CH. 13: Ownership & Management Flashcards
Clause in the purchase agreement to restrict the seller from competing with the business for a reasonable amount of time w/in a reasonable geographical loation
- may be found in employment contracts–> restrict employee from using trade secrets, confidential info. & trade connections
Noncompetition/ nonsolicitation clauses
Purchaser assumes all assets & liabilities of the business (better for the seller)
Share/ stock purchase agreement
Buyer can pick & choose assets he/ she wants to purchase & assume liabilities of those assets only (better for buyer)
Asset purchase agreement
real property
land and fixtures
personal property
chattels & intangibles
Intangibles
neither real property nor chattels, but are things like:
- shares debts intruments
- goodwill in a business
- trademark ownership
- rights to insurance proceeds
- rights under a contract
5 tiers of the corporate structure:
- shareholders
- employees
- board of directors
- statutory officers
- creditors
3 ways to finance a new/ existing business
- Equity/ stock financing
- Debt financing
- Sale of assets
chattel mortgage on inventory= situation in which the creditor can swoop down & immobilize inventory still in stock upon default
Floating Charge
What may happen if you default on your mortgage:
- Foreclosure
- Power of sale
- Taking possession of the property
- Action on the covenant
- Seizure & sale of the property at auction
four conditions of adverse possession (squatter’s rights)
- Open & notorious- possessor may not posses land in secret but make it known to the owner
- Unchallenged- owner’s aware of possession & allows it to continue w/out asserting rights of ownership
- Exclusive- possessor must be only non-owner in possession & cannot have competing claims
- Continuous- if possession’s interrupted before required time period, claim of adverse possession will fail
Advantages & disadvantages of a franchise
- can acquire instant goodwill, training & procedural & operational guidance & support
- disadvantage: problems arise if there’s a weak operation, strict rules
Advantages & disadvantages of a Stand- alone operation
- few government formalities
- disadvantages: income must be reported on owner’s individual tax form
Selling A/R at a discount
Factoring
Time required to pay off principal completely at a set interest rate
Amortization period
business owned by one individual
sole proprietorship
“with bread”
cum panis
The right to encumber land owned by another security for the performance of the land owner’s obligation
Land lien
intangible intellectual property; a symbol word, name or device adopted to id a company or its product
Trademark
