shares to the registration statement
• They suffered damages

Question 24

What does rule 147A require?

Answer 24

Rule 147A requires only that all purchasers be state residents.

Question 25

What standard must be established to prove a violation of the anti-fraud provisions of rule 10b-5?

Answer 25

A defendant must act intentionally. “Scienter”.

Question 26

What does the plaintiff need to show to win a Section 10b case?

Answer 26

1. Intentionally or recklessness
2. Material misstatement of fact
3. Reliance

Question 27

What are the restrictions on types of shaeholders S corporation?

Answer 27

• no more than 100
• no nonresident aliens
• one single class of shareholder
• all must be individuals

Question 28

What is novation?

Answer 28

If the other party agrees to release the agent from liability and to look only to the corporation for satisfaction, then a novation has taken place.

Question 29

What must the articles of incorporation include?

Answer 29

1. Name of the Corporation
2. # of shares authorized to issue
3. Street address and name of agent
4. Name and address of each incorporator.

Question 30

What is the purpose of an LLC operating agreement?

Answer 30

It is designed to forestall and resolve disputes among the owners.

Question 31

What is the means test?

Answer 31

If this figure exceeds state’s median income by more than $6,825, then substantial abuse is presumed.

Question 32

What is included in the Debtor’s estate?

Answer 32

• Tangible and intangible property
• All property acquired within 180 days following bankruptcy….inheritance, gifts, property from divorce, life insurance proceeds.

Question 33

What is not included in the Debtor’s estate?

Answer 33

• Child support and alimony
• Social security payments
• Wages (earned after declared of bankruptcy)

Question 34

What are the distribution priorities in bankruptcy?

Answer 34

1. Secured creditors
2. Claims for child support and alimony
3. Admin Costs
4. Claims arising in the ordinary course of business
5. Employee wages
6. Contribution to benefit plans
7. Consumer deposits
8. Taxes (Federal, State, and local)
9. Unsecured creditors.