Business Law Flashcards Preview

Regulation > Business Law > Flashcards

Flashcards in Business Law Deck (40)
Loading flashcards...
1
Q

Before registration is effective, what can a company do during the 20 day waiting period?

A

Make an oral offer and issue a preliminary prospectus, called a “red herring”.

2
Q

What is a “red herring”?

A

A preliminary prospectus missing certain key information, usually the issue price.

3
Q

What is an accredited investor?

A

Insurance companies, banks, wealthy individuals, credit unions, broker dealers, corporations, savings and loans, and certain trusts.

4
Q

What is considered a wealthy individual?

A

Someone with a net worth of $1M, excluding primary residence, or net income of $200k ($300k MFJ) for the two most recent years.

5
Q

What are the 2 main sources of contract law?

A

Common law derived from courts and UCC derived from Statutory Law.

6
Q

What is needed in order to have a valid contract?

A

Offer, acceptance, consideration, and a lack of defenses.

7
Q

Under common law, what happens if you modify a contract?

A

It requires new consideration.

8
Q

How are members of an LLC taxed?

A

As a partnership, unless they elect to be taxed as a corporation.

9
Q

Bilateral contract

A

A promise for a promise, I’ll pay you X for doing my audit.

10
Q

Unilateral contract

A

A promise for an act, I’ll pay anyone to find my dog.

11
Q

When is an offer communicated?

A

When it is received

12
Q

What terminates an offer?

A

Expiration, revocation, rejection, counteroffer, and operation of law.

13
Q

How long does an offer stay open?

A

Until it’s either accepted or terminated

14
Q

What represents acceptance of an offer?

A

Agree to all terms and conditions

15
Q

What is the mirror image rule?

A

The acceptance has to exactly mirror the offer

16
Q

What are the 2 rules of acceptance?

A

The mirror image rule and the early acceptance rule

17
Q

What is the early acceptance rule?

A

Aka, mailbox rule. Acceptance is effective when transmitted or dispatched.

18
Q

What is the difference between voidable and void?

A

Voidable means one or more of the party can escape it. Void means the contract is null and void and the courts will not enforce it.

19
Q

How is a contract voidable?

A

Duress, undue influence, misrepresentation of a material fact, mistake, capacity.

20
Q

How is a contract void?

A

Extreme duress, fraud in the execution, illegal subject matter, incompetent persons.

21
Q

What is a substituted contract?

A

Maintains the contractual relationship between the parties, but revises their obligations.

22
Q

What is novation?

A

When a new party replaces an original party to a contract and assumes (ie, steps into) the obligations and duties of that original party. All 3 parties must agree.

23
Q

Who pays for FUTA?

A

Paid for entirely by employer

24
Q

Who pays FICA?

A

Both employer and employee, 7.65% each

25
Q

What is Respondeat Superior?

A

Provides that an employer is responsible for torts committed by employees in the normal scope of employment

26
Q

Does assignment of a contract remove liability?

A

Assignment of a contract does not remove liability except in the case of novation

27
Q

What are the exceptions to the Statute of Frauds?

A

Specifically manufactured goods, Partial performance, Admitted in court by defendant, Merchant in goods does not object to written confirmation w/in 10 days

28
Q

Does an agency agreement have to be in writing?

A

Not unless either 1) agency sells real estate 2) agency relationship is over 1 year

29
Q

What is liquidated damages?

A

Specifies what damages a party will be entitled to upon breach of contract by the other party

30
Q

What are creditor rights for personal and real property?

A

Creditor rights against personal property are based on the secured transaction article of the UCC, while creditor rights against real property are based on state laws.

31
Q

What is an option contract?

A

Consideration paid to keep an offer open

32
Q

Are punitive damages available under the UCC Sales Article?

A

No, only under common law

33
Q

When would an uncompensated surety be released from liability?

A

Anytime the creditor makes a change to the agreement.

34
Q

What is the right of contribution?

A

The right of a co-surety to recover from other co-sureties a proportionate share of the liabilities

35
Q

What is exoneration?

A

The right of sureties and co-sureties to sue the debtor to compel payment to the creditor.

36
Q

What are duties of a principal?

A

Compensation, cooperation, indemnity/reimbursement, express contractual duties

37
Q

What are duties of an agent?

A

Reasonable care, loyalty, obedience, express contractual duties

38
Q

What is a right that a holder of public cumulative preferred stock always entitled?

A

Dividend carryovers from years in which dividends were not paid

39
Q

How can agent authority be terminated?

A

Agreement, unilateral, operation of law (death of principal/agent, insanity of principal, principal bankrupt, or subject becomes illegal or impossible.

40
Q

What is required to perfect a security interest?

A

Possession is required to perfect a security interest