Term
| What are three types of contracts which must be in writing to be enforceable? |
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Definition
1. Contract for sale of goods over $500
2. Contract dealing in an interest in land
3. Contract which cannot be completed within 1 year |
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Term
| How long does a merchant have under Article 2 of the UCC to object to a different term before it becomes part of the contract? |
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Definition
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Term
| What words does a party use to exclude implied waranties under Article 2 of the UCC? |
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Definition
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Term
| What are the six requirements for a document to be a negotiable instrument? |
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Definition
1. in writing
2. unconditional promise to pay
3. signed by maker
4. payable to order or bearer
5. payable on demand or a date certain
6. definite amount of money |
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Term
| What are three of the defenses to payment of a negotiable instrument? |
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Definition
| Discharge in Bankruptcy, signed by a minor, alteration of instrument, duress, or signed by trickery |
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Term
| What Article of the UCC governs security interests? |
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Definition
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Term
| What are the three steps a party must take to cause a security interest to attach to items? |
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Definition
1. Debtor must give creditor a security interest
2. creditor must give debtor value [loan]
3. debtor must have an interest in the collateral |
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Term
| What must a party do to perfect a security interest in the inventory of a business? |
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Definition
| File a financing statement in the office of the secretary of state in which debtor resides or has principal place of business |
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Term
| Provide an example of a person who is protected as a 'buyer in the ordinary course'? |
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Definition
| furniture store gave security interest in inventory, defaults, bank cannot repossess sold items |
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Term
| What are the three goals of bankruptcy? |
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Definition
1. Fresh start for debtor
2. Divide debtor's assets fairly among creditors
3. Preserve as much of debtor's property as possible |
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Term
| What does a 'voidable preference' in bankruptcy protect against AND give an example? |
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Definition
| prevents debtor from paying preferred creditor within 90 days prior to filing bankruptcy more than creditor would get in bankruptcy - amound in excess paid to creditor is required to be repaid to bankruptcy court and used to distribute among all creditors |
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Term
| In the bankruptcy homework assignment, how did the bank perfect its security interest in the backhoe sold by Ms. Myers to Mr. Able? |
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Definition
| Bank repossessed backhoe [one way to perfect a security interest is to take possession of the collateral] |
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Term
| In bankruptcy, what prevents creditors from taking action against the debtor or her property? |
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Definition
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Term
| What are three of the duties of an agent to a principal? |
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Definition
1. Duty of loyalty
2. Duty of due care
3. Duty to not compete with principal
4. Duty to share information
5. Duty to follow instructions as long as not illegal or unethical |
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Term
| What are three ways in which a principal agent relationship may be terminated? |
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Definition
1. Quit
2. Be fired
3. end of contract term
4. Mutual agreement
5. completion of assignment
6. by law or death of principal or agent |
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Term
| Give an example of the 'implied authority' of an agent? |
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Definition
| person is responsible for buying inventory for a store will have implied authority to arrange transportation of merchandise to store |
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Term
| How can an agent deal with a situation in which the agent has been asked to represent two parties who might have conflicting interests [such as a lawyer being asked to represent a bank and a borrower in a loan transaction]? |
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Definition
| the agent can disclose the conflict to both parties and obtain the informed consent of both to the conflict. used in law firms, banks an accounting firms with a Chinese wall to protect the obligations of loyalty to each party |
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Term
| What are three questions a court will ask to determine whether a relationship is employer-employee or principal-independent contractor? |
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Definition
1. Does the principal control the details of how the job is performed?
2. Does the principal supply the tools an dis the work performed at the principal's place of business?
3. Is the work a regular part of the principal's business
4. Does the agent work full time for the principal |
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Term
| A principal is only liable for the torts of an independent contractor in which situation? |
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Definition
| Negligent hiring of agent [for negligence torts] |
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Term
| What are three of the characteristics of a partnership? |
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Definition
1. Unlimited liability
2. Each partner is a full manager
3. Ceases on death of partner [unless
partnership agreement specifies contrary]
4. Formed by oral or written agreement |
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Term
| What are three of the characteristics of a corporation? |
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Definition
1. Formed by charter from government
2. Limited liability for investors
3. Separation of investors [shareholders] from management
4. Separate legal entity
5. Perpetual duration |
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Term
| What is one of the limitations on the formation of an S corporation? |
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Definition
1. Must have less than 100 shareholders
2. Must have only 1 class of stock
3. All shareholders must be US citizens
4. Taxed like a partnership |
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Term
| What is the risk of a promoter and how does the promoter eliminate this risk? |
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Definition
Promoter has unlimited liability for all obligation incurred prior to formation of corporation
Promoter can transfer liabilities to corporation with a novation |
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Term
| What is one of the reasons a person might form a corporation under Missouri law rather than Delaware law [other than the company is physically located in Missouri] |
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Definition
1. Missouri corporation fes are lower than Delaware
2. Missouri corporation may benefit in a takeover from- provisions of anti-takeover law which protect local corporations, unfamiliarity with Missouri corporate law or courts |
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Term
| What is 'treasury stock'? |
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Definition
| Sock issued and sold to the public by the corporation which is repurchased by the corporation when it thinks its stock price is too low or has an exess of funds |
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Term
| What are three reasons a court might give for 'piercing the corporate veil'? |
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Definition
1. Failure to adhere to formalities for a corporation - filing annual reports with government, failing to hold shareholders, separation of roles of shareholders, directors and officers 2. Inadequate capitalization when used to hide assets from persons harmed by the corporation, 3. Commingling of funds of corporation with personal monies of shareholder
4. If Fraud is committed in the name of corporation, victims can make claim against personal assets of those who profited from the fraud. |
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Term
| If a court pierces the corporate veil, who is it holding liable? |
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Definition
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Term
| Who does the 'business judgment rule' protect and why? |
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Definition
| Directors and officers - to protect them from interference by the courts when making business decisions which subsequently turn out unseccesul |
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Term
| What are three of the requirements to be protected by the 'business judgment rule'? |
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Definition
1. Directors must make an informed decision,
2. In good faith, in best interest of the business
3. Exercising the due care of a prudent person without a conflict of interest |
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Term
| What are three of the rights of a shareholder? |
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Definition
1. To sell shares
2. Attend shareholders meetings
3. To vote for directors and major decisions which will materially change the corporation
4. To receive dividends and in some states to dissent from decisions with which the shareholder disagrees |
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Term
| What are three of the obligations imposed by Sarbanes Oxley on publicly traded companies? |
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Definition
1. CEO and CFO must personally sign the public filings and financial statements, and attest that the public filings and financial statements are true and accurate and that the processes to collect and prepare the public filings are adequate
2. A majority of directors on the audit committee must be independent
3. At least one director on the audit committee must be financially qualified to understand the financial statements
4. Limits the consulting services audit firms may provide to their audit clients |
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Term
| What does 'red herring' describe? |
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Definition
| red line through a draft securities offering submitted to the SEC for review and approval which may be circulated to certain sophisticated investors prior to receiving approval from SEC to sell the securities |
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Term
| What are three of the document the 1934 Securities Act requires companies to publish and how often? |
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Definition
10-K annually
10-Q quarterly
8-K as soon as possible but within 24 hours of a material event for the corporation
Proxy annually prior to shareholders meeting |
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Term
| In what document will an investor find the total compensation for the five highest paid employees traded company? |
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Definition
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