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Business Law For Accountants > Business Law For Accountants > Flashcards

Business Law For Accountants Flashcards

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1
Q

What are the 4 primary sources of law?

A
  1. US Constitution
  2. Statutory law
  3. Regulations created by administrative agencies
  4. Case law and common law doctrines
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2
Q

What are secondary sources of law?

A

Books and articles that summarize and clarify primary sources - Ex. Legal encyclopedias

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3
Q

Constitutional Law

A

Law that is based on the constitution

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4
Q

What is the 10th amendment?

A

the Federal Government only has those powers delegated in the Constitution - otherwise, they are reserved to the states l

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5
Q

Statutory law

A

Laws enacted by legislative bodies as opposed to constitutional law, admin law, or case law - includes local ordinances

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6
Q

Uniform laws

A

Act that seeks to establish the same law on a subject among various jurisdictions

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7
Q

When does a uniform law become part of the statutory law?

A

Only if a state legislature adopts it

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8
Q

Administrative law

A

Consists of rules, orders, and decisions of administrative agencies

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9
Q

Independent regulatory agencies

A

Not considered part of executive branch and is not subject to the authority of the president

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10
Q

Can independent regulatory agencies be removed without cause?

A

No

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11
Q

Case law

A

Governs all areas not covered by other law.

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12
Q

Common law

A

Body of law developed from judicial decisions - not attributable to a legislature

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13
Q

Remedies

A

Relief given to an innocent party to enforce a right or compensate for violation of a right

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14
Q

Types of remedies

A

Land
Items of value
Money

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15
Q

Courts of law

A

Court which the only remedies that can be granted are things of value - distinct from courts of equity

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16
Q

Courts of equity

A

A court that decides controversies and administers justice accordingly

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17
Q

Remedies in equity

A

Remedy allowed by courts in situations where remedies at law are not appropriate - include:

Injunction
Specific performance
Rescission
Restitution
Reformation

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18
Q

Specific performance

A

Ordering a party to perform an agreement as promised

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19
Q

Injunction

A

Order to a party to cease engaging in specific activity or to undo some wrong

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20
Q

Rescission

A

Cancellation of a contractual obligation

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21
Q

Equitable maxims

A

Propositions of law that have to do with fairness

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22
Q

Common equitable maxims

A
  1. Whoever seeks equity must do equity
  2. Where there is equal equity, the law must prevail
  3. One seeking the aid of an equity court, must come to the court with clean hands
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23
Q

Laches

A

The equitable doctrine, that bars a parties right to legal action, if the party has neglected for an unreasonable length of time to act on their rights

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24
Q

Defendant

A

Party being sued

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25
Q

Plaintiff

A

Suing party

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26
Q

Statutes of limitations

A

A federal or state statute, setting the maximum time period during which a certain action can be brought or certain rights enforced

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27
Q

Action at law vs. action in equity: Initiation of a lawsuit

A

Law: filing complaint
Equity: filing petition

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28
Q

Action at law vs. action in equity: Decision

A

Law: judge or jury
Equity: judge, no jury

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29
Q

Action at law vs. action in equity: result

A

Law: judgement
Equity: decree

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30
Q

Action at law vs. action in equity: remedy

A

Law: monetary damages or property
Equity: injunction, specific performance, or rescission

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31
Q

Precedent

A

Court decision that furnishes an example for deciding subsequent cases with similar facts

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32
Q

Stare decisis

A

Common law doctrine under which judges are obligated to follow precedents established in prior decisions within their jurisdictions

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33
Q

What are the 2 aspects of stare decisis?

A
  1. A court should not overturn its own precedents unless there is a compelling reason to do so
  2. Decisions made by a higher court are binding on lower courts
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34
Q

Binding authority

A

Any source of law that a court must follow when deciding a case

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35
Q

What are included in binding authorities?

A

Constitutions
Statutes
Regulations that govern the issue being decided

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36
Q

Cases of first impression

A

Cases for which no precedent exists

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37
Q

Persuasive authorities

A

Any legal authority or source of law that a court may look to for guidance, but need not follow in making its decision

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38
Q

IRAC

A

Issue - what are they key facts and issues?
Rule - what rule of law applies to the case?
Application - how does the rule of law apply to the case?
Conclusion - what conclusion should be drawn?

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39
Q

Cases on point

A

Previous case involving factual circumstances and issues that are similar to those in the case before the court

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40
Q

Substantive law

A

All laws that define, describe, regulate, and create legal rights and obligations

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41
Q

Procedural law

A

Enforcement of substantive law

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42
Q

Civil law

A

The branch of law, dealing with the definition and enforcement of all private or public rights, as opposed to criminal matters

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43
Q

Criminal law

A

The branch of law that defines and punishes wrongful actions committed against the public

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44
Q

Cyber law

A

An informal term used to refer to all laws, governing electronic communications and transactions

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45
Q

United States code (USC)

A

Arranges all existing federal laws by assigning each 52 subjects a title and title number

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46
Q

Trial courts

A

Evidence presented and testimony given are on the bottom tier

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47
Q

Court of appeals (appellate court)

A

Decisions made from intermediate courts may be appealed to an even higher court

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48
Q

Case citations

A

After appellate decisions have been published, they are cited by name of the case and the volume, name, and page number of the reporters opinion

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49
Q

Appellant (petitioner)

A

Party appealing the case

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50
Q

Appellee (respondent)

A

Party against whom the appeal is taken

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51
Q

Concurring opinion

A

Court opinion by one or more judges or justices who agree with the majority, but want to make or emphasize a point that was not made in the majority opinion

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52
Q

Dissenting opinion

A

Core opinion that presents the views of one or more judges or justices, who disagreed with the majority decision

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53
Q

Per Curiam opinion

A

A court opinion written by the court as a whole instead of being offered by a judge or justice

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54
Q

Triple asterisk

A

Deleted words or phrases for the sake of brevity

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55
Q

Quadruple asterisk

A

Entire paragraph has been omitted

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56
Q

Federal form of government

A

A system of government in which the states form a union, and the sovereign power is divided between a central government and the member states

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57
Q

Sovereignty

A

The quality of having independent authority over a geographic area

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58
Q

Police powers

A

Powers possessed by states as part of their inherent sovereignty

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59
Q

Privileges and immunities clause

A

Clause in article 5 of the US Constitution that requires states not to discriminate against one another citizens

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60
Q

Full faith and credit clause

A

A clause in article 5 of the US Constitution that ensures that the rights established under deeds, wills, contracts, etc. and will be honored by the other states

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61
Q

Checks and balances

A

The system in which each of the three branches of the US national government exercise checks on the powers of the other branches

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62
Q

Commerce clause

A

provision in article 1 of the US constitution that gives Congress the power to regulate interstate commerce

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63
Q

Where can you find the constitutional authority that congress has to regulate commerce?

A

Commerce clause of the constitution

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64
Q

What is the rule of law with respect to congresses power to regulate local business activities?

A

Congress can regulate interstate activities and also local activities, provided that the latter have some affect on interstate commerce

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65
Q

Dormant commerce clause

A

The prohibition against states passing legislation that discriminated against or excessively burdens interstate commerce

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66
Q

Supremacy clause

A

Provides that the constitution, laws, and treaties of the United States are “the supreme law of the land”

When there is a direct conflict between federal and state law, the state law is rendered invalid

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67
Q

Preemption

A

A doctrine under which certain federal laws preempt, or take precedence over conflicting state or local laws

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68
Q

Bill of rights

A

The first 10 amendments to the US Constitution

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69
Q

Symbolic speech

A

Nonverbal expressions of opinions or thoughts about a subject - protected under the first amendment, guarantee of freedom of speech

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70
Q

Content neutral laws

A

Laws that regulate the time, manner, and place – but not the content

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71
Q

Compelling government interest

A

A test of constitutionality that requires the government to have compelling reasons for passing any laws that restrict fundamental rights

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72
Q

Unprotected speech

A

Fighting words, or words that are likely to incite others to respond violently – also includes defamatory speech

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73
Q

Establishment clause

A

Provision in the first amendment of the US constitution that prohibits Congress from establishing a state sponsored religion, as well as from passing laws that promote religion, or show a preference for one religion over another

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74
Q

Free exercise clause

A

Provision in the first amendment to the US Constitution that prohibits Congress for making any law prohibiting the free exercise of religion

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75
Q

Public welfare exception

A

When religious practices work against Public policy in the public welfare, the government can act.

Ex. Requirement that a child receive certain types of vaccinations or medical treatment if their is in danger regardless of child or parents, religious beliefs.

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76
Q

Due process clause

A

Provisions of the fifth and 14th amendments to the US Constitution that guarantee that no person shall be deprived of life, liberty, or property, without due process of law

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77
Q

Procedural due process

A

Requires that any government decision
must give a person proper notice, and an opportunity to be heard

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78
Q

Substantive due process

A

limits what the government may do in it’s legislative and executive capacities – must be fair and further a legitimate governmental objective

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79
Q

Equal protection clause

A

Provision in the 14th amendment to the US Constitution guarantees that no state will deny any person within its jurisdiction, the equal protection of the laws

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80
Q

Strict scrutiny

A

States that if a law or action prohibits or inhibits a person from exercising a fundamental right, the law or action will be subject by the courts

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81
Q

Intermediate scrutiny

A

Applied in cases involving discrimination based on gender or legitimacy – laws using these classifications must be substantially related to important governmental objectives

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82
Q

Freedom of information act 1966

A

Provides the individuals have a right to obtain access to information about them collected in government files

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83
Q

Privacy act of 1974

A

Protects the privacy of individuals about whom the federal government has information

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84
Q

Electronic communications privacy act of 1986

A

Prohibits the interception of information communicated by electronic means

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85
Q

Health insurance, portability, and accountability act of 1996

A

HIPPA

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86
Q

USA patriot act

A

Gives government officials increased authority to monitor Internet activities, and to gain access to personal financial information and student information

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87
Q

IDDR Framework

A

Inquiry
Discussion
Decision
Review

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88
Q

Moral minimum

A

The minimum degree of ethical behavior expected of a business firm, which is usually defined as compliance with the law

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89
Q

Triple bottom line

A

The idea that investors and others should consider not only corporate profits, but also the corporations impact on people in on the planet, when assessing the firm – people, planet, profits

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90
Q

Duty based ethics

A

An ethical philosophy, rooted in the idea that every person has certain duties to others

CANT WORRY ABOUT CONSEQUENCES, I JUST HAVE TO DO MY DUTY

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91
Q

Outcome based ethics

A

THE RIGHT THING TO DO PRODUCES A BETTER WORLD OR THE ACTION AT HAND WILL NOT LEAD TO A BETTER WORLD

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92
Q

Principle of rights/rights theory

A

The principle that human beings have certain fundamental rights

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93
Q

Categorical imperative

A

Concept developed by the philosopher Immanuel Kant as an ethical guideline for behavior

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94
Q

Cost benefit analysis

A

A decision making technique that involves weighing the cost of a given action against the benefits of the action

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95
Q

Corporate social responsibility/CSR

A

The concept of corporations can, and should act ethically and be accountable to society for their actions

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96
Q

Short-run profit maximization

A

Company may increase its profits by continuing to sell a product, even though it knows that the product is defective

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97
Q

Trademark

A

A type of intellectual property that identifies a product

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98
Q

Dilution

A

the name or logo is being used but the product itself is not

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99
Q

Trademark dilution revision act, TDRA

A

Allows trademark owners to bring suits in federal courts

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100
Q

Under TDRA what must a plaintiff prove?

A
  • That they own a famous trademark
  • That the defendant has begun using the mark in commerce
  • The similarities between the defendants and owners mark
  • The association is likely to impair the distinctiveness of the famous mark, or harm its reputation
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101
Q

When can a trademark be filed for patent?

A
  • if it is currently in commerce
  • if the applicant intends to put it into commerce within the next 6 months
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102
Q

Lanham act

A

Prohibits, trademark infringement, trademark dilution, and false advertising

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103
Q

Strong marks

A

Fanciful, arbitrary, or suggestive trademarks

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104
Q

Fanciful and arbitrary trademarks

A

Fanciful = invented words (Google for search engine)

Arbitrary = uses common words in an uncommon way (Dutch boy as a paint name)

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105
Q

Suggestive trademarks

A

Indicate some thing about a products, name, quality, or characteristics, without describing the product directly (Ex. Dairy Queen suggest use of dairy but not ice cream directly

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106
Q

Generic terms

A

Refers to an entire class of products, such as bicycle and computer, and receive no protection, even if they acquire secondary meanings

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107
Q

Service Mark

A

A mark used in the sale or the advertising of services, such as to distinguish the services of one person from the services of others (airlines)

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108
Q

Certification mark

A

Mark used by one or more persons, other than the owner to certify the region, materials, motive, manufacture, quality, or accuracy of the owners, goods or services (Ex. Seal of approval etc)

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109
Q

Collective mark

A

Mark used by members of a Cooperative Association or other organization to certify the region, materials, motive, manufacture, quality, or accuracy of the specific goods or services (Ex. Credits on movies)

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110
Q

Trade dress

A

Refers to the image, an overall appearance of a product

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111
Q

What does SCMGA stand for?

A

Stop counterfeiting in manufactured goods act

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112
Q

License

A

Permitting the use of a trademark, copyright, patent, or trade secret for certain purposes

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113
Q

What is a patent?

A

A grant from the government gives an inventor, the exclusive right to make, use, or sell their invention for a period of 20 years

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114
Q

What is patentable?

A

Anything excepts laws of nature, natural phenomenon, and abstract ideas, including algorithms

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115
Q

Copyright

A

An intangible property, right granted by federal statute to the author, or originator of a literary or artistic production of a specific type

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116
Q

What are copyright owners protected against?

A
  • reproduction of work
  • development of derivative rights
  • distribution
  • public display
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117
Q

The first sale doctrine

A

Gives owners of copyrighted works the rights to sell, lend, or share their copies without having to obtain permission (Ex. Students reselling textbooks at the end of a semester)

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118
Q

What are the 3 elements necessary for an offer to be effective?

A
  1. Offerer must have serious intention to become bound by offer
  2. Terms of the offer must be reasonably certain so that parties and court can ascertain the terms of the contract
  3. Offer must be communicated
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119
Q

What are some questionable situations of intent lacking?

A
  • expressions of opinion
  • statements of future intent
  • preliminary negotiations
  • invitations to bid
  • advertisements
  • live and online auctions
120
Q

What terms are required in a contract?

A
  • identification of parties
  • identification of the object or subject matter
  • consideration to be paid
  • time of payment, delivery, or performance
121
Q

Revocation

A

The withdrawal of an offer by an offerer

122
Q

2 ways in which revocation can be accomplished

A
  1. Express repudiation of the offer (I withdraw)
  2. Performance of acts that are inconsistent with the existence of the offer and are made known to the offeree
123
Q

Option contract

A

Contract under which the offerer cannot revoke their offer for a stipulated time period and the offeree can accept or reject the offer at any time

124
Q

Termination by operation of law

A
  1. Lapse of time
  2. Destruction of the specific subject matter
  3. Death or incompetence by either party
  4. Supervening illegality of the proposed contract
125
Q

Unequivocal acceptance

A

Mirror image rule where an offer must be accepted exactly with no modifications

126
Q

Mailbox rule / deposited acceptance rule

A

Rule providing that an acceptance of an offer becomes effective on dispatch

127
Q

Consideration

A

The value given in return for a promise or performance - the inducement, price, or motive that causes a party to enter an agreement

128
Q

In order to be legally sufficient, what 2 parts must be included in the consideration?

A
  • something of legal value
  • a bargained-for exchange
129
Q

Rescission

A

Unmaking of contract so as to return the parties to position they occupied before the contract was made

130
Q

Past consideration

A

Something given or some act done in the past which cannot ordinarily be consideration for a later bargain

131
Q

Illusory promises

A

A promise that is unenforceable due to indefiniteness (Ex. I’ll give you $10 if I feel like it)

132
Q

Accord and satisfaction

A

When a debtor offers to pay and a creditor accepts a lesser amount than the creditor originally claimed was owed.

Accord = agreement
Satisfaction = performance

133
Q

Liquidated debt

A

A debt that is due and certain in amount

134
Q

Unliquidated debt

A

A debt that is uncertain in amount

135
Q

Release

A

Contract in which one party forfeits the right to pursue a legal claim against the other party

136
Q

Requirements for a binding release

A
  • agreement is made in good faith
  • release contract is in a signed writing
  • contract is accompanied by consideration
137
Q

Covenant not to sue

A

legal agreement in which the party seeking damages agrees not to sue the party against which it has cause to sue

138
Q

Promissory estoppel / detrimental reliance

A

legal doctrine that says parties may be liable for broken promises that result in financial harm

139
Q

What are the 5 requirements for the promissory estoppel doctrine to be applied?

A
  1. There must be a clear and definite promise
  2. Promisee relied on the promise
  3. Promisee suffered significant damage by relying on the promise
  4. Fulfillment of the promise is the only way the promisee can be compensated
  5. promisee’s reliance on the promise must be both reasonable and foreseeable
140
Q

Contractual capacity

A

The ability of an individual to enter into a binding legal contract, and in so doing bind themselves to the obligations and consequences of said contract

141
Q

Disaffirmance

A

the legal right for one party to renounce a contract

142
Q

Usury

A

Charging an illegal rate of interest

143
Q

Contracts in restraint of trade

A

Any action or agreement restricting free market competition

144
Q

Reformation

A

A court ordered correction of a written contract so that it reflects the true intentions of the parties

145
Q

Unconscionable

A

Contract whose terms are extremely one-sided and fundamentally unfair

146
Q

Statute of frauds

A

A state statute, under which certain types of contracts must be in writing to be enforceable

147
Q

What types of contracts are generally require to be in writing?

A
  • real estate
  • contracts that cannot be performed within one year from the signage date
  • agreements to pay others debts
  • Promises made in consideration of marriage
  • Contracts for the sale of good priced at $500 or more
148
Q

Privity of contract

A

Provides that a contract cannot own rights or impose obligations upon anyone who is not a party to the contract

149
Q

Exceptions to delegation of rights

A
  • delegating would materially change the obligation of the obligor
  • materially burden the obligor
  • increase obligor’s risk
  • statute policy forbids the assignment
  • contract itself precludes assignment.
150
Q

Third-party beneficiary

A

One for whose benefit a promise is made in a contract, but who is not a party to the contract

151
Q

Predominant factor test

A

A test that courts use to determine whether a contract is primarily for the sale of goods or for the sale of services

152
Q

Uniform commercial code (UCC)

A

A comprehensive set of laws governing all commercial transactions of GOODS in the US

153
Q

Requirements contract

A

An agreement in which the seller agrees to sell all or up to a stated amount of what the buyer needs

154
Q

Output contract

A

an agreement where one party agrees to buy the entire output of the other party, even when the buyer doesn’t require that many goods

155
Q

Firm offer

A

An offer by a merchant that is irrevocable, without consideration for a period of time, and must be in writing and signed by the offeror

156
Q

What are the 3 exceptions to the writing requirements of the statute of frauds?

A
  1. Specially manufactured goods
  2. Admissions
  3. Partial performance
157
Q

Mechanics lien

A

Statutory lien created to ensure payment for work performed (Ex. Building)

158
Q

Artisan’s lien

A

Lien that permits a worker to retain possession of an item until it is paid for

159
Q

Writ of attachment

A

A court order prior to trial, directing seizure of nonexempt property

160
Q

Creditors composition agreements

A

Agreement formed between a debtor and creditor where the creditors agreed to accept a lesser than owed sum in satisfaction of the debt

161
Q

Suretyship

A

Express contract in which third party promises to be primarily responsible for the debtors obligation AS SOON AS THE BORROWER DEFAULTS

162
Q

Guarantor

A

Person who agrees to satisfy the debt of another only after the principal debtor defaults - ONLY HAS TO PAY AFTER EVERY OTHER LEGAL REMEDY HAS BEEN EXHAUSTED

163
Q

Right of subrogation

A

A right held by most insurance carriers to legally pursue a third party that caused an insurance loss to the insured (insurance pays doctors treatment to you in an accident that wasn’t your fault)

164
Q

Right of reimbursement

A

the right of a third party, like a health insurance company, to seek reimbursement from your settlement or judgment when another party is at fault.

165
Q

Prepayment penalty clause

A

Provision in a mortgage loan contract that requires the borrower to pay a penalty if the mortgage is repaid in full within a certain period

166
Q

Short sale

A

Sale of real property for an amount that is less than the balance owed on the mortgage loan

167
Q

Homestead exemption

A

Law prohibiting a creditor to cease the family home in the event of bankruptcy

168
Q

What are the two main goals of bankruptcy law in the US?

A
  1. Protect a debtor by giving them a fresh start without creditor claims
  2. Ensure equitable treatment of creditors who are competing for debtor assets
169
Q

Consumer-debtor

A

One whose debts result primarily from the purchase of goods for personal or household use

170
Q

Automatic stay

A

Suspension of all actions by creditors against the debtor while in bankruptcy proceedings

171
Q

Adequate protection doctrine

A

Protects secured creditors from losing their security as a result of an automatic stay

172
Q

Debtor in possession (DIP)

A

Debtor who is allowed to continue possession of the business and to continue business operations

173
Q

Sole proprietorship

A

Simplest form of business where the owner is the business

174
Q

Pass through entity

A

Business entity that has no tax liability

175
Q

Limited liability company (LLC)

A

Hybrid form of business that only risks their investment but runs like a sole proprietor or general partnership

176
Q

Articles of organization

A

Document that is filed when an LLC is formed

177
Q

Limited partnership - LP

A

Partnership consisting of one or more partners and one or more limited partners

178
Q

General partner

A

Partner who assumes responsibility for the management of the partnership and assumes full liability for the partnership debts

179
Q

Limited partner

A

Partner who contributes capital but has no right to participate in management and has no liability for any debts outside of their investments

180
Q

Limited liability limited partnership - LLLP

A

Type of limited partnership which the liability of the general partner is the same as the liability of the limited partners - only responsible for their investments

181
Q

Retained earnings

A

Portion of a corporations profits that has not been paid out as dividends

182
Q

Publicly held corporation

A

Corporation whose shares are publicly traded in security markets

183
Q

Public corporation

A

Corporation owned by a federal state or municipal government

184
Q

S corporation

A

small and simple - can choose to be taxed differently - corp pays no taxes but promise that all profits flow to shareholders

185
Q

Benefit corporation

A

For profit corporation that seeks to have a material positive impact on society and the environment

186
Q

Articles of incorporation

A

Document that is filed when a business is incorporated and that contains basic info about the corporation

187
Q

Venture capital

A

Capital provided to new businesses by professional, outside investors

188
Q

Ultra vires

A

Acting or done beyond one’s legal power

189
Q

Piercing the corporate veil

A

The action of a court to disregard the corporate entity and hold the shareholders personally liable for corporate debts and obligations

190
Q

Quorum

A

Number of members of a decision making body that must be present before business may be transacted

191
Q

Business judgement role

A

A rule under which courts will not hold corporate officers and directors liable for honest mistakes of judgement and bad business decisions that were made in good faith

192
Q

Fiduciary

A

someone who manages money or property for someone else

193
Q

Express authority

A

Authority declared in clear definite terms

194
Q

Equal dignity rule

A

Legal doctrine stating an agent operating on behalf of someone must have in writing their express authority to enter into contracts

195
Q

Multiple product order

A

An order requiring a firm that has engaged in deceptive advertising to cease and desist from false advertising in regard to all the businesses products

196
Q

Cooling off laws

A

Laws that allow buyers of goods sold in certain transactions to cancel their contracts within three business days

197
Q

Regulation Z

A

Extension of the Truth in Lending Act

198
Q

Truth In Lending Act (TILA)

A

Requires sellers and lenders to disclose credit terms and loan terms so that individuals can shop around for the best financing arrangements

199
Q

Fair Debt Collection Practices Act (FDCPA)

A

Attempts to curb perceived abuses by collection agencies

200
Q

Securities Act of 1933

A

Governs initial sales of stock by businesses

201
Q

Prospectus

A

written document that provides all material information about an offering of securities

202
Q

Short swing profits

A

Profits earned by a purchase and sale of the same security within a 6 month period

203
Q

Corporate governance

A

The relationship between a corporation and its shareholders

204
Q

What source of law is considered primary?

A

Common law doctrine

205
Q

What is the purpose of the UCC?

A

Reduce difficulties for businesses conducting trade and commerce

206
Q

What type of speech is unprotected?

A

Obscene speech

207
Q

What is a characteristic of a legal claim?

A

Remedy is usually monetary damages

208
Q

What is a requirement of a private company’s code of conduct?

A

It indicates how employees should act

209
Q

What is a characteristic of outcome-based ethics?

A

It focuses on consequences of an action

210
Q

What kind of mark is “cheesy” in connection with a spa company?

A

Arbitrary

211
Q

What are examples of intellectual property?

A

Books and music

212
Q

Which type of trademark receives automatic protection?

A

Fanciful
Arbitrary
Suggestive

213
Q

Which type of trademark never receives protection?

A

Generic responses

214
Q

What should a business use to protect its trade secrets?

A

NDA

215
Q

Perfect Tender Rule

A

goods tendered must comply with what was contracted

216
Q

When can the acceptance of substantially impaired goods be revoked?

A

When the seller promises to cure and fails within a reasonable amount of time

217
Q

What is the last resort when resolving creditor/debtor problems?

A

Bankruptcy

218
Q

What is an example of a secured creditor?

A

Mortgages, HELOC, and Auto loans

219
Q

What is an example of an unsecured creditor?

A

Credit cards, utilities, and hospitals

220
Q

When are guarantors liable to creditors?

A

When the borrower defaults

221
Q

What is the time period for filing chapter 7 schedules after the filing of the petition?

A

45 days

222
Q

What is the purpose of the means test?

A

To see if the debtor is actually able to pay the creditor during chapter 7 bankruptcy filings

223
Q

Which bankruptcy filing requires a debtor to receive credit counseling?

A

Chapter 7 liquidation

224
Q

Which type of relief does chapter 7 bankruptcy code provide to a debtor?

A

Debtor has an opportunity for a fresh start as most or all debts are discharged on liquidation and distribution to creditors

225
Q

What is the eligibility requirement for a small business debtor to avoid the appointment of a creditors committee?

A

Small business debtors that do not own or manage real estate with liabilities not exceeding $2.7 million

226
Q

Which bankruptcy filing has the advantage of being the least expensive in complicated?

A

Chapter 13 repayment plan

227
Q

What is a cramdown provision?

A

Confirmation of a reorganization plan by the court over any objections of a creditor

228
Q

What form of business organization should someone have if flexibility in decision making is valued over asset protection?

A

Sole proprietorship

229
Q

UPA - uniform partnership act

A

Establishes partnership as separate legal entities, not as an aggregate of partners

230
Q

Which fiduciary duty is exercised when a partner refrains from intentional misconduct?

A

Duty of care

231
Q

Bilateral contract

A

two sided - contract is made at one point in time and both perform it at a later point in time

232
Q

Unilateral contract

A

one-sided contract agreement in which an offeror promises to pay only after the completion of a task (Ex. I promise to give you my laptop but you have to pay me right now)

Person accepting performs their promise immediately

233
Q

Rule 144

A

Allows public resale of restricted securities if conditions are met

234
Q

Trademark vs Copyright

A

Trademark: name/products
Copyright: literary

235
Q

Novation

A

Replacement of one party in an agreement with consent of all parties

236
Q

Statement of value

A

What ought to be the case

237
Q

Are guarantors liable if the amount in the agreement changes but was not notified ?

A

No

238
Q

Which type of law primarily governs LLC’s?

A

State law

239
Q

When winding up an LLC, who is paid first from the sales proceeds?

A

Members who are creditors

240
Q

For which circumstance may an individual be personally liable for actions of an LLC?

A

Member personally guarantees a business loan

241
Q

Who are the owners of a corporation?

A

Shareholders

242
Q

Which filing gives a corporation the right to conduct business in a state other than the state of its formation?

A

Certificate of authority

243
Q

Agency by operation of law

A

Family relationships, or emergencies in the absence of any formal agreement

244
Q

Agency by estoppel

A

A person who gives the impression that they are acting as an agent for another person or business

245
Q

Agency by ratification

A

When someone adopts or approves of someone else’s actions on their behalf after they’ve occurred

246
Q

What is the duty of the principal to the agent in order to terminate an agency at will?

A

Give the agent notice if the termination

247
Q

For what reason may an agent be liable in a gratuitous principal-agent relationship?

A

Negligence

248
Q

Puffery

A

Exaggerated claims used to entice customers into making purchases

249
Q

Bait and switch advertising

A

Where a seller advertises an appealing but disingenuous offer (Ex. Advertising a car online at a reduced price but vehicle not being available when customer comes in)

250
Q

Mail, Internet, Telephone Order Merchandising Rule

A

Requires sellers to have ship within the advertised time frame or 30 days if not specified

251
Q

What is the standard for violating the Securities Act of 1933?

A

Intentionally defrauding investors by misinterpreting facts in a prospectus

252
Q

What is a written offer that describes the issuer and indicates that more information be obtained on the SEC website?

A

Free-writing prospectus

253
Q

What is the entity created by the SOX act of 2002?

A

Public Company Accounting Oversight Board (PCAOB)

254
Q

Who are the members of the audit committee of a public company?

A

Outside directors

255
Q

Which measure of the SOX act insures corporate accountability for the information in financial reports?

A

Certification by the CEO and CFO for accuracy of information

256
Q

When is the principal liable to third parties for the actions of the agent?

A

When the agent had authority to enter, legally binding contract on behalf of the principal

257
Q

Which agency relationship is created by actions of the principal?

A

Agency by estoppel

258
Q

Where does most of the legal system derive from?

A

Common law

259
Q

The constitution establishes what?

A

Blueprint for government - whose job is it to do what

260
Q

The UCC counts as law because of what?

A

Individual states enacted it by statutes in those states

261
Q

What is the stakeholder theory?

A

any action that affects stakeholders negatively is an unethical decision

262
Q

What must take place in order to receive damages from trademark infringement?

A

It has to be registered

263
Q

Do trademarks have to be registered in order to seek infringement damages?

A

No, they only have to be the first to use it

264
Q

Does discovery qualify for patents?

A

No, anything that is not CREATED or INVENTED cannot be patented

265
Q

Restatement of torts

A

Harmful actions against companies (Ex. Bribing an employee to break a contract in a way that hurts the employer)

266
Q

What is incorporated in the Uniform Trade Secrets Act?

A

Restatement of torts

267
Q

Contract law is primarily developed in what?

A

Courts through the common law

268
Q

What is a counteroffer?

A

Rejection of the original offer and proposal of another offer

269
Q

Mirror image rule

A

everyone in the contract has to agree to all meaningful terms: price, terms, etc.

270
Q

Do merchants have to follow the mirror image rule?

A

No

271
Q

What do merchant contracts need to address to be effective in terms of the law?

A

WHAT, and HOW MANY

272
Q

Is sending of goods other than discussed a revocation or a breach?

A

Breach

273
Q

What does the law assume if a contract doesn’t have a delivery term?

A

buyer goes to pick it up

274
Q

What is FOB an indicator of?

A

Identification of a destination

275
Q

Implied warranty of merchantability

A

Warranty given by every merchant stating that the goods are reasonably fit

276
Q

Implied warranty for fitness of a specific purpose:

A

Warranty given by every seller regardless of merchant status - only comes up when the buyer brings up what the purpose is (the buyer SAYS what the purpose is)

277
Q

Writ of attachment vs. writ of execution

A

Attachment: before judgement
Execution: after judgement

278
Q

Chapter 7, 11, and 13

A

7: execution - someone owns a lot of stuff, trustee takes stuff and sells it
11: garnishment - just a wage earner, trustee takes your paycheck and gives you an allowance
13: reorganization - just for businesses, no trustee

279
Q

What chapter of bankruptcy does not have a trustee?

A

Chapter 11

280
Q

Bankruptcy trustee

A

collecting the debtors available estate - they do not establish priority

281
Q

When is the Uniform Partnership Act (UPA) used?

A

When the partnership has no agreement in place

282
Q

Requirements of an S Corp

A
  • can only issue one class of stock
  • can only be invested in by US citizens (no nonresidents)
  • has less than 100 members
  • can’t issue stocks to the general public
283
Q

Duty to indemnify vs. duty to reimburse

A

Indemnify: if you hurt me, it’s your fault and you have to make it up to me
Reimburse: pay me back

284
Q

Respondeat superior

A

“Let the master answer” - principals are responsible for their agents

285
Q

Express, apparent, and implied authority

A

Express: real, stated out loud
Apparent: fake authority / agency by estoppel
Implied: real, but not stated out loud

286
Q

Fair credit and reporting act

A

Federal legislation enacted to promote accuracy, fairness, and privacy of consumer information

287
Q

Equal credit opportunity act

A

Prohibits creditors to discriminate against applicant’s

288
Q

Fair and credit transactions act

A

Amendment to Fair credit reporting act to prevent identity theft and credit related fraud

289
Q

Administrative agency’s regulations can be overturned by who?

A

Judicial findings

290
Q

Securities act of 1933

A

when a company creates a security, it creates it and sells it. About FIRST SALE ONLY - produce prospectus

291
Q

Exchange act of 1934

A

stock market - keeps it fair, open, and honest. Every investor should get the same info. Requires a producement of their financial statements, audited, etc.

292
Q

SOX

A

make the annual report better - internal control procedures, more accurate, auditing, etc. - CEO + CFO have to certify

293
Q

Patent vs. copyright

A

Patent: the thing you invent
Copyright: the way you talk about it

294
Q

Insurable interest

A

Only occurs once the goods can be identified as yours

295
Q

What is a merchant?

A

Someone who sells in a particular field (speciality)

296
Q

If a seller messes up, do they have the opportunity to fix it before the buyer revokes the contract?

A

Yes, UCC demands that as long as the remedy is timely they are required to allow the seller to attempt to make amends

297
Q

Reaffirmation

A

Reaffirmance of a debt

Business Law For Accountants (3 decks)

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