FINAL R7R8

Question 1

What is a private offering? And what are the conditions to rules 504 and 506?

Answer 1

Private offering = only offered to certain group (accredited investors)
General condition of rule 504 and 506 is that the issuer must notify the SEC within 15 days after the first sale of the offering

Question 2

What is similar between the formation of a corporation and Limited partnership?

Answer 2

Both can be formed only with filing with state authorities.. articles of incorporation

Question 3

What creates an express warranty?

Answer 3

created by the seller’s description of the goods which forms part of the basis of the bargain between the parties. The “express” warranty does not require that the seller select goods knowing the buyer’s intended use.;
language must be part of basis

Question 4

What are the 2 parts of a registration statement?

Answer 4

Part I - prospectus

Part II - other information about the securities being issued

Question 5

What must be included in a security agreement?

Answer 5

• name and address of debtor
• description of collateral
• debtors authentication

Question 6

What must be included in the contract of writing to be an enforceable contract for sale of goods

Answer 6

specifying the quantity of the goods

Question 7

What are the ways that a minor can ratify a contract?

Answer 7

1. Expressly ratifying the contract after reaching the age of majority
2. Failing to disaffirm the contract within a reasonable time after reaching the age of majority
3. Impliedly ratifying the contract after reaching the age of majority

Question 8

What is a requirement of a merger of 2 corporations?

Answer 8

The stockholders of both corporations must be given due notice of a special meeting, including a copy or summary of merger plan, approval of BOd, and vote by majority voters

Question 9

What is the warranty of merchantability?

Answer 9

arises as a matter of law when the seller ordinarily sells the goods purchased

Question 10

What do preemptive rights provide a shareholder?

Answer 10

Provide the right to purchase a proportionate share of newly issued stock. NOT a share of corporate assets on dissolution

Question 11

Define perfection by taking possession and give an example

Answer 11

Requires the secured party to take possession of the collateral (pawnbroker lends a person money)

Question 12

How will a voluntary petition in bankruptcy be denied?

Answer 12

if debtor failed to keep or preserve adaquate books and records

Question 13

Does the limited partner have the right to take part in control of pship?

Answer 13

No

Question 14

In what circumstance would a party be able to repay an illegal distribution to a corporation?

Answer 14

A shareholder who knowingly accepts an illegal dividend is liable to return it

Question 15

What chapter of bankruptcy can a farmer NOT file under?

Answer 15

Chapter 9

Question 16

What kind of security is regulated by the provisions of the Securities act of 1933?

Answer 16

Insurance companies must genreally registerd

Question 17

Can a partner assign rights to partnership property?

Answer 17

No, bc the partners rights in pship property are limited to using the property for pship purposes

Question 18

Does a partner have a right to assign interest partnership distributions?

Answer 18

Yes

Question 19

What is the limit on the number of offers that can be made under the 1933?

Answer 19

there is no limit

Question 20

T/F: In the result of a involuntary petition, there a trustee appointed.

Answer 20

True

Question 21

What company may not go into bankruptcy?

Answer 21

Insurance companies

Question 22

What does regulation D permit?

Answer 22

Permits unlimited number of “offers” to sell securities but not a “general solicitation” such as TV/newspaper

Question 23

What does a stockholders dissenting right generally apply to?

Answer 23

Short form consolidations and mergers

Question 24

what is the 1st thing to occur in ch 11 bankruptcy (before court can confirm reorg plan)

Answer 24

Ch 11 will not be approved unless plan provides for full payment of admin expenses

Question 25

What business cannot be petitioned into involuntarily bankruptcy?

Answer 25

Farmers

Question 26

what will release the buyer from all obligations under a sales contract?

Answer 26

refusal of the seller to give written assurance of performance when reasonably demanded by buyer

Question 27

What is a result a buyer accepts an offer containing an immaterial unilateral mistake?

Answer 27

Nothing, the contract is valid

Question 28

what is the business judgement rule?

Answer 28

Principle that protects corporate directors from personal liability for acts performed in good faith on behalf of the corporation .

Question 29

Define the liquidating damages clause.

Answer 29

Enforceable if at the time of contracting, it appears that the amount of damages in case of breach would be difficult to asses

Question 30

What happens to risk of loss when a buyer rejects nonconforming goods?

Answer 30

reverts back to the seller

Question 31

What is writ of attachment?

Answer 31

Court order to a sheriff to seize a person’s property.

This can apply to personal and real property (aka can be used even when there is no real property)

Question 32

Define Garnishment. what are the types involved?

Answer 32

Order to a third person who holds property of the debtor to turn over to a creditor (usually are wages and/or property owed by the third person to the debtor)

Question 33

what is the main condition that must be met to form an agency?

Answer 33

formation of an agency requires principal who has contractual capacity

Question 34

What defense would a surety be able to assert successfully to limit the surety’s liability to a creditor?

Answer 34

Incapacity of the surety

Question 35

What will release a noncompensated surety from liability to creditor?

Answer 35

Discharged if principal debtor and creditor modify terms of contract in anyway (i.e partial surrender of debtors collateral is modification)

Question 36

Who bears the loss in a breached contract?

Answer 36

breaching party no matter what

Question 37

Absent of an agreement how will members of LLC split profit/losses?

Answer 37

divided among members in proportion to their contributions

Question 38

When the debtor defaults and surety pays the creditor, what is a remedy would be best method of collecting from a debtor?

Answer 38

Subrogation

Question 39

What is an accountant liable for under section 18?

Answer 39

liable for false or misleading information in the registration statement or other required reports

Question 40

Under chapter 7 bankruptcy, will there be a trustee appointed?

Answer 40

yes