R5&6

Question 1

Statute of Limitations for Breach of Contract starts when?

Answer 1

The date the contract is breached

Question 2

6 contracts under Statute of Frauds

Answer 2

“MOGLES” mnemonic
1) Where consideration is Marriage
2) Where terms cannot be performed within One year
3) Sale of Goods for $500 or more
4) Involving interests in Land
5) Those made by Executors or similar representatives who pay estate debts out of personal funds
6) Surety (to pay the debt of another)

Question 3

How are contract duties discharged by operation of law?

Answer 3

If performance becomes objectively impossible

Question 4

What is required to modify a contract governed by common law?

Answer 4

Additional consideration

Question 5

Relief allowed for sale of real property or unique items

Answer 5

Specific Performance OR Compensatory Damages

Question 6

Merchant’s Firm Offer requirements & time open

Answer 6

Requirements:
1) Seller is a merchant;
2) Offer is in writing & signed by the merchant; and
3) Offer gives assurances that it will be kept open
If no time stated, max irrevocable time = 3 months

Question 7

An oral contract normally governed under the Statute of Frauds is enforceable in these scenarios:

Answer 7

1) Specially manufactured goods
2) Written confirmation memo between merchants (receiver doesn’t object within 10 days)
3) Admission in Court
4) Performance already occured, (enforceable to the extent goods/performance has been accepted)
*SWAP mnemonic

Question 8

When does Risk of Loss pass with Noncarrier delivery? (merchant vs. nonmerchant seller)

Answer 8

Merchant seller: upon actual delivery
Nonmerchant seller: once seller tenders delivery of the goods

Question 9

When is Risk of Loss passed in a sale on approval contract?

Answer 9

Once the trial period has ended

Question 10

Termination of Agency by Operation of Law

Answer 10

1) death of principal (once agent becomes aware)
2) incapacity of the principal
3) bankruptcy of the principal
4) failure to acquire a necessary license
5) destruction of the subject matter of the agency
6) subsequent illegality

Question 11

Means Test to force debtor into Ch. 13 bankruptcy

Answer 11

If 60 x (avg. monthly income - expenses) => $15,150, abuse and forced Ch. 13

Question 12

Subrogation

Answer 12

After surety pays the debtor’s obligation, surety obtains any rights the creditor had against the principal debtor.

Question 13

Changing manner of debt payment; impact on gratuitious vs. compensated surety

Answer 13

Gratuitous: Discharged
Compensated: Discharged only if surety’s risk increases

Question 14

Extension of debtor’s time to pay; impact on gratuitious vs. compensated surety

Answer 14

Gratuitous: Discharged
Compensated: Discharged only if surety’s risk increases
*Creditor’s delay in collection is not an extension of time to pay!

Question 15

What must be on a financing statement that is used to perfect collateral?

Answer 15

Names and addresses of the creditor and debtor, and a description of the collateral

Question 16

Accord and Satisfaction

Answer 16

Accord: an agreement to substitute one contract for another
Satisfaction: executing “satisfying” the new contract

Question 17

Number of creditors and amount of debt to involuntary petition debtor into bankruptcy

Answer 17

<12 creditors: only creditors who are owed at least $18,600 may file
12+ creditors: at least 3 creditors who are owed at least $18,600 in aggregate, unsecured, undisputed debt must join on petition.

Question 18

Preferential Debt payment elements:

Answer 18

1) transfer made to or for the benefit of the creditor;
2) on account of an antecedent debt;
3) made within 90 days prior to the filing of the petition (1 yr if creditor is an insider);
4) made while the debtor is insolvent; and
5) results in the creditor receiving more than he would have under the bankruptcy code.

Question 19

Debtors not eligible to file under Chapter 7 bankruptcy

Answer 19

Railroads, insurance companies, banks, savings institutions, small business investment companies

Question 20

Debtors not eligible to file under Chapter 11 bankruptcy

Answer 20

Stockbrokers and commodity brokers

Question 21

Involuntary bankruptcy petitions cannot be filed against who?

Answer 21

Farmers and nonprofits

Question 22

Bankruptcies where a trustee is required

Answer 22

Ch. 7 & 13
Ch. 11 - not required but can appoint

Question 23

What is filed to create LLC vs S/C Corp

Answer 23

LLC: Articles of Organization
S or C Corp: Articles of Incorporation

Question 24

Items required to be in the Articles of Incorporation

Answer 24

1) Name of the corporation
2) Names and Addresses of the registered agent
3) Names and Addresses of each incorporator
4) Number of shares authorized.

Question 25

3 reasons to pierce the corporate veil

Answer 25

1) Shareholders commingle personal & corporate funds, or use corporate assets for personal use 2) Corporation wasn't started with adequate capital to cover liabilities 3) Corporation was created to defraud existing creditors

Question 26

PMSI arises when:

Answer 26

1) Creditor sells the collateral to the debtor on credit (car dealership) 2) Creditor loans funds to the debtor so he can purchase the collateral

Question 27

Automatic perfection arises when:

Answer 27

1) PMSI in Consumer goods (not inventory or equipment) 2) Assignment of small AR

Question 28

What percent of shareholder interest (not # of shareholders) need to agree to a Ch. 11 reorg plan?

Answer 28

2/3 of shareholder interest. Agreement of the plan is not required, court can confirm reorg plan without agreement by creditors or shareholders through the "cram down" provision.

Question 29

Exoneration (surety defense)

Answer 29

prior to paying the debt, a surety can compel other sureties by suit to pay their pro-rata share of the debt.

Question 30

To have a priority security interest, PMSI must what?

Answer 30

PMSI give notice to prior secured creditors. If no notice is given, treated like another secured creditor (no priority).

Question 31

Order of distribution of bankruptcy estate

Answer 31

1. Secured Claimants (distributed value of their collateral) 2. Priority Claimants (separate priority claimant order) 3. General Creditors

Question 32

Business owner must file FUTA tax return if:

Answer 32

1) Employed at least one employee for 20 weeks of the year 2) Employer has quarterly payroll of at least $1500

Question 33

Order of distribution to Priority Claimants

Answer 33

1) Support obligations to spouses & children 2) Bankruptcy expenses 3) Claims from ordinary course of business 4) Wage claims from employees earned w/in 180 days of bankruptcy 5) Employee benefits owed 6) Claims of grain farmers & fisherman 7) Consumer deposits 8) Tax claims (exempt from discharge) 9) Personal injury claims arising from DUIs

Question 34

A general discharge in bankruptcy will be denied if:

Answer 34

Individual fails to keep adequate books and records