Chapter 5: Important Points

Question 1

IP The UCC (Uniform Commercial Code)

Answer 1

A state statute enacted to simplify, clarify and modernize the laws governing commercial transactions.

Question 2

IP Negotiable Instrument

Answer 2

An unconditional promise or oder to pay a fixed amount with or without interest. It must satisfy the requirements of negotiability defined in UCC Article 3.

Question 3

IP Negotiable Instruments include

Answer 3

Checks and drafts, (three-party instruments) as well as promissory notes and certificates (two-party instruments).

Question 4

IP Negotiable Instruments must comply with the following:

Answer 4

Be in writing, be signed, contain an order or promise to pay a fixed sum of money, and be payable on demand or by a definite date. If no date is specified, it is payable on demand.

Question 5

IP Indorsement

Answer 5

A signature other than a maker, drawee or an acceptor that is placed on an instrument to negotiate (or transfer) it to another person.

Question 6

IP Holder in Due Course

Answer 6

One who takes a negotiable instrument for value, in good faith and without notice that it is defective.

Question 7

IP Partnership

Answer 7

A form of business organization that is owned by two or more partners and created by contract between the partners.

Question 8

IP General Partnership

Answer 8

The partners are personably liable for partnership debts exceeding partnership assets. Partners are jointly (together) and severally (separately) liable for these debts. A limited partnership consists of one or more general partners who are jointly and severally liable, and one or more silent or limited partners who contribute money or other assets of value to the extent of their ownership interest.

Question 9

IP Corporation

Answer 9

A taxable legal entity recognized by law, with tax rates separate from individual income tax rates. These have the power to receive, hold, and convey title to real property. Shareholders are owners of the corporation to the extent of their shareholdings.

Question 10

Subchapter S Corporation

Answer 10

A type of corporate organization that is permitted to function as a corporation but is taxed as a partnership.

Question 11

IP C Corporation

Answer 11

Must pay corporate income tax to the IRS and the shareholders are also taxed on their dividends that are profits of the corporation. Therefore, a double tax is paid at the corporate level and the shareholder level.

Question 12

IP Securities Act of 1933

Answer 12

Regulates securities offered by corporations, general or limited partnerships, unincorporated associations, or individuals.

Question 13

IP Organizations Offering Securities

Answer 13

Must register with the Securities Exchange Commission (SEC) . Registration includes a registration statement and prospectus.

Question 14

IP Securities that do not involve a public offering

Answer 14

Are exempt from the SEC registration requirement. This exemption is known as Private Placement Exemption

Question 15

IP Shares of Stock in Private Offering

Answer 15

No more than 35 non-accredited investors may purchase these. Advertising to the public is not permitted.

Question 16

IP Companies Offering Securities To the Public

Answer 16

Must register with the Department of Laws, including an offering of plans to sell condominiums or cooperatives.

Question 17

IP Real Estate Investment Trusts (REITs)

Answer 17

Allow small investors to pool their money to participate in larger real estate transactions. These make financing available for large real estate developments.

Question 18

IP US Supreme Court

Answer 18

The nation’s highest court. It is composed of nine justices appointed by the President with the approval of the Senate.

Question 19

IP Federal Court System

Answer 19

Includes federal trial courts. There is at least one federal district court in each state.

Question 20

IP Special Federal Courts Hear Only Certain Types of Lawsuits

Answer 20

US Tax Court, US Claims Court, US Court of International Trade and the US Bankruptcy Court.

Question 21

IP US Court of Appeals

Answer 21

The federal court system’s intermediate appellate courts. There are 13 circuits in the federal court system. Curcuits refer to the areas where the court serves.

Question 22

IP The Unified Court System in New York

Answer 22

Composed of city, town, and village courts; county courts include county court, family court, and surrogate’s court.

Question 23

IP New York Supreme Court

Answer 23

Hears civil cases and the New York Supreme Court appellate division reviews cases fro the Supreme Court and county courts as well as administrative board such as the Worker’s Compensation Board. The court of appeals is the highest court in the state.

Question 24

IP New York City’s Court System

Answer 24

Divided into two courts: Civil Court that decides matters up to $25,000 including small claims and housing matters; a criminal court that rules on misdemeanor and traffic violations.

Question 25

IP Different Types of Laws

Answer 25

Substantive laws dealing with everyday behavior and procedural law dealing with rules and regulations.

Question 26

IP Bodies of Law Include

Answer 26

Agency law, real property law, administrative law, commercial law, contract law, corporation law, trusts and wills law, civil law, criminal law, personal property law, partnership law, torts and civil procedure.

Question 27

IP Methods to resolve disputes

Answer 27

Litigation (lawsuits), mediation, and arbitration are methods to resolve disputes.

Question 28

IP The Theory of Equitable Distribution

Answer 28

Applied by the New York Courts as to the division of marital property.

Question 29

IP Bankruptcies

Answer 29

Must adhere to the federal bankruptcy code and are filed in the federal district court. These options include Chapter 7, 11, and 13.

Question 30

IP If a person receives money or property from another, the donor may be subject to…

Answer 30

A federal gift tax. Money and property owned upon death maybe subject to an estate tax.

Question 31

IP Under the Economic Growth and Tax Relief Reconciliation Act of 2001…

Answer 31

The federal estate tax exemption is $3,500,000 for 2009.

Question 32

IP New York estate tax

Answer 32

Is limited to the maximum amount allowed on the federal estate tax return as a credit for state death taxes. There is no specific New York gift tax.

Question 33

IP Statute of Limitations

Answer 33

Imposes time limits within which litigation may be commenced. In New York, the time limit by statute to bring legal action against a party based on contract is 6 years.

Question 34

IP Statute of Frauds

Answer 34

States that contracts involving the creation of an interest in real property or the conveyance of an interest in real property must be written to be enforceable.

Question 35

IP Mechanic’s Lean

Answer 35

For residential property must be filed with the clerk of the county where property is situated within four months from the date when the labor or materials were furnished.

Question 36

IP Lis Pendens

Answer 36

There is a pending litigation. A notice of pendency is a legal notice that a lawsuit has been filed concerning title to a specific property.

Question 37

IP The US Constitution

Answer 37

The supreme law of our country. Federal, state or local laws that conflict with this are unenforceable.