Corporate Law 1

Question 1

Under the UCC what are the three theories of liabilities an injured person may collect under if he sues?

Answer 1

Breach of warranty, negligence, strict liability.

Question 2

What types of transfers are a bankruptcy trustee allowed to set aside? And what is the Mnemonic?

Answer 2

FLAP

1. Fraudulent transfers by debtor within 2 year of filing
2. Liens by statute Not ones effective before filing)
3. After fiing, transfer made by debtor
4. Preferential transfers of property

Question 3

What types of preferential transfers are there? What is the Mnemonic?

Answer 3

I-WAIT

1. Debtor was Insolvent when transfer made
2. W/I 90 Days of the filing of the petition
3. For an Antecendent (pre-existing) debt, new value is OK
4. Improves creditors position (gets more money than in bankruptcy)
5. Time is increased from 90 Days to 1 year for an insider (officer or close relative of debtor.

Question 4

Name the types of transfers that are allowed, non-prefential. Give Mnemonic.

Answer 4

C-CONAC

1. Charity
2. Consumer debt < $650
3. Ordinary course of business (current utility bill, lease payment)
4. New value
5. Alimony and child support
6. Continuation of installment payments

Question 5

What is an insider?

Answer 5

A person with special relationship to debtor that has prior knowldege of bankruptcy filing.

Question 6

What is Insolvency?

What IS NOT insolvency?

What is the timing on insolvency? When is it assumed it startes for the debtor?

Answer 6

• Insovency is when a person is unable to pay their debts as they become due
• Insolvency is not when a person’s total liablilites exceed total assets
• Insolvency starts 90 day prior to bankruptcy filing.

Question 7

Under what conditions may the government stop a merger?

Answer 7

If the mergers may cause a SUBSTANTIAL LESSENING OF COMPETITION, not that is actually REDUCES COMPETITION.

Question 8

Express Authority - What is it?

Answer 8

Authority actually granted byt he principal to the agent.