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REG > REG 5-9(?): Business Law > Flashcards

REG 5-9(?): Business Law Flashcards

1
Q

What are the three ways an agent obtains authority?

A
  1. Actual authority - The principal gives the agent authority, either through express authority (explicitly states) or implied authority.
  2. Apparent authority - The principal takes an action that creates the appearance to third parties that the agent has certain authority.
  3. Ratification - The agent acts without authority, but the principal decides to honor the contract anyway.
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2
Q

In order to ratify an agent’s unauthorized contract, a principal must:

A
  1. Be fully or partially disclosed
  2. Understand the material facts of the contract
  3. Ratify before the third party discovers agent’s action was not authorized by principal
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3
Q

When is a written agreement required to form an agency relationship?

A

If a statute of fraud applies, such as in:
1. Real estate
2. Agency relationship exceeding one year
3. Suretyship (answer for a debt or default of a principal to a third party)
4. Sale of goods over $500

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4
Q

What are the two types of actual authority?

A
  1. Express authority: written or oral agreement that outlines responsibility and authority of the agent.
  2. Implied authority: Granted to an agent in the creation of agency relationship as incidental and customary authority that is necessary for the agent to perform the outlined work.
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5
Q

What are the remedies available to an agent for a principal’s breach of contract? (3)

A
  1. Compensatory (ex: unpaid comp)
  2. Consequential damages ( ex: indirect losses)
  3. Specific performance (ex: land or unique property)
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6
Q

When an agency relationship is terminated under mutual or unilateral agreement, what two types of notice must be given by principal to third parties?

A
  1. Actual notice (eg, direct letters)
  2. Constructive notice (eg. newspaper announcement)

Under operation of law termination (eg, death, illegality, bankruptcy of principal), no notice is required.

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7
Q

What are the elements of forming an enforceable contract? LOCAL

A

Legal
Offer & Acceptance (“meeting of the minds”)
Considerstion (exchange, not a gift)
Legal capacity

Enforceable so long as the defendant has no valid defenses

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8
Q

What are the terms for a valid contract under common law & UCC?

A

Common law: need all terms - Identity, subject matter, price, time, terms, quantity
UCC: type of goods, description, quantity (main difference is doesn’t need price and time)

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9
Q

What renders a contract void?

A
  1. Illigal
  2. Fraud in the execution (tricked into signing)
  3. Adjudicated incompetent
  4. Extreme duress (physical threat)
  5. Unconscionability
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10
Q

What renders a contract voidable?

A
  1. Duress (social or economic)
  2. Undue influence(unfair advantage in relationship)
  3. Mistake (mutual or unilateral)
  4. Misrepresentation of material fact (unintentional or fraud in the inducement)
  5. Lack of capacity (minor, mental capacity)
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11
Q

What is the Warranty of Merchantability (WAM)?

A

An implied warranty that if reached, an injured party needs to prove:
1. The goods purchased were not fit for the ordinary(normal) purpose intended and therefore caused injury.
2. The seller was a merchant who normally sells the goods purchased.
3. The seller did not disclaim the WOM.

A seller can disclaim WAM in written or oral statement that specifically mentions “merchantability”, or by selling goods “as is” or “with all faults”

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12
Q

What are the seller’s implied warranties under UCC?

A

Title - goods have clear title that can be rightfully transferred
Against infringement - goods are free of rightful claim of infringement (ex: patent)
Merchantability - goods are fit for their ordinary purpose and conform to seller’s representations if seller is a merchant
Fitness for particular purpose - goods are fit for particular purpose if seller has reason to know that buyer is relying on sellers skill to furnish goods

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13
Q

What the requirements to become a secured creditor?

A

PIG FAT
You need:
Property owned by debtor
Interest is created either by:
-security agreement signed by debtor
- taking possession (writing not req.)
Given value by creditor

Note the date when all requirements are satisfied (date of attachment)

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14
Q

What are the requirements to perfect security interest?

A

PIG FAT
Must have one of:
File paperwork (financing or security agreement)
Automatic perfection (GR: PMSI creditor in consumer goods)
Take possession

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15
Q

What is the order of priority in security interests?

A
  1. Buyer in the ordinary course of business
  2. Perfected PMSI creditor (usually)
  3. Between 2 perfected creditors, both non-PMSI - first to file wins
  4. Perfected defeats unperfected (creditor that only attached)
  5. Secured (attached) defeats unsecured (never attached)
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16
Q

What is the 20 day rule for perfecting PMSI?

A

When a PMSI is perfected by filing a financing statement within 20 days from the date of attachment, the date of perfecting the PMSI is retroactive to the date of attachment.

17
Q

What is a public official bond?

A

A type of surety bond in which a surety guarantees that a public official will faithfully execute the governmental duties assigned to that official. Surety will reimburse the gov entity for the loss caused by the official’s improper actions. (Think insurance)

18
Q

What are the rules regarding a creditor selling possessed collateral?

A
  1. The creditor must give notice to debtor & other secured parties (only debtor if consumer goods)
  2. Must be within reasonable time and in reasonable manner
19
Q

When does Automatic perfection apply?

A
  1. In purchase money security interests (PMSI) in consumer goods
  2. When collateral is sold for proceeds (for 21 days from debtor’s receipt of proceeds - must file a financing statement within that period in order to retain perfected status.
20
Q

What is the order of priority for distribution of a debtor’s estate?

A

Secured parties, DAG WE FIF PTI (priority), then general unsecured

Priority
1. Domestic Support
2. Administrative costs
3. GAP Claims (between filing date and order of relief)
4. Wages
5. Employee benefits (up to $15,150 w/wages)
6. Fisherman or Farmers
7. Prepaid consumer deposits (up to $3,350)
8. Taxes (returns due within last 3 yrs)
9. Injury from DWI (non-dischargeable)

If money is exhausted at any level, then you divide up the money to creditors at that level pro rata. Most claims below that level are discharged.

21
Q

What are the non-dischargeable debts?

A

BUT WE HAD Fraud, Fines, Consumer Debt
Bankruptcy (within last 8 years)
Undisclosed
Taxes
Willful/malicious injury
Education loans
HOA
Alimony/child support
DWI Injuries
Fraud
Fines
Consumer debt (within 90 days, greater than $1,100)

22
Q

What is the homestead exemption from bankrupt’s estate?

A

If a homestead is acquired within 3.5 years preceding the date of filing, the maximum state homestead equity exempted is $189,050, and the debtor must have been domiciled in the state for two years.

23
Q

What contractual duties does a principal owe an agent?

A
  1. Cooperate
  2. Indemnify the agent for expenses
  3. Compensate the agent for services performed (N/A if gratuitous agent)
  4. Abide by any express duties stipulated in the contract
24
Q

When is a contract not assignable?

A
  1. Duty/right is personal in nature
  2. Materially alters rights and responsibilities of the other party
  3. Personal services
  4. States “no assignment” in contract
  5. Prohibited by law/public policy
25
Q

What is required in order to modify a contract under common law & UCC?

A

CL: Parties are free to change terms as long as there is consideration from both sides for those changes.
UCC: Parties are permitted to make changes as long as they are in good faith, even without consideration. Both parties just need to voluntarily agree.

26
Q

When does a creditor have the right to repossess goods from a good-faith purchaser who buys from the debtor in a consumer to consumer transaction?

A

If they perfected the goods by filing financing statement before the purchase was made.

Automatic perfection does not win out in this case.

27
Q

What are the rights of a surety?

A

RISE
Reimbursement
Indemnity
Subrogation - “step into shoes” of creditor.
Exoneration - permits surety to petition courts to order creditor to exhaust recovery from principal debtor before holding surety liable.

28
Q

When a seller is not a merchant, when do title and risk of loss transfer to the buyer?

A

Upon tender of delivery

29
Q

What is a reaffirmation?

A

Agreement between debtor and creditor that a debt will not be discharged in bankruptcy.

30
Q

What federal act regulates mortgage lenders?

A

Real Estate Settlement Procedures Act (RESPA)

REG (5 decks)

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