FR2 Flashcards
Agency Law
What are the requirements for an Agency?
- Requires agreement but not consideration or writing
EXCEPTION: sale of land or longer than 1 year
What are 4 ways the an agency will be terminated immediately by law?
Death or insanity by either party
Bankruptcy of the principal, but not the bankruptcy of the agent
Failure of the agent to have a required license
Destruction of the subject matter of the agency
How do you terminate apparent authority?
Principal must give actual notice to persons with whom the agent has dealt and constructive notice to all others
What is an Agency coupled with interest?
Agent has interest in the subject matter of the agency (security interest, buyer of a stock who has appointed the sellers agent to vote the stock)
- Not terminable by the principal, death or insanity does not end this agency
- can only be terminated by the agent
What are two types of actual authority?
Expressed or implied
What is the difference between expressed and implied authority?
Express - power that principal specifically tells agent that the agent has
Implied - power that agent reasonably believes the agent has based on the communications
What are the three duties a principal owes the agent?
- Duty to reimburse the agent for expenses while acting on behalf of principal
- Duty to compensate the agent
- Duty to indemnify the agent for losses incurred while acting on principals behalf
What are the 5 duties a agent owes the principal?
- Duty of care
- Duty to inform the principal of all relevant facts
- Duty to account for money spent or received
- Duty of loyal
- Duty of obedience
What are the requirements of Ratification of a contract?
- the principal must know all relevant facts to ratify the contract
- if principal accepts the benefits of contract knowing all material terms,(implied ratification)
- principal cannot ratify unless agent indicated to TP
- once ratified, principal cannot withdrawal.
What are some ways to reject/terminate/revoke an offer? When is revocation effective?
- offeror - can revoke anytime prior to acceptance(except option contracts, merchant firm offers, unilateral contracts)
- offeree- expressly reject, or counteroffer
- Offer can be terminated through destruction of subject matter, death, illegality
- Revocation/rejection is effective when received
What is the difference between Acceptance in Common law vs Sales Article?
Common law - offeree must assent to every item
Sales article - new or different terms don’t change unless substantial change
Define Fraud in the Execution
The victim never knew a contract was being made–> makes contract void
Define Fraud in the inducement
Occurs when the victim knows a contract is being made, but terms are misrepresented (makes contract voidable)
Define difference between unilateral and mutual mistake
mutual mistake allows victim to avoid contract
Unilateral mistake is not a defense unless it is of material fact and other party knew it was being made
Define Parole Evidence Rule
Prior oral written statements and contemporaneous oral statements cannot be admitted into evidence. only can introduce evidence of subsequent modifications, explanations, fraud, duress, mistake
What are the 6 contracts that require writing under the Statute of Fraud?
Marriage
Year: contracts impossible to perform within one year
Land: contracts involving interest on real estate
Executor: contracts by executor being personally liable
Goods: contracts for sale of goods for $500 or more
Suretyship: Contracts to act as surety
Define Specific Performance
Court order that the breaching party performs contract duties.
only with property and not personal service contracts
What are the exceptions to the statue of frauds?
Need not be in writing for the following:
- Specially manufactured goods
- Merchant sends another merchant written confirmation of contract that is sufficient to bind the sender and recipient does not object within 10 days
What is the process of a nonconforming delivery by the seller?
A buyer may reject any nonconforming delivery by the seller
Seller has right to correct or cure the nonconforming delivery by notifying the buyer it will be corrected on time.
Difference between Gratuitous Surety and Compensated surety?
Gratuitous - not compensated for promise, ANY variation of risk to surety = release of gratuitous surety
Compensated - paid for promise, only material variation will release surety.
What are the rights of a surety?
Subrogation - once surety pays all they have creditors rights
Reimbursement/indemnification - right to recover from debtor any money paid
Exoneration- obtain court order demanding debtor to pay back
Define writ of attachment
if creditor has reason to believe that debtor won’t pay then creditor can ask court to issue this so that if debtor doesn’t pay–> creditor seizes property through sale
What are the 5 tests that must be met in order for trustee to disaffirm voidable preferences.
- Transfer - transferred prop to creditor
- Antecedent - transfer must have been for a pre-existing debt
- 90 days - transfer must have occurred within 90 days
Insolvent - transfer made while debtor was insolvent - More - creditor received more than he would have in bankruptcy
What are the 5 debts that are exempted from discharge?
debts from Willful and malicious injury to others debts from Alimony&child support debts from Fraud Taxes owed within 3 years Educational loans Debts not reported by the debtor
What are the 4 types of bankruptcy?
Chapter 7 - Liquidation
Chapter 13 - Individual Debt Adjustment
Chapter 11 - Reorganization
Chapter 15 - Ancillary and Cross-Border Cases
Describe the difference between Chapter 7 Voluntary vs Involuntary liquidations.
Voluntary - files, trustee appointed
Involuntary - trustee appointed
1. If 12 or more creditors –> 3+ creditors must file who are owed $15,775 or more in the aggregate in unsecured claims
2. with fewer than 12 creditors —>1+ are required to file who are owed $15,775 in unsecured claims
What are the 3 requirements for attachment?
All must be met for attachment to occur:
Value (creditor gives value)
Agreement (written/oral)
Collateral (debtor must have rights in collateral)
What is PMSI?
Purchase Money Security Interest. Arises from the creditor either:
- lends debtor money that was used for collateral
- Sells collateral to the debtor on credit and retains int on purchase price
What is section 11 under the 1933 act?
permits civil suits against issuers, directors, accountants, and attorneys
-all the plaintiff needs to show is that the plaintiff acquired the stock
Accountants are liable unless due diligence was proven
Issuers are liable for MM
What is the registration requirements under the 1934 act?
Required to register if:
- securities are sold on a national exchange
- if the issuer has atleast 500 shareholders in any o/s class and more than $10mill in assets
Who is a withdrawing partner liable to?
Personally liable to creditors of old pship even if there is a hold harmless agreement
Hold harmless agreement- allows partner to recover from other partners any amounts he is required to pay to creditors
T/F: A person can be a limited and a general partner of the same company
True
What is special about an LLC?
can be formed with limited liability for all members bc an LLC member is not liable beyond their investment
Define “piercing the corporate veil”
The corporate entity may be disregarded and stockholders held personally liable if corp was formed to commit fraud, undercapitalized at formation, sholders commingle personal and corp funds
What are the 4 main fundamental changes in the corporation the stockholders can vote on?
D issolution
A mending the articles of incorporation
M ergers, consolidations and compulsory share exchanges
S ale of substantially all corps assets outside the ord course of business
