Business Law For Accountants Flashcards
(297 cards)
1
Q
What are the 4 primary sources of law?
A
- US Constitution
- Statutory law
- Regulations created by administrative agencies
- Case law and common law doctrines
2
Q
What are secondary sources of law?
A
Books and articles that summarize and clarify primary sources - Ex. Legal encyclopedias
3
Q
Constitutional Law
A
Law that is based on the constitution
4
Q
What is the 10th amendment?
A
the Federal Government only has those powers delegated in the Constitution - otherwise, they are reserved to the states l
5
Q
Statutory law
A
Laws enacted by legislative bodies as opposed to constitutional law, admin law, or case law - includes local ordinances
6
Q
Uniform laws
A
Act that seeks to establish the same law on a subject among various jurisdictions
7
Q
When does a uniform law become part of the statutory law?
A
Only if a state legislature adopts it
8
Q
Administrative law
A
Consists of rules, orders, and decisions of administrative agencies
9
Q
Independent regulatory agencies
A
Not considered part of executive branch and is not subject to the authority of the president
10
Q
Can independent regulatory agencies be removed without cause?
A
No
11
Q
Case law
A
Governs all areas not covered by other law.
12
Q
Common law
A
Body of law developed from judicial decisions - not attributable to a legislature
13
Q
Remedies
A
Relief given to an innocent party to enforce a right or compensate for violation of a right
14
Q
Types of remedies
A
Land
Items of value
Money
15
Q
Courts of law
A
Court which the only remedies that can be granted are things of value - distinct from courts of equity
16
Q
Courts of equity
A
A court that decides controversies and administers justice accordingly
17
Q
Remedies in equity
A
Remedy allowed by courts in situations where remedies at law are not appropriate - include:
Injunction
Specific performance
Rescission
Restitution
Reformation
18
Q
Specific performance
A
Ordering a party to perform an agreement as promised
19
Q
Injunction
A
Order to a party to cease engaging in specific activity or to undo some wrong
20
Q
Rescission
A
Cancellation of a contractual obligation
21
Q
Equitable maxims
A
Propositions of law that have to do with fairness
22
Q
Common equitable maxims
A
- Whoever seeks equity must do equity
- Where there is equal equity, the law must prevail
- One seeking the aid of an equity court, must come to the court with clean hands
23
Q
Laches
A
The equitable doctrine, that bars a parties right to legal action, if the party has neglected for an unreasonable length of time to act on their rights
24
Q
Defendant
A
Party being sued
25
Plaintiff
Suing party
26
Statutes of limitations
A federal or state statute, setting the maximum time period during which a certain action can be brought or certain rights enforced
27
Action at law vs. action in equity: Initiation of a lawsuit
Law: filing complaint
Equity: filing petition
28
Action at law vs. action in equity: Decision
Law: judge or jury
Equity: judge, no jury
29
Action at law vs. action in equity: result
Law: judgement
Equity: decree
30
Action at law vs. action in equity: remedy
Law: monetary damages or property
Equity: injunction, specific performance, or rescission
31
Precedent
Court decision that furnishes an example for deciding subsequent cases with similar facts
32
Stare decisis
Common law doctrine under which judges are obligated to follow precedents established in prior decisions within their jurisdictions
33
What are the 2 aspects of stare decisis?
1. A court should not overturn its own precedents unless there is a compelling reason to do so
2. Decisions made by a higher court are binding on lower courts
34
Binding authority
Any source of law that a court must follow when deciding a case
35
What are included in binding authorities?
Constitutions
Statutes
Regulations that govern the issue being decided
36
Cases of first impression
Cases for which no precedent exists
37
Persuasive authorities
Any legal authority or source of law that a court may look to for guidance, but need not follow in making its decision
38
IRAC
Issue - what are they key facts and issues?
Rule - what rule of law applies to the case?
Application - how does the rule of law apply to the case?
Conclusion - what conclusion should be drawn?
39
Cases on point
Previous case involving factual circumstances and issues that are similar to those in the case before the court
40
Substantive law
All laws that define, describe, regulate, and create legal rights and obligations
41
Procedural law
Enforcement of substantive law
42
Civil law
The branch of law, dealing with the definition and enforcement of all private or public rights, as opposed to criminal matters
43
Criminal law
The branch of law that defines and punishes wrongful actions committed against the public
44
Cyber law
An informal term used to refer to all laws, governing electronic communications and transactions
45
United States code (USC)
Arranges all existing federal laws by assigning each 52 subjects a title and title number
46
Trial courts
Evidence presented and testimony given are on the bottom tier
47
Court of appeals (appellate court)
Decisions made from intermediate courts may be appealed to an even higher court
48
Case citations
After appellate decisions have been published, they are cited by name of the case and the volume, name, and page number of the reporters opinion
49
Appellant (petitioner)
Party appealing the case
50
Appellee (respondent)
Party against whom the appeal is taken
51
Concurring opinion
Court opinion by one or more judges or justices who agree with the majority, but want to make or emphasize a point that was not made in the majority opinion
52
Dissenting opinion
Core opinion that presents the views of one or more judges or justices, who disagreed with the majority decision
53
Per Curiam opinion
A court opinion written by the court as a whole instead of being offered by a judge or justice
54
Triple asterisk
Deleted words or phrases for the sake of brevity
55
Quadruple asterisk
Entire paragraph has been omitted
56
Federal form of government
A system of government in which the states form a union, and the sovereign power is divided between a central government and the member states
57
Sovereignty
The quality of having independent authority over a geographic area
58
Police powers
Powers possessed by states as part of their inherent sovereignty
59
Privileges and immunities clause
Clause in article 5 of the US Constitution that requires states not to discriminate against one another citizens
60
Full faith and credit clause
A clause in article 5 of the US Constitution that ensures that the rights established under deeds, wills, contracts, etc. and will be honored by the other states
61
Checks and balances
The system in which each of the three branches of the US national government exercise checks on the powers of the other branches
62
Commerce clause
provision in article 1 of the US constitution that gives Congress the power to regulate interstate commerce
63
Where can you find the constitutional authority that congress has to regulate commerce?
Commerce clause of the constitution
64
What is the rule of law with respect to congresses power to regulate local business activities?
Congress can regulate interstate activities and also local activities, provided that the latter have some affect on interstate commerce
65
Dormant commerce clause
The prohibition against states passing legislation that discriminated against or excessively burdens interstate commerce
66
Supremacy clause
Provides that the constitution, laws, and treaties of the United States are “the supreme law of the land”
When there is a direct conflict between federal and state law, the state law is rendered invalid
67
Preemption
A doctrine under which certain federal laws preempt, or take precedence over conflicting state or local laws
68
Bill of rights
The first 10 amendments to the US Constitution
69
Symbolic speech
Nonverbal expressions of opinions or thoughts about a subject - protected under the first amendment, guarantee of freedom of speech
70
Content neutral laws
Laws that regulate the time, manner, and place – but not the content
71
Compelling government interest
A test of constitutionality that requires the government to have compelling reasons for passing any laws that restrict fundamental rights
72
Unprotected speech
Fighting words, or words that are likely to incite others to respond violently – also includes defamatory speech
73
Establishment clause
Provision in the first amendment of the US constitution that prohibits Congress from establishing a state sponsored religion, as well as from passing laws that promote religion, or show a preference for one religion over another
74
Free exercise clause
Provision in the first amendment to the US Constitution that prohibits Congress for making any law prohibiting the free exercise of religion
75
Public welfare exception
When religious practices work against Public policy in the public welfare, the government can act.
Ex. Requirement that a child receive certain types of vaccinations or medical treatment if their is in danger regardless of child or parents, religious beliefs.
76
Due process clause
Provisions of the fifth and 14th amendments to the US Constitution that guarantee that no person shall be deprived of life, liberty, or property, without due process of law
77
Procedural due process
Requires that any government decision
must give a person proper notice, and an opportunity to be heard
78
Substantive due process
limits what the government may do in it’s legislative and executive capacities – must be fair and further a legitimate governmental objective
79
Equal protection clause
Provision in the 14th amendment to the US Constitution guarantees that no state will deny any person within its jurisdiction, the equal protection of the laws
80
Strict scrutiny
States that if a law or action prohibits or inhibits a person from exercising a fundamental right, the law or action will be subject by the courts
81
Intermediate scrutiny
Applied in cases involving discrimination based on gender or legitimacy – laws using these classifications must be substantially related to important governmental objectives
82
Freedom of information act 1966
Provides the individuals have a right to obtain access to information about them collected in government files
83
Privacy act of 1974
Protects the privacy of individuals about whom the federal government has information
84
Electronic communications privacy act of 1986
Prohibits the interception of information communicated by electronic means
85
Health insurance, portability, and accountability act of 1996
HIPPA
86
USA patriot act
Gives government officials increased authority to monitor Internet activities, and to gain access to personal financial information and student information
87
IDDR Framework
Inquiry
Discussion
Decision
Review
88
Moral minimum
The minimum degree of ethical behavior expected of a business firm, which is usually defined as compliance with the law
89
Triple bottom line
The idea that investors and others should consider not only corporate profits, but also the corporations impact on people in on the planet, when assessing the firm – people, planet, profits
90
Duty based ethics
An ethical philosophy, rooted in the idea that every person has certain duties to others
CANT WORRY ABOUT CONSEQUENCES, I JUST HAVE TO DO MY DUTY
91
Outcome based ethics
THE RIGHT THING TO DO PRODUCES A BETTER WORLD OR THE ACTION AT HAND WILL NOT LEAD TO A BETTER WORLD
92
Principle of rights/rights theory
The principle that human beings have certain fundamental rights
93
Categorical imperative
Concept developed by the philosopher Immanuel Kant as an ethical guideline for behavior
94
Cost benefit analysis
A decision making technique that involves weighing the cost of a given action against the benefits of the action
95
Corporate social responsibility/CSR
The concept of corporations can, and should act ethically and be accountable to society for their actions
96
Short-run profit maximization
Company may increase its profits by continuing to sell a product, even though it knows that the product is defective
97
Trademark
A type of intellectual property that identifies a product
98
Dilution
the name or logo is being used but the product itself is not
99
Trademark dilution revision act, TDRA
Allows trademark owners to bring suits in federal courts
100
Under TDRA what must a plaintiff prove?
- That they own a famous trademark
- That the defendant has begun using the mark in commerce
- The similarities between the defendants and owners mark
- The association is likely to impair the distinctiveness of the famous mark, or harm its reputation
101
When can a trademark be filed for patent?
- if it is currently in commerce
- if the applicant intends to put it into commerce within the next 6 months
102
Lanham act
Prohibits, trademark infringement, trademark dilution, and false advertising
103
Strong marks
Fanciful, arbitrary, or suggestive trademarks
104
Fanciful and arbitrary trademarks
Fanciful = invented words (Google for search engine)
Arbitrary = uses common words in an uncommon way (Dutch boy as a paint name)
105
Suggestive trademarks
Indicate some thing about a products, name, quality, or characteristics, without describing the product directly (Ex. Dairy Queen suggest use of dairy but not ice cream directly
106
Generic terms
Refers to an entire class of products, such as bicycle and computer, and receive no protection, even if they acquire secondary meanings
107
Service Mark
A mark used in the sale or the advertising of services, such as to distinguish the services of one person from the services of others (airlines)
108
Certification mark
Mark used by one or more persons, other than the owner to certify the region, materials, motive, manufacture, quality, or accuracy of the owners, goods or services (Ex. Seal of approval etc)
109
Collective mark
Mark used by members of a Cooperative Association or other organization to certify the region, materials, motive, manufacture, quality, or accuracy of the specific goods or services (Ex. Credits on movies)
110
Trade dress
Refers to the image, an overall appearance of a product
111
What does SCMGA stand for?
Stop counterfeiting in manufactured goods act
112
License
Permitting the use of a trademark, copyright, patent, or trade secret for certain purposes
113
What is a patent?
A grant from the government gives an inventor, the exclusive right to make, use, or sell their invention for a period of 20 years
114
What is patentable?
Anything excepts laws of nature, natural phenomenon, and abstract ideas, including algorithms
115
Copyright
An intangible property, right granted by federal statute to the author, or originator of a literary or artistic production of a specific type
116
What are copyright owners protected against?
- reproduction of work
- development of derivative rights
- distribution
- public display
117
The first sale doctrine
Gives owners of copyrighted works the rights to sell, lend, or share their copies without having to obtain permission (Ex. Students reselling textbooks at the end of a semester)
118
What are the 3 elements necessary for an offer to be effective?
1. Offerer must have serious intention to become bound by offer
2. Terms of the offer must be reasonably certain so that parties and court can ascertain the terms of the contract
3. Offer must be communicated
119
What are some questionable situations of intent lacking?
- expressions of opinion
- statements of future intent
- preliminary negotiations
- invitations to bid
- advertisements
- live and online auctions
120
What terms are required in a contract?
- identification of parties
- identification of the object or subject matter
- consideration to be paid
- time of payment, delivery, or performance
121
Revocation
The withdrawal of an offer by an offerer
122
2 ways in which revocation can be accomplished
1. Express repudiation of the offer (I withdraw)
2. Performance of acts that are inconsistent with the existence of the offer and are made known to the offeree
123
Option contract
Contract under which the offerer cannot revoke their offer for a stipulated time period and the offeree can accept or reject the offer at any time
124
Termination by operation of law
1. Lapse of time
2. Destruction of the specific subject matter
3. Death or incompetence by either party
4. Supervening illegality of the proposed contract
125
Unequivocal acceptance
Mirror image rule where an offer must be accepted exactly with no modifications
126
Mailbox rule / deposited acceptance rule
Rule providing that an acceptance of an offer becomes effective on dispatch
127
Consideration
The value given in return for a promise or performance - the inducement, price, or motive that causes a party to enter an agreement
128
In order to be legally sufficient, what 2 parts must be included in the consideration?
- something of legal value
- a bargained-for exchange
129
Rescission
Unmaking of contract so as to return the parties to position they occupied before the contract was made
130
Past consideration
Something given or some act done in the past which cannot ordinarily be consideration for a later bargain
131
Illusory promises
A promise that is unenforceable due to indefiniteness (Ex. I’ll give you $10 if I feel like it)
132
Accord and satisfaction
When a debtor offers to pay and a creditor accepts a lesser amount than the creditor originally claimed was owed.
Accord = agreement
Satisfaction = performance
133
Liquidated debt
A debt that is due and certain in amount
134
Unliquidated debt
A debt that is uncertain in amount
135
Release
Contract in which one party forfeits the right to pursue a legal claim against the other party
136
Requirements for a binding release
- agreement is made in good faith
- release contract is in a signed writing
- contract is accompanied by consideration
137
Covenant not to sue
legal agreement in which the party seeking damages agrees not to sue the party against which it has cause to sue
138
Promissory estoppel / detrimental reliance
legal doctrine that says parties may be liable for broken promises that result in financial harm
139
What are the 5 requirements for the promissory estoppel doctrine to be applied?
1. There must be a clear and definite promise
2. Promisee relied on the promise
3. Promisee suffered significant damage by relying on the promise
4. Fulfillment of the promise is the only way the promisee can be compensated
5. promisee’s reliance on the promise must be both reasonable and foreseeable
140
Contractual capacity
The ability of an individual to enter into a binding legal contract, and in so doing bind themselves to the obligations and consequences of said contract
141
Disaffirmance
the legal right for one party to renounce a contract
142
Usury
Charging an illegal rate of interest
143
Contracts in restraint of trade
Any action or agreement restricting free market competition
144
Reformation
A court ordered correction of a written contract so that it reflects the true intentions of the parties
145
Unconscionable
Contract whose terms are extremely one-sided and fundamentally unfair
146
Statute of frauds
A state statute, under which certain types of contracts must be in writing to be enforceable
147
What types of contracts are generally require to be in writing?
- real estate
- contracts that cannot be performed within one year from the signage date
- agreements to pay others debts
- Promises made in consideration of marriage
- Contracts for the sale of good priced at $500 or more
148
Privity of contract
Provides that a contract cannot own rights or impose obligations upon anyone who is not a party to the contract
149
Exceptions to delegation of rights
- delegating would materially change the obligation of the obligor
- materially burden the obligor
- increase obligor’s risk
- statute policy forbids the assignment
- contract itself precludes assignment.
150
Third-party beneficiary
One for whose benefit a promise is made in a contract, but who is not a party to the contract
151
Predominant factor test
A test that courts use to determine whether a contract is primarily for the sale of goods or for the sale of services
152
Uniform commercial code (UCC)
A comprehensive set of laws governing all commercial transactions of GOODS in the US
153
Requirements contract
An agreement in which the seller agrees to sell all or up to a stated amount of what the buyer needs
154
Output contract
an agreement where one party agrees to buy the entire output of the other party, even when the buyer doesn't require that many goods
155
Firm offer
An offer by a merchant that is irrevocable, without consideration for a period of time, and must be in writing and signed by the offeror
156
What are the 3 exceptions to the writing requirements of the statute of frauds?
1. Specially manufactured goods
2. Admissions
3. Partial performance
157
Mechanics lien
Statutory lien created to ensure payment for work performed (Ex. Building)
158
Artisan’s lien
Lien that permits a worker to retain possession of an item until it is paid for
159
Writ of attachment
A court order prior to trial, directing seizure of nonexempt property
160
Creditors composition agreements
Agreement formed between a debtor and creditor where the creditors agreed to accept a lesser than owed sum in satisfaction of the debt
161
Suretyship
Express contract in which third party promises to be primarily responsible for the debtors obligation AS SOON AS THE BORROWER DEFAULTS
162
Guarantor
Person who agrees to satisfy the debt of another only after the principal debtor defaults - ONLY HAS TO PAY AFTER EVERY OTHER LEGAL REMEDY HAS BEEN EXHAUSTED
163
Right of subrogation
A right held by most insurance carriers to legally pursue a third party that caused an insurance loss to the insured (insurance pays doctors treatment to you in an accident that wasn’t your fault)
164
Right of reimbursement
the right of a third party, like a health insurance company, to seek reimbursement from your settlement or judgment when another party is at fault.
165
Prepayment penalty clause
Provision in a mortgage loan contract that requires the borrower to pay a penalty if the mortgage is repaid in full within a certain period
166
Short sale
Sale of real property for an amount that is less than the balance owed on the mortgage loan
167
Homestead exemption
Law prohibiting a creditor to cease the family home in the event of bankruptcy
168
What are the two main goals of bankruptcy law in the US?
1. Protect a debtor by giving them a fresh start without creditor claims
2. Ensure equitable treatment of creditors who are competing for debtor assets
169
Consumer-debtor
One whose debts result primarily from the purchase of goods for personal or household use
170
Automatic stay
Suspension of all actions by creditors against the debtor while in bankruptcy proceedings
171
Adequate protection doctrine
Protects secured creditors from losing their security as a result of an automatic stay
172
Debtor in possession (DIP)
Debtor who is allowed to continue possession of the business and to continue business operations
173
Sole proprietorship
Simplest form of business where the owner is the business
174
Pass through entity
Business entity that has no tax liability
175
Limited liability company (LLC)
Hybrid form of business that only risks their investment but runs like a sole proprietor or general partnership
176
Articles of organization
Document that is filed when an LLC is formed
177
Limited partnership - LP
Partnership consisting of one or more partners and one or more limited partners
178
General partner
Partner who assumes responsibility for the management of the partnership and assumes full liability for the partnership debts
179
Limited partner
Partner who contributes capital but has no right to participate in management and has no liability for any debts outside of their investments
180
Limited liability limited partnership - LLLP
Type of limited partnership which the liability of the general partner is the same as the liability of the limited partners - only responsible for their investments
181
Retained earnings
Portion of a corporations profits that has not been paid out as dividends
182
Publicly held corporation
Corporation whose shares are publicly traded in security markets
183
Public corporation
Corporation owned by a federal state or municipal government
184
S corporation
small and simple - can choose to be taxed differently - corp pays no taxes but promise that all profits flow to shareholders
185
Benefit corporation
For profit corporation that seeks to have a material positive impact on society and the environment
186
Articles of incorporation
Document that is filed when a business is incorporated and that contains basic info about the corporation
187
Venture capital
Capital provided to new businesses by professional, outside investors
188
Ultra vires
Acting or done beyond one’s legal power
189
Piercing the corporate veil
The action of a court to disregard the corporate entity and hold the shareholders personally liable for corporate debts and obligations
190
Quorum
Number of members of a decision making body that must be present before business may be transacted
191
Business judgement role
A rule under which courts will not hold corporate officers and directors liable for honest mistakes of judgement and bad business decisions that were made in good faith
192
Fiduciary
someone who manages money or property for someone else
193
Express authority
Authority declared in clear definite terms
194
Equal dignity rule
Legal doctrine stating an agent operating on behalf of someone must have in writing their express authority to enter into contracts
195
Multiple product order
An order requiring a firm that has engaged in deceptive advertising to cease and desist from false advertising in regard to all the businesses products
196
Cooling off laws
Laws that allow buyers of goods sold in certain transactions to cancel their contracts within three business days
197
Regulation Z
Extension of the Truth in Lending Act
198
Truth In Lending Act (TILA)
Requires sellers and lenders to disclose credit terms and loan terms so that individuals can shop around for the best financing arrangements
199
Fair Debt Collection Practices Act (FDCPA)
Attempts to curb perceived abuses by collection agencies
200
Securities Act of 1933
Governs initial sales of stock by businesses
201
Prospectus
written document that provides all material information about an offering of securities
202
Short swing profits
Profits earned by a purchase and sale of the same security within a 6 month period
203
Corporate governance
The relationship between a corporation and its shareholders
204
What source of law is considered primary?
Common law doctrine
205
What is the purpose of the UCC?
Reduce difficulties for businesses conducting trade and commerce
206
What type of speech is unprotected?
Obscene speech
207
What is a characteristic of a legal claim?
Remedy is usually monetary damages
208
What is a requirement of a private company’s code of conduct?
It indicates how employees should act
209
What is a characteristic of outcome-based ethics?
It focuses on consequences of an action
210
What kind of mark is “cheesy” in connection with a spa company?
Arbitrary
211
What are examples of intellectual property?
Books and music
212
Which type of trademark receives automatic protection?
Fanciful
Arbitrary
Suggestive
213
Which type of trademark never receives protection?
Generic responses
214
What should a business use to protect its trade secrets?
NDA
215
Perfect Tender Rule
goods tendered must comply with what was contracted
216
When can the acceptance of substantially impaired goods be revoked?
When the seller promises to cure and fails within a reasonable amount of time
217
What is the last resort when resolving creditor/debtor problems?
Bankruptcy
218
What is an example of a secured creditor?
Mortgages, HELOC, and Auto loans
219
What is an example of an unsecured creditor?
Credit cards, utilities, and hospitals
220
When are guarantors liable to creditors?
When the borrower defaults
221
What is the time period for filing chapter 7 schedules after the filing of the petition?
45 days
222
What is the purpose of the means test?
To see if the debtor is actually able to pay the creditor during chapter 7 bankruptcy filings
223
Which bankruptcy filing requires a debtor to receive credit counseling?
Chapter 7 liquidation
224
Which type of relief does chapter 7 bankruptcy code provide to a debtor?
Debtor has an opportunity for a fresh start as most or all debts are discharged on liquidation and distribution to creditors
225
What is the eligibility requirement for a small business debtor to avoid the appointment of a creditors committee?
Small business debtors that do not own or manage real estate with liabilities not exceeding $2.7 million
226
Which bankruptcy filing has the advantage of being the least expensive in complicated?
Chapter 13 repayment plan
227
What is a cramdown provision?
Confirmation of a reorganization plan by the court over any objections of a creditor
228
What form of business organization should someone have if flexibility in decision making is valued over asset protection?
Sole proprietorship
229
UPA - uniform partnership act
Establishes partnership as separate legal entities, not as an aggregate of partners
230
Which fiduciary duty is exercised when a partner refrains from intentional misconduct?
Duty of care
231
Bilateral contract
two sided - contract is made at one point in time and both perform it at a later point in time
232
Unilateral contract
one-sided contract agreement in which an offeror promises to pay only after the completion of a task (Ex. I promise to give you my laptop but you have to pay me right now)
Person accepting performs their promise immediately
233
Rule 144
Allows public resale of restricted securities if conditions are met
234
Trademark vs Copyright
Trademark: name/products
Copyright: literary
235
Novation
Replacement of one party in an agreement with consent of all parties
236
Statement of value
What ought to be the case
237
Are guarantors liable if the amount in the agreement changes but was not notified ?
No
238
Which type of law primarily governs LLC’s?
State law
239
When winding up an LLC, who is paid first from the sales proceeds?
Members who are creditors
240
For which circumstance may an individual be personally liable for actions of an LLC?
Member personally guarantees a business loan
241
Who are the owners of a corporation?
Shareholders
242
Which filing gives a corporation the right to conduct business in a state other than the state of its formation?
Certificate of authority
243
Agency by operation of law
Family relationships, or emergencies in the absence of any formal agreement
244
Agency by estoppel
A person who gives the impression that they are acting as an agent for another person or business
245
Agency by ratification
When someone adopts or approves of someone else’s actions on their behalf after they’ve occurred
246
What is the duty of the principal to the agent in order to terminate an agency at will?
Give the agent notice if the termination
247
For what reason may an agent be liable in a gratuitous principal-agent relationship?
Negligence
248
Puffery
Exaggerated claims used to entice customers into making purchases
249
Bait and switch advertising
Where a seller advertises an appealing but disingenuous offer (Ex. Advertising a car online at a reduced price but vehicle not being available when customer comes in)
250
Mail, Internet, Telephone Order Merchandising Rule
Requires sellers to have ship within the advertised time frame or 30 days if not specified
251
What is the standard for violating the Securities Act of 1933?
Intentionally defrauding investors by misinterpreting facts in a prospectus
252
What is a written offer that describes the issuer and indicates that more information be obtained on the SEC website?
Free-writing prospectus
253
What is the entity created by the SOX act of 2002?
Public Company Accounting Oversight Board (PCAOB)
254
Who are the members of the audit committee of a public company?
Outside directors
255
Which measure of the SOX act insures corporate accountability for the information in financial reports?
Certification by the CEO and CFO for accuracy of information
256
When is the principal liable to third parties for the actions of the agent?
When the agent had authority to enter, legally binding contract on behalf of the principal
257
Which agency relationship is created by actions of the principal?
Agency by estoppel
258
Where does most of the legal system derive from?
Common law
259
The constitution establishes what?
Blueprint for government - whose job is it to do what
260
The UCC counts as law because of what?
Individual states enacted it by statutes in those states
261
What is the stakeholder theory?
any action that affects stakeholders negatively is an unethical decision
262
What must take place in order to receive damages from trademark infringement?
It has to be registered
263
Do trademarks have to be registered in order to seek infringement damages?
No, they only have to be the first to use it
264
Does discovery qualify for patents?
No, anything that is not CREATED or INVENTED cannot be patented
265
Restatement of torts
Harmful actions against companies (Ex. Bribing an employee to break a contract in a way that hurts the employer)
266
What is incorporated in the Uniform Trade Secrets Act?
Restatement of torts
267
Contract law is primarily developed in what?
Courts through the common law
268
What is a counteroffer?
Rejection of the original offer and proposal of another offer
269
Mirror image rule
everyone in the contract has to agree to all meaningful terms: price, terms, etc.
270
Do merchants have to follow the mirror image rule?
No
271
What do merchant contracts need to address to be effective in terms of the law?
WHAT, and HOW MANY
272
Is sending of goods other than discussed a revocation or a breach?
Breach
273
What does the law assume if a contract doesn’t have a delivery term?
buyer goes to pick it up
274
What is FOB an indicator of?
Identification of a destination
275
Implied warranty of merchantability
Warranty given by every merchant stating that the goods are reasonably fit
276
Implied warranty for fitness of a specific purpose:
Warranty given by every seller regardless of merchant status - only comes up when the buyer brings up what the purpose is (the buyer SAYS what the purpose is)
277
Writ of attachment vs. writ of execution
Attachment: before judgement
Execution: after judgement
278
Chapter 7, 11, and 13
7: execution - someone owns a lot of stuff, trustee takes stuff and sells it
11: garnishment - just a wage earner, trustee takes your paycheck and gives you an allowance
13: reorganization - just for businesses, no trustee
279
What chapter of bankruptcy does not have a trustee?
Chapter 11
280
Bankruptcy trustee
collecting the debtors available estate - they do not establish priority
281
When is the Uniform Partnership Act (UPA) used?
When the partnership has no agreement in place
282
Requirements of an S Corp
- can only issue one class of stock
- can only be invested in by US citizens (no nonresidents)
- has less than 100 members
- can’t issue stocks to the general public
283
Duty to indemnify vs. duty to reimburse
Indemnify: if you hurt me, it’s your fault and you have to make it up to me
Reimburse: pay me back
284
Respondeat superior
“Let the master answer” - principals are responsible for their agents
285
Express, apparent, and implied authority
Express: real, stated out loud
Apparent: fake authority / agency by estoppel
Implied: real, but not stated out loud
286
Fair credit and reporting act
Federal legislation enacted to promote accuracy, fairness, and privacy of consumer information
287
Equal credit opportunity act
Prohibits creditors to discriminate against applicant’s
288
Fair and credit transactions act
Amendment to Fair credit reporting act to prevent identity theft and credit related fraud
289
Administrative agency’s regulations can be overturned by who?
Judicial findings
290
Securities act of 1933
when a company creates a security, it creates it and sells it. About FIRST SALE ONLY - produce prospectus
291
Exchange act of 1934
stock market - keeps it fair, open, and honest. Every investor should get the same info. Requires a producement of their financial statements, audited, etc.
292
SOX
make the annual report better - internal control procedures, more accurate, auditing, etc. - CEO + CFO have to certify
293
Patent vs. copyright
Patent: the thing you invent
Copyright: the way you talk about it
294
Insurable interest
Only occurs once the goods can be identified as yours
295
What is a merchant?
Someone who sells in a particular field (speciality)
296
If a seller messes up, do they have the opportunity to fix it before the buyer revokes the contract?
Yes, UCC demands that as long as the remedy is timely they are required to allow the seller to attempt to make amends
297
Reaffirmation
Reaffirmance of a debt
