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REG > R7&8 > Flashcards

R7&8 Flashcards

1
Q

What is a private offering? And what are the conditions to rules 504 and 506?

A

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

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2
Q

What happens if the partnership dissolves and partner has negative account?

A

If a partner has a negative capital account when the partnership is dissolved, the partner must contribute enough to make up for the shortfall.

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3
Q

What is one type of instrument that is not a security?

A

Certificate of deposit

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4
Q

What is similar between the formation of a corporation and Limited partnership?

A

Both can be formed only with filing with state authorities.. articles of incorporation

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5
Q

What creates an express warranty?

A

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

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6
Q

According to the UCC, when is risk of loss passed?

A

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.

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7
Q

How are profits shared in a partnership?

A

In the absence of an agreement to the contrary, the profits will be shared equally regardless of investment of money or time.

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8
Q

What type of company may not go into bankruptcy, voluntary or involuntary?

A

Insurance

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9
Q

What type of security is exempt from 1933 Securities Act?

A

Class of stock given in exchange for another class by the issuer to its existing stockholders w/o the issuers paying a commission

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10
Q

What are the 2 parts of a registration statement?

A

Part I - prospectus

Part II - other information about the securities being issued

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11
Q

What must be included in a security agreement?

A
  • name and address of debtor
  • description of collateral
  • debtors authentication
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12
Q

What is the rule in becoming a partner?

A

One may become a partner only with the consent of all other partners

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13
Q

What must be included in the contract of writing to be an enforceable contract for sale of goods

A

specifying the quantity of the goods

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14
Q

What is included in an tombstone ad?

A

Nature of security
the price
availability of a prospectus

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15
Q

What will disregard the limited liability of the shareholders

A

Undercaptialized the corporation when it was formed

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16
Q

What is not covered by workers comp?

A

Full pay during disability

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17
Q

Who is a disclosed principal liable to for agents unauthorized misrepresentations?

A

Employee, not independent contractor

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18
Q

Define Specific performance

A

court order to fulfill the terms of contract… if no contractual agreement–> no contractual terms to fulfill

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19
Q

What are the ways that a minor can ratify a contract?

A
  1. Expressly ratifying the contract after reaching the age of majority
  2. Failing to disaffirm the contract within a reasonable time after reaching the age of majority
  3. Impliedly ratifying the contract after reaching the age of majority
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20
Q

How is FUTA administrated through the states?

A

through state employment laws

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21
Q

Under chapter 11 who are the creditors committee composed of?

A

secured creditors

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22
Q

What is the general partnership not liable for in a partnership?

A

not liable for personal liability, on liabilities of the partnership

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23
Q

in what circumstance will Ch 7 deny a debtor a discharge?

A

When the debtor is a corp or pship

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24
Q

Under Ch 11 what is a result of a reorganization plan?

A

The courts final decree results in a discharge of all debts and liabilities that arose before confirmation of the plan.

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25
Q

What is the max percentage that an employer may take credit against the futa tax?

A

5.4%

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26
Q

What is included in a Bankruptcy estate?

A

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)

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27
Q

What is a composition of creditiors

A

an agreement between a debtor and at least 2 creditors that the creditors will take less than full payment to discharge debts owed

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28
Q

What is a requirement of a merger of 2 corportions?

A

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

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29
Q

What will release a buyer from all its obligations under a sales contract?

A

Failure to give adequate assurances when reasonably demanded is a form of anticipatory repudiation. Constitutes a breach and discharges the buyer

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30
Q

What is the warranty of merchantability?

A

arises as a matter of law when the seller ordinarily sells the goods purchased

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31
Q

What is a joint venture

A

association of persons engaged as co-owners in a single undertaking for profit.

32
Q

What are preemptive rights?

A

The right to purchase new issuances of additional stock in order to maintain current proportional ownership

33
Q

What are the 2 ways that purchase money security interest for interest?

A
  1. creditor sells inventory to the debtor on credit and retains a security interest for the purchase price
  2. creditor lends money to the debtor so that the debtor so the debtor can purchase inventory
34
Q

What excluded in secured transactions article?

A

landlord lien, assignment of claim for wages, sale of chattel paper as part of sale of business out of which it arose

35
Q

What does a co-surety entitled to?

A

Co- surety only has the right of contribution against other co-sureties

36
Q

What is one way that will totally release of a compensated surety?

A

Tender performance by the principal debtor

37
Q

Define undue influence

A

When a person in a position of trust or confidence takes unfair advantage of the relationship

38
Q

When is a liquidated clause enforceable?

A

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

39
Q

When is attachment autoperfected?

A

PMSI is auto perfected if the item purchased is a consumer good

40
Q

What secured transaction document must be signed by the debtor?

A

Security agreement

41
Q

Define Fraud in the inducement

A

victim was deceived as to the reason for the transaction

42
Q

When does the risk of loss transfer on a sale on approval?

A

risk of loss passes to the buyer on the approval of goods (goods are accepted after the trial period

43
Q

What are the rules for involuntary petition?

A

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

44
Q

What does the FDCPA constitute as a way to collection debt?

A

forgives parties injured by unfair collection practices the right to sue under a Civil law suit for damages who violate the Act.

45
Q

What are the reporting requirements of the 1934 Securities Exchange Act for any company?

A
  1. 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

46
Q

What 3 things must be reported to the SEC under the 1934 Act?

A

Tender offers, Insider Trading, Soliciting proxies

47
Q

Define Subrogation

A

the right a surety has in which the surety succeeds to the creditors rights against the principal when the surety pays the principals obligations.

48
Q

What happens to contracts entered when a person was adjudicated mentally incompetent?

A

all contracts are void

49
Q

Who are considered an insider of a corporation?

A

officers, directors, and more than 10% stockholders are required to register and report under 1934 act. this also includes attorneys

50
Q

What does a party who files a security interest have superior interest than?

A

Superior interest that sequential judicial liens

51
Q

What are the requirements of a firm offer?

A
  1. sale of goods
  2. seller was a merchant
  3. was in writing and signed by merchant
52
Q

What is an example of a good that is valued more than $500 that is unenfoceable?

A

Works of art

53
Q

What happens when a General partner dies in a limited pship?

A

dissolve by operation of law, limited partners do not automatically become GP as result

54
Q

What happens when goods are nonconforming? who bears risk of loss?

A

considered breach of contract and risk of loss is borne by breaching part

55
Q

What happens in a sale of real property is breached?

A

Nonbreaching party can either recover compensatory damages or specific performance

56
Q

Who gets paid out first in a dissolution of a limited partnership?

A

creditors

57
Q

What does the antifruad provision (10-b) of the 1934 act require?

A

Requires that the wrongful act must be accomplished through mail, any other use of interstate commerce or through nation securities exchange

58
Q

What kind of liens require notice to the owner of the property in most states?

A

mechanics and artisan loans

59
Q

When is a promoter relieved of personal liability?

A

only when there is a novation (requires agreement by all parties to substitute the corporation for the promoter.

60
Q

Define warranty of title

A

Provides that the seller deliver the goods from any lien of which the buyer lacked knowledge when the contract was made

61
Q

Who is specifically excluded from relief under chapter 11?

A

Stockbrokers

62
Q

What remedies are available to a principal when an agent fraudulently breaches a fiduciary duty?

A

Termination of the agency and constructive trust

63
Q

What is the rule of the “confirmation memo” in the UCC?

A

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)

64
Q

What is the rule of investors under 1933 Act?

A

There can be no more than 35 unaccredited investors under 506 offering.

65
Q

What business entity can be voluntary dissolved and terminated with filing state or organization?

A

Corporation

66
Q

What does an agent not have implied authority to do?

A

Sell principals business fixtures

67
Q

In terms of the sale of real estate, does the Statue of frauds require the agreement to be signed?

A

No, does not need to be signed by any party

68
Q

What can a party recover under involuntarily petition bankruptcy who succeeds in having petition dimissed?

A

They can recover court costs, attorney fees, compensatory damages, punitive damages

69
Q

T/F : A sole proprietorship can be formed without filing with the state?

A

True

70
Q

How will an agent apparent authority cease without a notice?

A

When the principal has received a discharge in bankruptcy

71
Q

Who bears the risk of loss in a sale and return contract?

A

buyer has title and risk of loss unless and until goods are returned to seller

72
Q

What will cause a discharge of contractual duties by operation of law?

A

Impossibility of performance (no one can perform)

73
Q

What is an example of a corporate equity security?

A

A share of callable preferred stock. (all types of stock are considered equity securities

74
Q

What is a limited liability partner not liable for?

A

Not personal liable for the negligent actions committed by his partners

75
Q

What document do you have to file to form LLC?

A

Articles of Organization

76
Q

What is a defense a surety would be able to assert to limit the surety’s liability to a creditor?

A

The incapacity of ther surety

REG (16 decks)

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