R7&8 Flashcards
What is a private offering? And what are the conditions to rules 504 and 506?
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
What happens if the partnership dissolves and partner has negative account?
If a partner has a negative capital account when the partnership is dissolved, the partner must contribute enough to make up for the shortfall.
What is one type of instrument that is not a security?
Certificate of deposit
What is similar between the formation of a corporation and Limited partnership?
Both can be formed only with filing with state authorities.. articles of incorporation
What creates an express warranty?
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
According to the UCC, when is risk of loss passed?
Under the UCC, risk of loss rules, the risk of loss passes to the buyer on tender of delivery where the seller is a non-merchant who is making the delivery.
How are profits shared in a partnership?
In the absence of an agreement to the contrary, the profits will be shared equally regardless of investment of money or time.
What type of company may not go into bankruptcy, voluntary or involuntary?
Insurance
What type of security is exempt from 1933 Securities Act?
Class of stock given in exchange for another class by the issuer to its existing stockholders w/o the issuers paying a commission
What are the 2 parts of a registration statement?
Part I - prospectus
Part II - other information about the securities being issued
What must be included in a security agreement?
- name and address of debtor
- description of collateral
- debtors authentication
What is the rule in becoming a partner?
One may become a partner only with the consent of all other partners
What must be included in the contract of writing to be an enforceable contract for sale of goods
specifying the quantity of the goods
What is included in an tombstone ad?
Nature of security
the price
availability of a prospectus
What will disregard the limited liability of the shareholders
Undercaptialized the corporation when it was formed
What is not covered by workers comp?
Full pay during disability
Who is a disclosed principal liable to for agents unauthorized misrepresentations?
Employee, not independent contractor
Define Specific performance
court order to fulfill the terms of contract… if no contractual agreement–> no contractual terms to fulfill
What are the ways that a minor can ratify a contract?
- Expressly ratifying the contract after reaching the age of majority
- Failing to disaffirm the contract within a reasonable time after reaching the age of majority
- Impliedly ratifying the contract after reaching the age of majority
How is FUTA administrated through the states?
through state employment laws
Under chapter 11 who are the creditors committee composed of?
secured creditors
What is the general partnership not liable for in a partnership?
not liable for personal liability, on liabilities of the partnership
in what circumstance will Ch 7 deny a debtor a discharge?
When the debtor is a corp or pship
Under Ch 11 what is a result of a reorganization plan?
The courts final decree results in a discharge of all debts and liabilities that arose before confirmation of the plan.
What is the max percentage that an employer may take credit against the futa tax?
5.4%
What is included in a Bankruptcy estate?
property the debtor receives from a bequest, devise, inheritance, property settlement, divorce decree or beneficial interest in a life insurance policy or death plan within 180 days after filing the petition.
Other includes income generated by estate property(rents, interest & dividends)
What is a composition of creditiors
an agreement between a debtor and at least 2 creditors that the creditors will take less than full payment to discharge debts owed
What is a requirement of a merger of 2 corportions?
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
What will release a buyer from all its obligations under a sales contract?
Failure to give adequate assurances when reasonably demanded is a form of anticipatory repudiation. Constitutes a breach and discharges the buyer
What is the warranty of merchantability?
arises as a matter of law when the seller ordinarily sells the goods purchased
What is a joint venture
association of persons engaged as co-owners in a single undertaking for profit.
What are preemptive rights?
The right to purchase new issuances of additional stock in order to maintain current proportional ownership
What are the 2 ways that purchase money security interest for interest?
- creditor sells inventory to the debtor on credit and retains a security interest for the purchase price
- creditor lends money to the debtor so that the debtor so the debtor can purchase inventory
What excluded in secured transactions article?
landlord lien, assignment of claim for wages, sale of chattel paper as part of sale of business out of which it arose
What does a co-surety entitled to?
Co- surety only has the right of contribution against other co-sureties
What is one way that will totally release of a compensated surety?
Tender performance by the principal debtor
Define undue influence
When a person in a position of trust or confidence takes unfair advantage of the relationship
When is a liquidated clause enforceable?
if at the time of contracting it appears that the amount of damages in case of breach would be difficult to assess and the amount is a reasonable approximate of damages and not penalty
When is attachment autoperfected?
PMSI is auto perfected if the item purchased is a consumer good
What secured transaction document must be signed by the debtor?
Security agreement
Define Fraud in the inducement
victim was deceived as to the reason for the transaction
When does the risk of loss transfer on a sale on approval?
risk of loss passes to the buyer on the approval of goods (goods are accepted after the trial period
What are the rules for involuntary petition?
if less than 12 creditors -> any 1 who is owed $16,750 in unsecured debt mile file
if more 12 12 -> 3 for a total of $16,750
Stops the enforcement of all judgement liens and collections against debtor
What does the FDCPA constitute as a way to collection debt?
forgives parties injured by unfair collection practices the right to sue under a Civil law suit for damages who violate the Act.
What are the reporting requirements of the 1934 Securities Exchange Act for any company?
- shares are traded on a national exchange
2. company has at least 500 shareholders in any one class who are not accredited and more than $10mil in assets
What 3 things must be reported to the SEC under the 1934 Act?
Tender offers, Insider Trading, Soliciting proxies
Define Subrogation
the right a surety has in which the surety succeeds to the creditors rights against the principal when the surety pays the principals obligations.
What happens to contracts entered when a person was adjudicated mentally incompetent?
all contracts are void
Who are considered an insider of a corporation?
officers, directors, and more than 10% stockholders are required to register and report under 1934 act. this also includes attorneys
What does a party who files a security interest have superior interest than?
Superior interest that sequential judicial liens
What are the requirements of a firm offer?
- sale of goods
- seller was a merchant
- was in writing and signed by merchant
What is an example of a good that is valued more than $500 that is unenfoceable?
Works of art
What happens when a General partner dies in a limited pship?
dissolve by operation of law, limited partners do not automatically become GP as result
What happens when goods are nonconforming? who bears risk of loss?
considered breach of contract and risk of loss is borne by breaching part
What happens in a sale of real property is breached?
Nonbreaching party can either recover compensatory damages or specific performance
Who gets paid out first in a dissolution of a limited partnership?
creditors
What does the antifruad provision (10-b) of the 1934 act require?
Requires that the wrongful act must be accomplished through mail, any other use of interstate commerce or through nation securities exchange
What kind of liens require notice to the owner of the property in most states?
mechanics and artisan loans
When is a promoter relieved of personal liability?
only when there is a novation (requires agreement by all parties to substitute the corporation for the promoter.
Define warranty of title
Provides that the seller deliver the goods from any lien of which the buyer lacked knowledge when the contract was made
Who is specifically excluded from relief under chapter 11?
Stockbrokers
What remedies are available to a principal when an agent fraudulently breaches a fiduciary duty?
Termination of the agency and constructive trust
What is the rule of the “confirmation memo” in the UCC?
If there is a sale between merchants -> if one merchant sends the other a memo of contract…. it will bind the recipient unless the recipient does not respond in a reasonable time (10 days)
What is the rule of investors under 1933 Act?
There can be no more than 35 unaccredited investors under 506 offering.
What business entity can be voluntary dissolved and terminated with filing state or organization?
Corporation
What does an agent not have implied authority to do?
Sell principals business fixtures
In terms of the sale of real estate, does the Statue of frauds require the agreement to be signed?
No, does not need to be signed by any party
What can a party recover under involuntarily petition bankruptcy who succeeds in having petition dimissed?
They can recover court costs, attorney fees, compensatory damages, punitive damages
T/F : A sole proprietorship can be formed without filing with the state?
True
How will an agent apparent authority cease without a notice?
When the principal has received a discharge in bankruptcy
Who bears the risk of loss in a sale and return contract?
buyer has title and risk of loss unless and until goods are returned to seller
What will cause a discharge of contractual duties by operation of law?
Impossibility of performance (no one can perform)
What is an example of a corporate equity security?
A share of callable preferred stock. (all types of stock are considered equity securities
What is a limited liability partner not liable for?
Not personal liable for the negligent actions committed by his partners
What document do you have to file to form LLC?
Articles of Organization
What is a defense a surety would be able to assert to limit the surety’s liability to a creditor?
The incapacity of ther surety
