REG - R8 Flashcards
Surety
A surety is one who is LIABLE for the DEBT or obligation of another.
A suretyship undertaking NOT evidenced by a written memorandum is unenforceable.
A surety is DIRECTLY liable and does NOT have the right to compel the creditor to collect from the debtor; A surety does NOT have the right to compel the creditor to proceed against the principal debtor’s collateral.
Surety vs. Guarantor
Surety: DIRECTLY LIABLE
Guarantor: Liable to the CREDITOR ONLY if the debtor does not perform his duty to the creditor; Guaranty must be in WRITING.
Gratuitous Surety vs. Compensated Surety
Gratuitous Surety: NOT compensated (e.g. parent signing a loan for their child)
Compensated Surety: PAID Surety (e.g. a bonding company); a compensated surety is bound to perform regardless of the timing of the promise.
Co-Sureties
Co-sureties are two or more sureties of the SAME obligation
Co-sureties are jointly severally liable (e.g. any one or more may be liable for the entire obligation)
If the contract does NOT specify the liability of each surety, each surety is liable for a pro rata share determined by the number of SOLVENT sureties.
Defenses of Surety
CPRs Mnemonic
C - Creditor acted in bad faith
P - Payment has already been made
R - The creditor RELEASED the debtor
S - Surety’s incapacity, Bankrupt
Fair Debt Collection Practices Act (FDCPA)
FDCPA curbs abuses by COLLECTION AGENCIES in collecting consumer debts.
Does not apply to creditor attempting to collect its own debts; just to services that collect consumer debts for others.
Official Bond
An official bond is a type of SURETY BOND. Many states require public officials to obtain bonds from a surety for faithful performance of their duties. Such bonds obligate a surety for all losses that the public official causes by negligence or nonperformance of required duties.
Agency
Agency is a legal relatioship in which one person or entity (the principal) appoints another person or entity (the agent) to act on his behalf.
Principal MUST HAVE capacity
Agent NEED NOT have capacity (minors can be agents)
Agency power can arise through…
1) a grant of ACTUAL authority (power & right)
2) apparent authority or estoppel (power but no right)
3) ratification (power but no right)
Ratification
Ratification allows a principal to choose to become bound by a previously unauthorized act of his agent.
Constructive Trust
If the agent obtained SECRET PROFIT, the principal can recover the secret profit, usually by imposing a CONSTRUCTIVE TRUST on the profit.
Respondeat Superior
Under the doctrine of respondeat superior, a principal, including a corporation, can be held liable for an employee’s tort committed within the scope of employment.
The Bank Secrecy Act (BSA)
The Bank Secrecy Act was enacted in 1970 and is one of the primary tools used to fight money laundering.
Sometimes called an anti-money-laundering law (AML)
Money Laundering - BSA Regulations Required REPORTING
Currency Transaction Report (CTR) - Transactions of more than $10,000, file within 15 DAYS after transaction
Suspicious Activity Report (SAR) - Transactions of more than $10,000, file within 30 DAYS after transaction
Money Laundering - BSA Regulations Required RECORDS
5 Years - maintain records
$3,000 - monetary records
Money Laundering Penalties
Criminal - 20 years’ imprisonment or a fine up to $500,000 or 2x the value of the money laundered, whichever is greater (Department of JUSTICE)
Civil - forfeiture of any property involved in money laundering transaction (FinCEN pursues civil sanctions)
Other - Banks risk losing charter, and bank employees risk being removed/barred from banking (FinCEN pursues civil sanctions)
Antitrust Laws
Antitrust Laws prohibit businesses from engaging in conduct that could stifle free competition
Sherman Act
Sherman Act (federal law applies)
1) Prohibits Restraints of Trade
- Balance anti competitive and competitive effects
- “Per Se” violations - inherently illegal and without legal justification
2) Monopolies
Restraints of Trade under Sherman Act (Section 1)
Most horizontal restraints are illegal per se (e.g., price fixing, market allocation and boycotts designed to eliminate a competitor or coerce compliance)
Most vertical restraints are judged by the rule of reason (vertical price fixing in all likelihood, vertical market allocation and vertical boycotts)
**To see if an activity is illegal per se, it is beneficial to first check to see if it is a horizontal or vertical restraint.
Clayton Act
The Clayton Act was aimed at anticompetitive behavior NOT covered by the Sherman Act.
It was intended to stop such activities in their incipiency (e.g., stop them before they become violations of the Sherman Act)
Robinson-Patman Act
The Robinson-Patman Act of 1936 amended and strengthened “Section 2” of the Clayton act that prohibited price discrimination.
Applies only to price discrimination of commodities of like grade and quality.
**Civil ONLY (no criminal penalties)
Federal Trade Commission Act
FTC Act
Prohibits misleading ads
Prohibits ads without a reasonable basis for their claims
**NO Private-Party Suits Permitted
Dodd-Frank Act of 2010
Dodd-Frank act is a conglomeration of a number of acts adopted to promote the financial stability of the United States by improving accountability and transparency in the financial system, ending the idea of “too big to fail,” protecting the American taxpayer by ending bailouts, and protecting consumers from abusive financial services practices.
