Flashcards in REG Lecture 8 Deck (73):
What is a guarantor of collectibility?
A surety who agrees to perform only if the creditor first exhausts all remedies against the principal debtor.
Generally, is a writing required in order for a surety to be liable?
Yes. A surety promise is required to be evidenced by a writing by the Statute of Frauds.
What are the surety's rights against the principal?
Exoneration Subrogation Reimbursement
What are the surety's rights against co-sureties?
What are some potential defenses of a surety?
May a debtor's Social Security payments be garnished?
No. Social Security payments are not subject to garnishment under federal law.
The Fair Debt Collection Practices Act presents a creditor who is owed money from calling the debtor before 8 a.m. or after 9 p.m. True or false?
What are the requirements to create an agency?
What are the duties of the agent to the principal?
What are the duties of principal to the agent?
What types of agency relation cannot be unilaterally terminated by the principal?
A principal may not unilaterally terminate an agency coupled with an interest.
Define actual (real) authority.
Actual authority is that which an agent reasonably things he possesses based on communications from the principal.
What are the two types of actual authority?
The two types of actual authority are implied authority (e.g. from position, past acts, circumstances) and express authority (authority specifically granted by the principal).
Define apparent authority.
Apparent authority is that which a third party believes an agent possesses as a result of the principal's communications with the third party.
If a principal tells a purchasing agent not to spend more than $500 on each purchase, but tells the agent not to disclose this ceiling amount to third parties, has the principal effectively limited the agent's apparent authority?
No. Secret limiting instructions are sufficient to limit actual authority, but do not limit apparent authority because apparent authority is based on the third party's reasonable belief in the agent's authority. An instruction of which the third party is unaware can have no effect on the third party's beliefs.
Would the manager of a retail business generally have implied authority to:
A manager generally has implied authority to hire and firs employees.
What is the difference between a general agent and a special agent?
A general agent is one who is authorized to engage in a series of transactions involving a continuity of service.
Under what conditions may a principal ratify an unauthorized transaction?
The agent must have indicated that he was acting on behalf of the principal.
Describe the differences between a disclosed, partially disclosed, and undisclosed principal.
A disclosed principal is one whose existence and identity are disclosed to the third party with whom an agent deals.
Who is liable to third parties in the case of an undisclosed or partially disclosed principal?
Both the agent and the principal are liable. Only the principal is liable if the principal is fully disclosed.
What elements are necessary to establish a principal's liability under respondeat superior?
Act committed within the scope of employment
What is an employer's liability for independent contractors?
The general rule is that an employer is not liable for torts committed by independent contractors, but there are certain situations in which the employer can be held liable for torts of independent contractors:
What are the elements of forming a general partnership?
The elements of forming a general partnership are:
Is a writing generally necessary to create a general partnership?
A general partnership can be formed whenever two or more persons agree to enter into a business for profit as co-owners.
If the partnership agreement is silent, how are profits and losses divided in a partnership?
If the partnership agreement is silent, profits and losses are divided equally, regardless of the contribution of each partner
For what services is a partner entitled to compensation if the partnership agreement is silent on the issue?
If the agreement is silent on the issue, a partner generally is not entitled to any compensation.
A partner's interest in partnership property is subject to attachment to satisfy the partner's alimony obligation.
False. A partner has no right to possess partnership property other than for partnership purposes, and a partner's creditors cannot get any greater rights than the partner's in such property.
What is the liability of each partner for the partnership obligations?
Partners are personally liable for all contracts entered into and all torts committed by other partners within the scope of the partnership business or which are otherwise authorized.
Can a limited partnership be formed with limited liability for all partners?
No. A limited partnership must have at least one general partner who will be personally liable for all partnership debts.
Is a limited partner personally liable for the debts of the partnership?
No. A limited partner is not personally liable for the debts of the partnership unless the limited partner is also a general partner, or, under the revised Uniform Limited Partnership Act of 1976, allows his name to be used in the partnership agreement, or takes control of the partnership and a creditor reasonably believes the limited partner is a general partner.
A limited partner has apparent authority to bind his limited partnership on contracts apparently within the scope of the partnership business.
False. Limited partners are like shareholders of a corporation and have no apparent authority to bind their partnership in contract.
Can a limited liability company be formed with limited liability for all members?
Yes. Members of a limited liability company are not personally liable for obligations of the company.
A member of a limited liability company has apparent authority to bind the company on contracts apparently within the scope of the company's business unless the company's articles or organization provide otherwise.
True. Generally, unless the articles of organization provide otherwise, limited liability companies are member-managed, and the members have apparent authority to bind the company on contracts apparently within the scope of the company's business.
Under the Uniform Limited Liability Company Act (ULLCA), if the articles of organization and operating agreement are silent, how are profits and losses divided in a limited liability company?
Under the Uniform Limited Liability Company Act (ULLCA), profits are shared equally, regardless of capital contributions.
When does a member of an LLC have a right to distribution?
A member of an LLC has a right to a distribution when the articles of organization, an operating agreement, or an agreement of the members so provides.
Is a member of an LLC personally liable for the debts of the LLC? What if the member is also a manager of the LLC?
No. A member of an LLC is like a limited partner or shareholder and is not personally liable for the LLC's obligations. If the member is also a manager, the member is treated as an officer or director of a corporation rather than as a general partner of a limited partnership and is not personally liable for the obligations of the LLC.
A promoter, like a shareholder, officer, or director, is not liable on contracts the promoter makes on behalf of the corporations.
False. Generally, promoters are personally liable on contracts that they enter into on behalf of the corporation to be formed.
What must be included in the articles of incorporation of a corporation?
Name of the corporation
For what reasons do courts typically disregard the corporate entity (i.e., "pierce the corporate veil")?
If the corporate entity is disregarded (i.e., the corporate veil is "pierced"), courts can reach the responsible shareholders, officers, and/or directors.
What is the procedure for a fundamental change?
Fundamental changes procedure:
What are the fundamental corporate changes that require shareholder approval?
The fundamental corporate changes that require shareholder approval are the following:
When does a shareholder of common and/or preferred stock have the right to a dividend?
Generally, shareholders do not have a right to a dividend unless and until a dividend is declared by the board of directors.
Once a dividend is declared, shareholders have the status of secured creditors.
False. Once a dividend is declared, shareholders have the status of unsecured creditors.
What is the advantage of cumulative preferred stock?
The advantage of cumulative preferred stock is that even if a dividend is not declared in a particular year, the right to receive that dividend (if dividends are ever declared) accumulates,
What is the main point regarding the inspection rights of shareholders?
Shareholders (or their agents, attorneys, accountants, etc.) may inspect for any proper purpose ( a purpose related to the shareholder's interest in the corporation, such as starting a derivative suit or soliciting shareholders to vote for certain directors), but shareholders also may be denied inspection for improper purposes (a purpose personal to the shareholder, such as getting names for a retail mailing list).
Which of the following businesses can be formed without filing a formation document with the state: partnership, limited partnership, limited liability company, or corporation?
A partnership can be formed without filing a formation document with the state. All other businesses require a filing to be formed.
How is a limited partnership similar to a corporation?
A limited partnership is similar to a corporation in that both can be formed only by compliance with statute and filing with the secretary of state, and both limited partnerships and corporations provide limited liability for investors (except general partners).
Which of the following businesses offer flow-through taxation for their owners: partnership, limited partnership, limited liability company, or corporation?
A partnership, limited partnership, limited liability company (although the owners of a limited liability company may opt to be taxed as a C corporation), and corporations that elect S-corporation status offer flow-through taxation for their owners. C corporations do not offer flow-through taxation.
What will bar an employee from recovery under a worker's compensation statute?
Fighting, intoxication, and self-inflicted wounds will bar recovery. An employee's negligence or assumption of the risk does not bar recovery.
What income is subject to FICA?
An employee's gross wages, and a self-employed person's net profits are subject to FICA.
What benefits are provided by FICA?
FICA, Federal Old-Age, Survivors, and Disability Insurance
To whom does FUTA apply?
All employers who:
The Fair Labor Standards Act requires that overtime be paid for employees working more than eight hours in one day.
False. Overtime must be paid if the nonexempt employee works more than 40 hours in one week.
What is Title VII?
Title VII is a federal statute that prohibits discrimination in employment.
What are the general requirements of the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA)?
When employment terminates, the employer must allow the employee and other covered persons to continue to participate in the employer's group insurance plan at the employee's own expense for 18 months.
What is the threshold dollar amount that triggers the need to file a currency transaction report (CTR) under the Bank Secrecy Act?
More than $10,000. Financial institutions must file a CTR for transactions exceeding $10,000. The CTR must be filed within 15 days of the transaction (25 days if filed electronically).
Under the Bank Secrecy Act, as amended, what must a bank do if its customer engages in a transaction that is not the type of transaction that the customer normally would be expected to engage in?
File a suspicious activity report (SAR) within 30 days of the transaction (60 days if filed electronically).
In general, how long must a financial institution keep records required to be kept under the Bank Secrecy Act, as amended?
What are the dollar threshold and limit for triggering the monetary instrument sales records requirements under the Bank Secrecy Act?
The records are not filed with the government.
Under the antitrust laws, what does the term "illegal per se" connote?
Under the antitrust laws, the term "illegal per se" connotes anticompetitive conduct or agreements that are inherently illegal and without legal justification.
What was the major impetus for enacting the Clayton Act?
To proscribe anticompetitive conduct in its incipiency.
Under the antitrust laws, what does the term "rule of reason" connote?
Under antitrust laws, the rule of reason is the balancing test used to determine whether contracts, combinations, attempts to monopolize, etc. unreasonably restrain trade and so violate the antitrust laws.
Under the antitrust laws, what are "horizontal restraints"?
Horizontal restraints involve agreements between industry players that are on the same marketing level (e.g., agreements between two competing manufacturers or between two competing retailers). Horizontal restraints are generally illegal per se.
Under the antitrust laws. what does the term "vertical restraint" mean?
Under the antitrust laws, vertical restraints are agreements between industry players that are on different marketing levels (e.g., an agreement between a manufacturer and a retailer). They are generally judged under the rule of reason.
What is a holder of a duly negotiated document of title?
A person who:
How are documents of title negotiated?
Like commercial paper, the procedure for negotiating a document of title depends on whether the document is a bearer or an order document:
What are the three transfer warranties made by a transferor of a document of title?
The document is genuine.
What is the duty of care of a common carrier?
At common law, a common carrier has a high standard of care. It is treated as an insurer of the goods and is liable for all damages to the goods that occur during shipment, regardless of cause.
What are the primary tasks of the Financial Stability Oversight Council?
Identifying risks to US financial stability
Under the Secretary of the Treasury's Orderly Liquidation Authority granted under Title II of Dodd-Frank, what types of institutions may the Secretary place in receivership?
Financial companies not previously covered by the FDIC or SIPC, including insurance companies and nonbank financial institutions.
What type of securities offering are regulated by the Private Fund Investment Advisers Registration Act of 2010?
The Private Fund Investment Advisers Registration Act of 2010 regulates hedge funds and other similar investment intermediaries and requires such intermediaries to make reports to federal agencies.
What investments are limited under the Volker Rule of Title VI of the Dodd-Frank Act?
The Volker Rule limits trading the investing by any banking entity in a hedge fund or private equity fund if the trading results in more than 3% ownership of the fund. The aim of this rule is to limit the amount of speculative investments on large banks' balance sheets.