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Law Flashcards

1
Q

What is the majority rule?

A

accountants are liable to anyone in a class (such as potential lenders or investors) of third parties whom the CPA knows will rely on the opinion of the financial statements

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2
Q

Ultramares (minority rule) limits the accountant’s liability for negligence to:

A

(i) parties in privity and (ii) intended third party beneficiaries; parties who are merely “foreseen” cannot recover.

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3
Q

Who is a CPA who commits fraud is liable to?

A

anyone who is injured by the fraud

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4
Q

Under Rule 10b-5, a purchaser must prove

A

scienter (either an intent to deceive or gross negligence, which is the reckless disregard for the truth)

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5
Q

Under Section 11, a plaintiff need only prove that:

A

LAM

(i) the plaintiff acquired (not necessarily bought) the security
(ii) there was a material misstatement in the financial statements included in the registration statement that was signed by the defendant
(iii) the plaintiff suffered a loss

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6
Q

For a cause of action for negligence, the client must prove at least that

A

the CPA failed to exercise due care

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7
Q

Negligence has 4 elements:

A

duty of care
breach (lack of due care)
cause
damages

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8
Q

What is the difference between actual and constructive fraud?

A

Constructive fraud does not require intent. Constructive fraud only requires reckless disregard for truth or falsity. (gross negligence)

Actual fraud requires intent in making a material misstatement, upon which the plaintiff justifiably relies (and that the plaintiff suffers damages) (scienter required)

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9
Q

For a CPA to be liable for damages under section 10(b) of the 1934 Act, the plaintiff must prove:

A

The plaintiff purchased or sold securities,
The defendant’s material misrepresentation of fact with respect to the securities,
Scienter (intent to deceive or reckless disregard for the truth) by the defendant,
The plaintiff’s justifiable reliance,
Damages incurred by the plaintiff, and
A means of interstate commerce was involved

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10
Q

What are the 5 elements of constructive fraud that must be proven? actual?

A 
MAIDS
misrepresentation of a material fact
intent to deceive
actual and justifiable reliance on the misrepresentation intent to induce that reliance
damages

Intent to deceive (scienter)

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11
Q

Which securities never have to be registered with the SEC?

A 
BRINGS
Banks and savings and loans
NFPs
Government orgs
Railroads (common carriers)
ST commercial paper
Insurance policies
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12
Q

What reports are required under the Securities Exchange Act of 1934?

A 
10K, 10Q, 8K
5%+ owners
Tender offers
Insiders
Proxy solicitations and statements
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13
Q

What companies have to abide by the 1934 Act?

A

companies whose shares trade on a national exchange

companies with over $10M in assets and at least 2000 shareholders or 500 unaccredited shareholders

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14
Q

When is an investment considered a security?

A

When passive

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15
Q

When are shelf registrations of securities permitted?

A

original registration statement must be kept current in order to provide accurate information to investors
SEC will not allow an issuer to use shelf registrations unless the issuer has a history of issuing securities

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16
Q

What is the difference between transaction and securities exemptions?

A

Securities exemptions exempt a security forever while transaction exemption exist for transaction in question and must be registered if resold (unless qualified for another exemption)

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17
Q

What are the 3 general conditions apply to rules 504, 505, and 506 for issuing securities?

A

no advertising
Immediate resale to public prohibited
SEC informed within 15 days after first sale

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18
Q

What is a CPA’s best defense to 1933 section 11?

A

exercising due diligence

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19
Q

What are the transaction exemptions for securities?

A 
Casual sales
Exchanges with existing holder and corporate reorgs
Intrastate sales
Reg A (simplified)
Reg D (private offerings)
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20
Q

What must be filed under Reg A?

A

Offering stmt (notification and offering circular)

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21
Q

Rule 147 provides that for

A

9 months after the last sale by the issuer, resales can only be made to residents of the state

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22
Q

When can securities legally be sold?

A

after registration is effective (20 days after filing)

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23
Q

What type of damages are available for section 11 of the 1933 Act?

A

Monetary only

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24
Q

Under Section 10(b) and Rule 10b-5, a successful plaintiff will be entitled either to:

A

recover the amount of any loss caused by the fraud or obtain rescission

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25
Q

What do common law applicable contracts involve?

A 
RISE
Real Estate
Insurance
Services
Employment
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26
Q

What does the UCC govern?

A

Contracts for sale of goods

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27
Q

What the the 3 requirements of a legally enforceable contract?

A

Offer and acceptance
Exchange of consideration
Lack of defense

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28
Q

What are the 3 requirements to be an offer?

A

Intent
Definiteness and certainty
Communication

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29
Q

What is an option contract?

A

Offeree buys time

Consideration given to keep offer open

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30
Q

Which 6 contracts require a writing?

A

MY LEGS
Marriage
Year (multi, cannot be performed within a year)

Land interests
Executors (estate)
Goods (sale of)
Surety (to pay debt of another)

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31
Q

What is a Unilateral mistake?

A

a defense to a contract if the nonmistaken party knew or should have known of the mistake

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32
Q

What is the criteria for valid assignment of a sales contract?

A

Not materially increase the other party’s risk or duty

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33
Q

What is a rescission?

A

“undoes” a contract and restores the parties to the positions they would have been in if no contract were made

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34
Q

What is Duress?

A

a person overcomes the will of another through wrongful force or threats of imminent force

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35
Q

Upon reaching the age of majority, a person can become bound on contracts entered into as a minor through ___________ by retaining the benefits of the contract.

A

ratification

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36
Q

What is a novation?

A

Same agreement

Substituted party

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37
Q

To qualify as a merchant’s firm offer:

A

Seller must be a merchant (regularly deals in goods of kind sold)
Offer must be in writing and signed by merchant
Offer must give assurance it will be kept open for certain period of time

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38
Q

What are the exceptions for contracts for the sale of goods that must be evidenced in a writing?

A 
SWAP
Specially manufactured goods
Written confirmation between merchants
Admission in court
Performance
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39
Q

How can implied warranty of title be disclaimed?

A

Specific language or circumstances

NOT a general disclaimer (as is or with all faults)

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40
Q

What are the elements of strict product liability?

A 
defective product
caused injury
unreasonably dangerous
seller in business of selling goods
no substantial changes
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41
Q

How is the risk of loss determined under the UCC?

A

Shipping terms

NOT title

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42
Q

What does shipment of nonconforming goods constitute?

A

Acceptance and Breach

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43
Q

When does risk of loss pass for merchants? nonmerchants?

A

Actual delivery

Tender of delivery

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44
Q

What is Anticipatory repudiation?

A

occurs when either the buyer or the seller indicates in advance of performance that he or she will not perform

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45
Q

What does a copyright give the owner exclusive right to?

A

Reproduce
Prepare derivative works
Distribute copies
Perform or display publicly

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46
Q

When can a copyright be used without owner’s permission?

A

Criticism and comments
Reporting
Teaching

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47
Q

How long do individual copyright lives last?

A

author’s life + 70 yrs

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48
Q

What is a patent?

A

federal right to protect invention, process, or design that is:
novel
useful
not obvious to person skilled in that area

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49
Q

How long to patents generally last?

A

20 yrs

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50
Q

What happens when the statute of limitations runs out?

A

it makes the contract unenforceable, but does not make the contract invalid or void in any way

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51
Q

when can a buyer recover goods from an insolvent seller?

A

goods identified in contract

buyer made payment within 10 days of solvency

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52
Q

What does common law require for any material change?

A

Consideration

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53
Q

Under UCC, when is the seller entitled to recover full contract price from buyer?

A

Goods destroyed while risk of loss is with buyer

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54
Q

Under UCC, what constitutes an express warranty?

A

any affirmation of fact or promise

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55
Q

What is the difference between an intended and incidental 3rd party beneficiary?

A

Intended: purpose of contract must have been to benefit 3rd party that is specifically identified

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56
Q

What endorsement controls what is necessary for further negotiation?

A

The last endorsement
If the last endorsement is blank, the instrument can be negotiated by delivery alone
If the last endorsement is special (i.e., it names a special endorsee), the special endorsee must sign to further negotiate the instrument

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57
Q

Accuracy-related penalties apply to:

A

the portion of tax underpayments attributable to negligence or disregard of tax rules and regulations
any substantial understatement of income tax

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58
Q

What does an attachment require?

A

(i) parties agree to create security interest (authenticated security agreement or the creditor’s taking possession or control of collateral)
(ii) debtor has rights in collateral
(iii) creditor gives value

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59
Q

When is security interest automatically perfected?

A

If a seller retains a security interest for the sale price of consumer goods

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60
Q

What is the priority order for security interests?

A 
Buyer in ordinary course of business
Perfected PMSI
Perfected non-PMSI
Attached only (unperfected)
Debtor
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61
Q

What are the creditor’s options after default?

A

peacefully repossess the goods or bring an action to reduce the claim to judgment
have the goods repossessed and sold judicially
sell the goods and apply the proceeds toward the debt

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62
Q

How many parties are involved with a note? draft?

A

2

3

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63
Q

What characteristics must the instrument have to be negotiable?

A 
in writing
signed by maker (note) or drawer (draft)
unconditional promise to pay
fixed amount of money (only)
payable on demand or at definite time
payable to order or bearer (w/ exception of checks)
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64
Q

What does negotiation of bearer paper require? order paper?

A

Delivery/possession

Delivery/possession and Endorsement

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65
Q

A holder will take commercial paper in due course to the extent he takes the paper: (all 4 things must be present)

A

for value
in good faith
without notice of any defenses to or claims of ownership
negotiable (front only)

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66
Q

What two facts do not constitute notice to purchaser?

A

instrument antedated or postdated

instrument purchased at a discount

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67
Q

What is the Shelter Doctrine?

A

non-HDC get instrument from HDC - transferee claims rights of HDC who help commercial paper before them

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68
Q

What are the real defenses against HDCs?

A 
maker/drawer does not have to pay anyone
HDC subject to real defenses
FAIDS
Fraud in execution
Forgery
Adjudicated insanity (void)
Alteration (material)
Infancy (voidable)
Illegal (void)
Duress (void)
Discharge in bankruptcy
Suretyship defenses
Statute of limitations
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69
Q

What types of defenses are Holders in Due Course (HDCs) subject to?

A

Real

Personal not raised against HDC or assignees

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70
Q

What are the 2 commonly tested personal defenses?

A

Unauthorized completion

Failure of consideration

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71
Q

What is the party liability for notes/CDs?

A
  1. Maker

2. Endorsers

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72
Q

What is the party liability for drafts/checks?

A
  1. Drawee (if they accept)

2. Drawer and endorsers

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73
Q

What liability is negated by endorsing a negotiable instrument?

A

Contract liability

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74
Q

What is covered in the negotiable instruments Article 3?

A

Note/CD

Draft/Check

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75
Q

What commercial paper is promise to pay? order to pay?

A

Note/CD

Draft/Check

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76
Q

What does signing without recourse negate?

A

Contract liability on the instrument

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77
Q

What happens when a person entitled to enforce an instrument impairs the value of collateral securing the instrument?

A

the obligations of the endorsers are discharged to the extent of the impairment

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78
Q

What is restrictive language for endorsements?

A

for deposit

for collection

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79
Q

What does without recourse in an endorsement mean?

A

qualified

skip if instrument bounces (negates contractual liability for payment)

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80
Q

What are the 2 characteristics of checks?

A

drawn on a bank

payable on demand

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81
Q

Ultramares limits the accountant’s liability for negligence to:

A

(i) parties in privity

(ii) intended third party beneficiaries

82
Q

When does a PMSI creditor exist?

A

creditor sells collateral on credit, retaining security interest
creditor advances funds used by debtor to purchase collateral

Ask: did debtor receive collateral with creditor’s money on creditor’s debt?

83
Q

What are the 3 requirements for attachment?

A
  1. Security agreement between creditor and debtor or creditor taking possession/control of collateral
  2. Value given
  3. Debtor must have rights in collateral
84
Q

What are the 5 methods of perfection?

A

Filing
Taking possession of collateral (must be tangible)
Control
Automatic perfection (small scale accounts or sale of goods)
Temporary perfection

85
Q

When is a security interest enforceable and perfection completed?

A

when attached to collateral

86
Q

What are the 2 types of automatic perfection?

A

PMSI in consumer goods

Small scale assignment of accounts

87
Q

What is the priority ranking for security interests?

A 
Buyer in ordinary course of business
Perfected PMSI
Perfected non-PMSI
Unperfected (attach only)
Debtor
88
Q

In what order are default sale proceeds distributed?

A

Pay expenses
pay creditors with security interest in collateral
pay debtor

89
Q

What is the 60 percent rule for default?

A

if debtor has paid at least 60% of loan, secured party must sell collateral within 90 days after repossession

90
Q

What does Article 9 of the UCC include?

A

personal property or fixtures

outright A/R sales

91
Q

Under the UCC secured transactions, what document must be signed by the debtor?

A

Security agreement

92
Q

The act of “perfection” of a security interest:

A

establishes a priority over claims of most subsequent secured creditors

93
Q

What must be included in a secured transaction financing statement?

A

name and address of debtor and secured party
description of collateral
debtor’s authentication (e.g., a signature or electronic substitute)

94
Q

What type of bankruptcy are trustees required for?

A

Chapter 7 and 13

95
Q

What steps are taken to see whether or not chapter 7 bankruptcy is permitted?

A
  1. calculate current monthly income (avg of 6 months before filing)
    - if equal to or less than state median income, ch 7 permitted
    - if greater than state median income, means test applied
  2. means test: (avg monthly income - allowed expenses)*60
    $12475 = presumption of abuse
    between $7475 and $12475 = abuse only if amt = 25% of nonpriority claims
96
Q

Who may be a debtor under Ch 7?

A

generally I, P, Cs
limitation: no RIBS
railroads, insurance companies, banks and small businesses, and savings institutions

97
Q

What debtors must complete a financial mgmt course before their debts are discharged?

A

Ch 7 and 13

98
Q

Only creditors who are owed, individually or in aggregate, at least ________ in unsecured, undisputed debt may petition a debtor involuntarily into bankruptcy.

A

$15,325

99
Q

If debtor has fewer than 12 creditors, who may file?

A

any 1 or more creditors who are owed at least $15,325

100
Q

If debtor has 12 or more creditors, who may file?

A

at least 3 creditors who are owed at least $15,325 in aggregate unsecured undisputed debt

101
Q

Which debts of an individual are not discharged under Chapter 7 or 11?

A 
WAFTED
Willful and malicious injury (ex. Operating vehicle while intoxicated)
Alimony
Fines and Fraud
Taxes (due within 3 years of filing)
Educational loans and Embezzlement
Debts undisclosed in bankruptcy petition
102
Q

What are the basic categories of claimants and the order of payment?

A

Secured
Priority (SAG WEG CTI)
General (non-priority)

103
Q

What are the 9 priority claimant categories in order?

A

SAG WEG CTI

  1. Support obligations to spouse and children
  2. Administrative expenses (fees)
  3. Gap claims (involuntary case)
  4. Wage claims up to $12,475 (180 days prior to filing)
  5. Employee benefit plans up to $12,475 (180 days prior to filing, reduced by wage claims)
  6. Grain farmers and fishermen up to $6,150
  7. Consumer deposits up to $2,775
  8. Tax claims
  9. Injury claims from intoxicated driving
104
Q

What is the vote to accept the reorg plan under ch 11? who can confirm the plan?

A

2/3 of creditors and stockholders

court confirms

105
Q

What is the effect of the court’s final decree for ch 11 bankruptcy?

A

discharged from all debts and liabilities that arose before the confirmation of the plan, except as otherwise provided in the plan, the order of confirmation, or the Bankruptcy Code

106
Q

The voluntary filing of a petition in bankruptcy invokes:

A

automatic stay against all attempts to collect on most debts of the debtor

107
Q

What are the grounds for revoking the discharge of debts?

A

bad faith

108
Q

What are the trustee bankruptcy proceedings?

A

Transfer that:

(i) is made for the benefit of a creditor on account of an antecedent debt
(ii) is made within 90 days of the filing of the bankruptcy petition
(iii) is made while the debtor was insolvent (presumed within the 90-day period)
(iv) enables the creditor to get more than the creditor would have received in the bankruptcy proceeding

109
Q

What is a preferential payment?

A

transfer made to or for benefit of a creditor
on antecedent debt of debtor
made within 90 days prior to filing of petition (1 yr if creditor is insider)
made while debtor was insolvent
results in creditor receiving more than creditor would have received under Bankruptcy Code

110
Q

What is automatic stay?

A

Stops collection efforts
effective in voluntary and involuntary cases against creditors
does not apply to criminal prosecutions, paternity suits, and spousal/child support obligations

111
Q

What is trade acceptance?

A

“draft” drawn by the seller of goods on the buyer’s account

orders the buyer or his/her designee to make payment

112
Q

How is bearer paper negotiated?

A

Delivery alone

113
Q

What are the requirements for a holder in due course (HDC) ?

A

holder of the instrument
negotiable
take instrument in good faith without notice of any claims or defenses
give value for the instrument

114
Q

When is a noncompensated surety discharged from liability?

A

if the principal debtor and the creditor modify the terms of the contract in any way

115
Q

What are defenses of surety?

A 
CPRS
Creditor bad faith
Payment and tender of payment
Release of principal debtor
Surety's incapacity or bankruptcy
116
Q

What is exoneration?

A

suit to compel payment before surety pays creditor

117
Q

What is subrogation?

A

enforcement of creditor’s right against debtor

118
Q

What is reimbursement?

A

suit against principal debtor after payment (indemnification)

119
Q

What is creditor composition?

A

agreement between debtor and creditors that debtor pays creditors less than their full claims to fully satisfy claims (debtor discharged in full for debts)

120
Q

What is creditor assignment?

A

debtor transfers some or all of their property to a trustee who disposes of the property and uses proceeds to satisfy debtor’s debts (debtor not discharged since no creditor agreement)

121
Q

What is contribution and who has the right?

A

Right to co-surety

Sharing liability on pro-rata basis

122
Q

Who does the fair debt collection practices act apply to?

A

debt collection agencies

not creditor attempting to collect their own debts

123
Q

What is an “illegal per se” act?

A

one that is inherently illegal and without legal justification

124
Q

When is consent of all partners required in a partnership?

A

When engaging in activities outside normal course of business

125
Q

How can agency power arise?

A

grant of actual authority
apparent authority or estoppel
ratification

126
Q

What is the difference between express and implied actual authority?

A

express: oral/written instruction
implied: authority to do things reasonably necessary to carry out the agency

127
Q

How can an agency be terminated by operation of law?

A 
death
incapacity
discharge in bankruptcy
failure to acquire necessary license
destruction of subject matter
subsequent illegality
128
Q

When is the principal liable for agent’s torts?

A

When agent is an employee acting within the scope of employment

129
Q

What are the fundamental changes that require shareholder approval?

A

DAMS
Dissolution
Amendments to articles of incorporation
Mergers, consolidations, and share exchanges
Sale of substantially all corp’s assets outside regular business

130
Q

What are the reasons the corporate veil will be pierced?

A
  1. shareholders commingle personal and corporate funds
  2. corp inadequately capitalized
  3. committing fraud on existing creditors
131
Q

What items must be included in the articles of incorporation?

A

name of corp
registered agent name and address
incorporators’ names and addresses
number of shares authorized to be issued

132
Q

When can shareholders have the right to inspect books and records?

A

for any proper purpose

133
Q

What is included in a tombstone ad?

A

nature of the security, the price, and the availability of a prospectus

134
Q

What are the 5 elements of fraud?

A 
misrepresentation of a material fact
intent to deceive
actual and justifiable reliance on the misrepresentation
intent to induce reliance
damages
135
Q

When do the reporting requirements of the 1934 Act apply?

A 
shares traded on national exchange
at least 500 shareholders in any one class who are not accredited
more than $10 million in assets
136
Q

What is a novation?

A

agreement unchanged but one of the original parties is released and a new party is substituted into their place

137
Q

What is a substituted contract?

A

original parties both released from the original agreement but both bound by a new agreement

138
Q

What is necessary for a security interest to attach?

A

(i) agreement to create security interest with authenticated security agreement or the creditor possession/control of the collateral
(ii) creditor gives value
(iii) debtor rights in collateral

139
Q

What is the order of dissolution for a general partnership?

A

General partner loans.
Partners’ capital accounts.
General partners’ profits.

140
Q

Under law of agency, when is a writing required?

A

purchase/sale of land

impossible to perform duties within 1 yr

141
Q

What is the statute of limitations for section 11 of securities act of 1933?

A

one year after the discovery of the untrue statement or omission and within three years of the offering date

142
Q

When a CPA breaches contract, what is the 3rd beneficiary entitled to receive?

A

monetary damages

143
Q

What is the difference in liability between gross negligence and negligence?

A

Gross: liable to all plaintiffs
Ordinary: liability limited to clients and persons whom the CPA knew would be relying

144
Q

When are exempt securities subject to liability under the 1933 act?

A

When material misrepresentations exist

145
Q

When does 10b-5 under the 1934 act apply?

A

wrongful act occurred through interstate commerce or via a national securities exchange

146
Q

What right does a purchaser have under section 12 of the 1933 Act if the issuer fails to meet disclosure requirements?

A

right to rescind (sell back to issuer and recover price paid)

147
Q

What is a marketed opinion?

A

advice that will be used to promote, market, or sell a partnership, investment plan, or arrangement

148
Q

What type of transaction is a listed transaction?

A

tax avoidance transaction

149
Q

What is included in the SOX ethical requirements?

A

Compliance with laws, rules, and regulations
Prompt internal reporting of code provisions and accountability for adherence to the code.
Honest and ethical conduct.
Full, fair, accurate, and timely disclosure in periodic financial statements.

150
Q

What do the requirements under the securities act of 1933 help the SEC do?

A

Ensure investors are provided with adequate information for investment decisions

151
Q

What registration does regulation A (securities) require?

A

Offering stmt: notification and offering circular

152
Q

When does Anticipatory repudiation occur?

A

when either the buyer or the seller indicates in advance of performance that he or she will not perform

153
Q

What happens to title when buyer correctly rejects non-conforming goods?

A

title to the goods reverts to seller

154
Q

What type of mistake makes a contract unenforceable and allows to be rescinded?

A

Mutual misstatement of fact

155
Q

What is implied in an assignment?

A

Assignor does not know of anything that would impair the value of the assignment

156
Q

failing to have what type of license renders a contract void?

A

license to protect public

157
Q

What signatures are required under the statute of frauds?

A

signature of party to be charged

NOT all parties

158
Q

Which party always bears the risk of loss in a breach?

A

Breaching party

159
Q

Under UCC, when do contract for the sale of goods have to be in writing?

A

= or > $500

160
Q

Under the UCC pertaining to shipment contracts, title to the goods passes to the buyer when what?

A

the goods are delivered to a common carrier

rule applies even when the goods are nonconforming goods

161
Q

prevail in a common law action for innocent misrepresentation, the plaintiff must prove

A

proof of a material misrepresentation of fact
intent to reduce reliance
actual and justifiable reliance by the contracting party
damages

162
Q

When is no written security agreement required?

A

When creditor takes possession of secured collateral

163
Q

When is an endorsement special? restrictive? qualified?

A

specifies person to whom payable

“for collection”

“without recourse”

164
Q

What does striking a prior endorser’s name do?

A

Discharges endorser’s liability to all people who take instrument after signature is striken

165
Q

What can a party successfully defending an involuntary bankruptcy petition received?

A

Court costs
attorney fees
compensatory damages
punitive damages (if bad faith)

166
Q

Who is the party to whom a check is presented for payment?

A

Drawee

167
Q

Who is a security interest effective against before it attaches to collateral?

A

No one

168
Q

When is a debtor denied a discharge in bankruptcy (ch 7)?

A

if refuses to explain satisfactorily a loss of assets

169
Q

What is the creditors’ committee in a ch 11 reorg made up of?

A

unsecured creditors

170
Q

What happens to a corp or p-ship in ch 7 bankruptcy? individual?

A

dissolved

discharged

171
Q

What type of liability is negated by endorsing a negotiable instrument without recourse?

A

Contract liability

NOT warranty liability

172
Q

When there are conflicting perfected security interests in the same collateral, where does priority go?

A

First to file or perfect

173
Q

What type of income is taxable under FICA?

A

wages/salary or substitute

174
Q

How long does promoter have liability for incorporation?

A

until corp assumes debts in novation

175
Q

What is ratification?

A

principal’s affirmation of agent’s unauthorized act

176
Q

What discharges a surety?

A

Full payment of obligation

177
Q

When is a CTR (currency transaction report) required? record keeping requirements?

A

non-exempt transaction with financial institution over $10,000

$3,000 to 10,000 transaction

178
Q

When is an agent personally liable? not liable?

A

principal not disclosed

principal disclosed

179
Q

Under Dodd-Frank, before liquidating a financial institution, the FDIC must determine that

A

liquidation is necessary for U.S. financial stability

180
Q

What is required for the promise to pay another’s debt to be enforceable? (surety)

A

signed and in writing

181
Q

When is authorization of all partners in a general partnership required?

A

When activity is outside ordinary scope of business

182
Q

What action by principal debtor completely releases both types of surety?

A

tender of performance

183
Q

When must a CTR (currency transaction report) be filed after date of qualifying transaction?

A

15 days

184
Q

What medical thing is included with Social Security?

A

Medicare NOT medicaid

185
Q

What can a general partner in a partnership assign rights to?

A

distributions NOT partnership assets

186
Q

What is a composition of creditors?

A

an agreement between a debtor and at least two creditors that the creditors will take less than full payment to discharge the debts owed by the debtor to the creditors who participate in the composition agreement

187
Q

What is a co-surety entitled to that a surety is not?

A

Contribution

188
Q

What is the general partnership order of distribution?

A

general partner loans
capital accounts
profits

189
Q

Who can terminate the agency relationship if agency is coupled with interest?

A

agency ONLY

190
Q

Which partners have the right to inspect partnership’s books and records?

A

every partner - active and inactive

191
Q

What must an LLC file with the secretary of state?

A

Articles of Organization

192
Q

What is exoneration?

A

right of surety to get a court order prior to payment demanding debtor pay

193
Q

What is accord and satisfaction?

A

both parties agree to new terms that vary from the original contract such that fulfilling the terms of the new agreement will discharge the old agreement completely, it is an accord
When the agreement is fulfilled, the fulfillment is called a satisfaction

194
Q

When is a gratuitous surety released?

A

creditor commits fraud
duress or breach
surety lacks capacity or goes bankrupt
material change without the surety’s consent

195
Q

When can agency relationship be terminated?

A

Either party generally has the power to terminate the relationship at will, but they may be liable for damages if the termination breached the contract between the parties

196
Q

Nondischargeable debts include

A 
certain taxes
debts incurred by fraud
unscheduled debts
debts arising from crimes, fines and penalties
alimony/child support debts
student loans
197
Q

Legal fees for preparation of a will are

A

not deductible

198
Q

What is the difference between fraud in the inducement vs. execution?

A

inducement: person knows what they’re doing, but are tricked
execution: person does not know what they’re doing

199
Q

What individual debts are not discharged under ch 7 or 11 bankruptcy?

A 
WAFTED
Willful and malicious injury (ex. Operating vehicle while intoxicated)
Alimony
Fines and Fraud
Taxes (due within 3 years of filing)
Educational loans and Embezzlement
Debts undisclosed in bankruptcy petition
200
Q

What is a preferential transfer?

A

transfer made to or for benefit of a creditor
on antecedent debt of debtor
made within 90 days prior to filing of petition (1 yr if creditor is insider)
made while debtor was insolvent
results in creditor receiving more than creditor would have received under Bankruptcy Code

201
Q

A party who successfully defends an involuntary bankruptcy petition is entitled to receive

A

court costs, attorney’s fees, compensatory damages, and if the petition was filed in bad faith, punitive damage

202
Q

What are main objections to discharge under ch 7?

A

debtor not individual
fraudulent transfers
unjustifiably failed to keep books and records
prior discharge within 8 yrs
bankruptcy crime
failure to explain loss of assets
refusal to obey orders or answer questions

REG (2 decks)

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