Business Law Flashcards
What is the list of how the debtor’s estate is divided in order?
- Perfected secured parties
- Claims for domestic support, including child support and alimony
- administration costs, related to bankruptcy fees
- employee wages within 180 days up to 13,650
- contributions to benefit plans, same as wages
- claims of farm producers, up to 6,725 per
- consumer creditors, up to 3,025
- gov taxes
- unsecured creditors
- if any left back to debtor
What are debts that won’t release due to bankruptcy?
Alimony or child support
Student loans
Tax liens (unpaid taxes)
Debt acquired through false representation (lying about income or fraud)
What is the difference between implied, express and apparent authority?
Apparent is when someone’s action give the impression of authority. Implied is the incidental decisions an agent must make to complete his job. Express authority is the specific authority a principle has given an agent.
Under the 1933 securities act what must a registrant statement disclose?
Description of security How Corp will use proceeds of sale Description of registrants business and management Financial statement A prospectus
When will a security interest attach?
When the secured party gives value the debtor, has rights in the collateral (in writing) and a record of the security agreement exists
What are the major differences between the tax courts, district courts , federal claims and small cases?
Tax court: you do not have to pay the refund to challenge
Us district: jury is possible. Must pay fine first
Federal claims: only in Washington. Must pay claims
Small courts: under 50,000
What are the four main tax penalties for a taxpayer?
No filing
Not paying eat taxes
Not pay by 4/15
Accuracy penalty, taking improper positions.
What is the difference between common law and Ucc law?
Common law applies to contracts of real estate or service (mowing the lawn).
UCC law applies to contracts for the purchase of goods
If there is service and goods involved, then the questions becomes what is the main purpose of the contract.
Ex buglar system purchased would be a common law, because the houseowners want the installation monitoring services.
1.) When do contracts have to be in writing?
Are there any exceptions?
1.)Under UCC goods over 500 have to be in writing.
Under Common Law, Land contracts and services ( like the purchase of company pending performance) cannot be performed under 1 year.
2.) Yes: UCC: a.) if there has been a partial payment or goods have been excepted b.) specially manufactured good c.)confirmation from one side d.)admission
Common-Law: a.) Payment made and improvements to the property have been made and buyer lives there.
FYI if there is a modification, under UCC it is in good faith and no written contract or consideration is required. For common-law consideration is owed.
What does parol defense mean?
Whatever is not in the contract is not enforceable. Unless there are modifications where both parties agree on new performance or compensation levels
What are the UCC and common law defenses?
Same for both. Voidable Capacity: Age, mental efficiency Duress: Threats, physical force, shame Mistake: Unilateral material mistake, Fraud
Enforceable:
a unilateral mistake of fact (mistake in ordering correct size)
Recission:
Mutual mistake of fact (mistake on both sides)
Material misrepresentation of fact that was relied on
Common law substantial performance:
Contractor was hire to build a house and to use red herring pipes. Contractor used gold pipes, because red herring was not available, the red pipes are just as good. Can the owner sue?
The owner is entitled to the price difference because the contractor did it in good faith and it is just as good.
UCC performance:
What are the rights of the buyer?
- Inspection upon deliverance of goods
- Right of rejection of all or some of the goods. Must notify seller
- Acceptance after inspection. Must notify seller, or acceptance can be due to failure of rejection.
- Revocation of acceptance, material defect after acceptance
FYI: seller has a right to cure, before the performance date
Can you ever get out of performance?
Under UCC impracticability, like a war. Not foreseen
Under common law impossibility, means you are not exempt from unforeseen.
Yes. Under both Common law and UCC due to Novation, breach, illegality, Bankruptcy
Does a surety have to be in writing?
Yes unless the surety is also a partner
What releases a surety from the liability?
What doesn’t release a surety?
1.) Sell of collateral by creditor, sub of debtor, Fraud, refusal of creditor to accept payment of debtor
How are secured interests perfected?
Filing a financial statement, possession of the collateral by the creditor.
Automatic perfection: Consumer goods Purchased money security interest (PMSI)
Temp perfection: State transfer by debtor. Creditor has 4 month perfection. Has to reperfect.
Who gets priority over a perfected creditor and a liener?
The one who filed first
What are the exceptions to the priority over perfected secured parties?
PMSI of fixtures, PMSI of equipment if perfected within 20 days of delivery, PMSI of inventory if perfected before delivery, Buyers in the ordinary course of business (unless the merchant files for perfection, which is not customary)
Can a debtor demand the sale of a repossessed item?
Yes, only if the debtor has paid 60% of the loan.
What are the 3 types of bankruptcy chapters?
Chapter 7: Voluntary or involuntary (stay is in affect). Has a trustee (appointed by court). Allows individuals and businesses and requires debts. Exemptions to involuntary are S&Ls, credit unions, SBA, RRs, municipalities
Chapter 11: no trustee, Voluntary or involuntary. Exemptions to involuntary are the Same as 7 plus brokers
Chapter 13: for individuals, trustee and only voluntary. No exemptions
What is a voidable preference in a bankruptcy proceeding?
A transfer of debtor’s property to a creditor for a debt antecedent or preexisting within 90 days of bankruptcy. Made while debtor was insolvent
What is an insider voidable preference in a bankruptcy proceeding?
Transfer of property to an insider for an antecedent or preexisting debt made within 1 year of bankruptcy. Must prove that debtor was insolvent at the time of transfer.
Describe the general partnership business structure?
Partnership must have at least 2 partners (business can continue as a different structure).
No formality required for creation.
Has unlimited liability for each partner
Partnership can create their management agreement or use RUPA
dissolution can be based on agreement or based on RUPA
to sell requires the approval of partners
Describe the limited partnership business structure?
Must have 2 or more partners
Must file with state
General partners have unlimited liability
Limited partners have liability up to amount invested
General partners manage day to day
limited partners can not be involved day to day to remain limited
dissolution can be based on agreement or based on RUPA
To sell you sell securities
Taxes flow through to individual
Describe the limited liability company business structure?
Must file with agency Liable only to extent of invested Company is managed by members. Can also delegate to sell must have majority consent Taxes flow through to individual
Describe the limited liability partnership business structure?
Must file with state
Liable only to extent of invested, except for lawsuits involving their own professional wrongful acts (i.e. doctors, accountants being sued)
Members can create their management agreement or use LLC statues
to sell must have majority consent
Taxes flow through to individual
Describe the Corporation business structure?
Must file article of incorporation
Limited liability, except with piercing corp veil and water (must pay par value of stock)
Corp and owner must be separate entities
Management has to be officers and board
Dissolution is done through votes (a major transaction)
To sell a corp you can sell shares
An s corp
A c corp is the same as an s corp
Taxes:
S corp; Taxes flow through to individual
C corp & corporation both pay taxes and shareholers pay taxes on dividends
According to the 1933 securities act, what are the entities that are exempt from securities registration?
- Securities issued by federal, state, county or municipal entities
- Commercial paper under 9 months
- Banks, savings and loans, charitable organizations
What is the 147 and 147a exemption?
Corporations that are domestic to US and have 80% revenue, assets and use of the proceeds in one state are free from registering
What is regulation D, rule 506?
Exemption from registering, unlimited revenue.
What could be done before getting approved but after filing?
Tombstone ad
red herring (sample prospectus)
cannot make offers to sell
Under securities section 11 of the 1934 act what must a plaintiff prove in court?
A defense?
Plaintiff must prove a false statement or omission of the fact that is material. Also that they bought securities under the registration statements and they suffered damages.
A defense must prove due diligence
What is a short swing?
When an insdier purchases and sell stock within 6 months. The SEC will add up the highest sell price and the lowest purchase price to calculate the profit
Under the Ultramares who is the accountant liable to fo negligence?
The client and the third party intended benificiary.
Under common law what must a plaintiff prove in court?
Negligence, reliance and breach of contract
Under section 10-b of the 1934 act what must a plaintiff prove?
Scienter by defendant (intent). Intent would mean fraud
Under the 1933 securities act what must a plaintiff prove to win?
Damages were incurred, and there was a material misstatements or omission.
Does a guaranty need to be in writing?
Yes, under the statues of frauds
