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Legal Concepts for Accountants > Exam 2 > Flashcards

Exam 2 Flashcards

1
Q

state statute that stipulates what types of contracts must be in writing

A

Statute of Frauds

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2
Q

What are the contracts that must be written in writing

A
  • any interest in the sale or lease of land
  • Guarantees
  • Prenuptial Agreements
  • Sale of Goods over $500
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3
Q

What is the exception to having a contract in writing which pertains to a Guarantee

A

if the main purpose of the contract is to secure personal benefit to the Guarantor

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4
Q

Exceptions to having to have the contract in writing

A

partial performance, Admit in court proceeding there is an agreement, and Promissory esptopel - someone relied on that agreement

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5
Q

what is the Parol evidence rule

A

final document = agreement

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6
Q

the transfer of contractual rights to a third party is known as an

A

assignment

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7
Q

Exceptions to assignment

A

Workman’s compensation
Contract is personal in nature - specialized service
delegate duties - the assignment significantly increases or alters the risks of the obligator

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8
Q

when the original parties to the contract agree that the contract performance should be rendered or directly benefit a third person the third person is a

A

third party beneficiary

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9
Q

What is the most common why to discharge yourself from a contract

A

complete the work

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10
Q

something must happen before performance can occure commonly used in real estate like the buyer must obtain financing before getting the loan

A

condition precedent

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11
Q

something must happen in order to continue the agreement an example of this would be passing the bar in order to continue working at a law firm

A

condition subsequent

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12
Q

both parties perform at the same time an example would be an agreement to sell a care the money and car exchange would be this

A

condition concurrent

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13
Q

Exception would be if the person performed everything almost exactly nessessary these things must be done in good faith, not vary greatly from what was promised and changes can be remedied with compensation, and the performance is basically what was said in the contract

A

substantial performance

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14
Q

non performance of a contractual duty, can sue for damages, example would be Garth brooks donating money for a hospital wing and that wing never being built

A

Material Breach

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15
Q

notification of duty to perform that contract won’t be fulfilled and can sue or see if they perform for breach of contract an example would be the prom dress store

A

anticipatory repudiation

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16
Q

both parties agree that they shouldn’t complete the contract **GET IN WRITING

A

Discharge by Mutual Rescission

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17
Q

1 party can’t fulfill their obligation and they get another party to fill their spot

A

Novation

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18
Q

what are the rules to Novation

A

1 valid obligation
2 agreement by all parties
3. extinguishing of old obligation
4. new contract is put into place

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19
Q 
law says there is a discharge
due to Material Obligations
Statute of limitations
Bankruptcy 
Impossibility of performance
A

Operation of Law

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20
Q

what are the 3 parts of Impossibility of performance

A

person dies
subject matter destroyed
change in law

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21
Q

contract becomes very difficult to complete and it wasn’t reasonably anticipate

A

Commercial impracticability

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22
Q

actual damages form the breach (to make person whole)

A

compensatory damages

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23
Q

foreseeable damages due to resale of goods or loss of profits example would be the prom dress store

A

Consequencial damages

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24
Q

NOT ALLOWED FOR BREACH OF CONTRACT meant to punish the individual

A

Punitive damages

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25
Q

breach of contract exists but there are no damages just says that you win

A

nominal damages

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26
Q

if you don’t breach the contract they breaching party owes you the $ due
**These MUST be reasonable or you will get nothing!!!!!

A

Liquidated damages

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27
Q

there was no contract but court says there was because one party was unjustly enriched

A

Quasi Contract

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28
Q

in the UCC you must deal in

A

GOOD FAITH

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29
Q

what is the primary fact or the contract and you go with that ex. sale of goods/services

A

predominate factor test

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30
Q

These people are held to a higher standard than others because they have unique knowledge of the product/service

A

merchants

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31
Q

If UCC conflicts with Common Law in the sale of goods who wins

A

UCC

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32
Q

What makes something a consumer lease

A
  1. lessor regularly engages in the business of the lease/selling
  2. a Lessee who leases the goods are for a personal family or household use
  3. lease payments are less than $25,000
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33
Q

in this lease you must make the payments even it if the product doesn’t work (usually from a bank)

A

Financing lease

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34
Q

these contracts can have open terms except they must specify a quantity

A

sale of goods

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35
Q

an exception to the sale of goods contract would be if the parties agree to buy and sell as many as the buyer wants

A

Requirements Contract

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36
Q

this would be an exception to the sale of goods contract would be when the buyer will take as many as you can make

A

outputs contract

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37
Q

seller has obligation to ship/tender conforming goods
can agree to move away from this rule
seller can’t meet the seller can provide a cure

A

Perfect Tender rule

38
Q

make sure the company will perform obligation

A

right of assurance

39
Q

what can the seller do if the buyer breaches the contract

A

the seller can resell the product

pay for the unfinished goods

40
Q

what can the buyer do if the seller breaches

A

get specific performance

right to cure or buy from someone else

41
Q

company gets a letter of credit from the bank saying they will accept this debt

A

letter of credit

42
Q

this is a feel good letter about the company’s credit

A

credit letter

43
Q

signed writing that contains an unconditional promise/order to pay an exact amount either on demand or at a specific future date

A

negotiable instrument

44
Q

create of the draft

A

drawer

45
Q

pays the money

A

drawee

46
Q

receives the money

A

payee

47
Q

type of note issued whey party deposits funds in the bank and the bank pays you back

A

CD

48
Q

What are the requirements for a negotiable instrument

A
  1. in writing
  2. signed by maker/drawer
  3. unconditional promise/order to pay
  4. state fixed $ amount
  5. payable on demand or at a specific time
  6. be payable to order or to bearer
49
Q

bank demands you pay a dollar amount bank ahead of the call date

A

acceleration clause

50
Q

allows more time to pay back a note

A

extension clause

51
Q

something payable to the bearer

A

bearer instrument

52
Q

changes into bearer instruments just sign name on the back

A

blank endorsement

53
Q

contains signatures of endorser and intends to make it payable

A

special endorsement

54
Q

endorse to someone and they can’t come back at you

A

qualified endorsement

55
Q

only get money if you do something

A

Conditional endorsement

56
Q

requires the endorse to follow instructions before you can get the money

A

restrictive endorsement

57
Q

person who takes a instrument free of most claims and defenses and this person must have taken the instrument in good faith or at FMV and doesn’t know any of the defects

A

Holder in due course

58
Q

a person who is not a HDC can become a HDC if that person takes the instrument from a HDC

A

Shelter Principle

59
Q

not protected if postdated unless you contact them in a reasonable amount of time

A

postdated checks

60
Q

if a check is cashed 6 months after it is written then you don’t have to cash them

A

stale check

61
Q

no legal effect and the bank is liable where your signature has been sold Customer negligence Lady who had her check book stolen

A

forged signatures

62
Q

send digital image of check to the bank and not the paper called substitute checks and created after 9/11

A

Check 21

63
Q

claim against someone’s property which makes sure you get paid

A

lien

64
Q

when you have provided labor services or materials furnished for real estate and don’t get paid

A

mechanic’s lien

65
Q

personal property and must have possession until paid for

A

artisan lien

66
Q

from court judgement and can attach to real estate

A

Judicial Lien

67
Q

seize wages from person and must get ruling in order to do (Can take all the money out of a bank account but not pay check) also can attempt to peacefully reposes personal property

A

garnishment

68
Q

sale of property for less than balance on mortgage loan

A

short sale

69
Q

process by which lender repossesses and then auctions off property that secured the loan

A

foreclosure

70
Q

promise made by 3rd person to be responsible for obligation primary liable

A

surety

71
Q

secondary liable for a loan and if they have to pay can go after the person for damages

A

guarantor

72
Q

any rights that the creditor had given to guarantor

A

subrogation

73
Q

allowed to maintain family home up to a certain amount

A

homestead exemption

74
Q

creates lien on assets of person/business

A

security agreement

75
Q

refereed to as the instrument normally filed to give notice you have a lien

A

financing statement

76
Q

establishes priority in collateral

A

perfection

77
Q

exceptions to the financing statement

A

inventory bought for resale

78
Q

default can only be done in

A

good faith

79
Q

peaceful repossession can occur but resale must

A

sale commercially acceptable must be done at a reasonable time and place

80
Q

What are the goals of Bankruptcy

A

give the debtor a fresh start and treat the creditors fairly

81
Q

Chapter 7

A

liquidation all non exempt assets gathered and sold off

82
Q

Chapter 11

A

reorganization plan to pay off creditors for businesses

83
Q

Chapter 12

A

for fisherman and farmers to qualify 50% of income and debt must be from the farm

84
Q

Chapter 13

A

Reorganization of individuals plan to pay off creditors

85
Q

try to determine if you should go through bankruptcy

A

means test

86
Q

individuals must go through what before starting bankruptcy process

A

credit counseling

87
Q

all attempts to collect stop immediately

A

automatic stay

88
Q

any transfer made withing 90 days of creditor more than normal can cancel

A

preferential transfer

89
Q

hides assets somewhere so not available to the creditor stretches back 2 yrs before bankruptcy and you are kicked out

A

fraudulent transfer

90
Q

exceptions from the discharge of debt

A

back taxes, domestic obligations, and student loans

91
Q

continue to pay debt to get credit going forward and must be in signed writing from the court

A

reaffirmation agreement

Legal Concepts for Accountants (5 decks)

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