C241 Study Plan

9. What is the purpose and function of Social Security and Medicare?

Social Security provides for old-age (retirement), survivors', and disability insurance to help pay for benefits that will partially make up for the employees loss of income. Medicare is a federal government health insurance program administered by the Social Security Administration for people 65 or older and those disabled.

12. Explain the term "unconscionability."

Something that is not right or unreasonably excessive.

4. Define and describe sexual harassment and the two forms of sexual harassment.

Sexual harassment in the employment context is defined as granting of job promotions or other benefits in return for sexual favors or conduct that is so sexually offensive that it creates a hostile working environment. -Quid Pro Quo harassment occurs when sexual favors are demanded in return for job opportunities, promotions, salary increases, or other benefits. It is a Latin phrase that is translated as "something in exchange for something else." - Hostile-Environment harassment occurs when a pattern of sexually offensive conduct runs throughout the workplace and the employer has not taken steps to prevent or discourage it.

5. Differentiate between a disclosed, partially disclosed, and undisclosed principal.

A disclosed principal is a principal whose identity is known by the third party at the time the contract is made by the agent. A partially disclosed principal is a principal whose identity is not known by the third party, but the third party knows that the agent is acting for a principal at the time the contract is made. An undisclosed principal is a principal whose identity is totally unknown by the third party and the third party has no knowledge that the agent is acting in an agency capacity at the time the contract is made.

9. Define the doctrine of "resondeat superior."

A doctrine under which a principal or an employer is held liable for the wrongful acts committed by agents or employees while acting within the course and scope of their agency and employment.

4. Describe how a security interest can be perfected by filing.

A financing statement gives public notice to third parties of the secured party's security interest. This gives the creditors interest in the collateral primary to any unperfected claims to the collateral.

7. What are the time durations of perfection?

A financing statement is effective for five years from the date of filing. A continuation statement can be filed within 6 months prior to the expiration date and will extend the original statement for another five years.

7. Define and describe a firm offer.

A firm offer arises when a merchant-offeror gives assurances in a signed writing that the offer will remain open. The merchant's firm offer is irrevocable without the necessity of consideration for the stated period or, if no definite period is stated, a reasonable period (neither to exceed three months).

6. Differentiate between fixed-rate and adjustable-rate mortgages.

A fixed-rate mortgage has a fixed, unchanging, rate of interest so the payments remain the same for the duration of the loan. An adjustable-rate mortgage has an interest rate that is usually relatively low for a specified period of time (such as a year) and after that the interest rate adjusts annually or by some other period.

3. Define and describe garnishment, including any possible limits on the amount.

A garnishment is a legal process used by a creditor to collect a debt by seizing property of the debtor (such as wages) that is being held by a third party (such as the debtor's employer). State and federal laws limit the amount that can be taken from a debtor's weekly take-home pay through garnishment proceedings so that employees can't lose all their income to pay judgement debts.

3. Differentiate between "horizontal" and "vertical" restraints.

A horizontal restraint is any agreement that in some way restrains competition between rival forms competing in the same market. A vertical restraint of trade results from an agreement between firms at different levels in the manufacturing and distribution process.

17. What is a homestead exemption?

A law permitting a debtor to retain the family home, either in its entirety or up to a specified dollar amount, free from the claims of unsecured creditors or trustees in bankruptcy.

9. Describe letter of credit transactions, as they pertain to international sales contracts.

A letter of credit is a written instrument, usually issued by a bank on behalf of a customer or other person, in which the issuer promises to honor drafts or other demands for payment by third persons in accordance with the terms of the instrument and are frequently used to facilitate international business transactions.

2d. Define a judicial lien.

A lien obtained by judgement, levy, sequestration, or other legal process. If a court finds that a debtor owes money to a creditor and the judgement remains unsatisfied, the creditor can ask the court to impose a lien on specific property owned and possessed by the debtor.

22. Define the term "lockout."

A lockout occurs when the employer shuts down to prevent employees from working, typically because it cannot reach a collective bargaining agreement with the union. It is the employer's counterpart to a strike.

4. Describe "Per Se" violations.

A type of anti-competitive agreement - such as a horizontal price-fixing agreement - that is considered to be so injurious to the pubic that there is no need to determine whether it actually injures the market competition; rather, it is in itself (per se) a violation of the Sherman Act.

21. Under what conditions can or cannot a union strike?

A union can strike when unable to come to an agreement through collective bargaining. These strikes can involve picketing by employees and non-employees. Non-picketing employees have the right to refuse to cross a legal picket line of fellow workers. A union cannot strike via violence, massed picketing (forming a barrier and preventing entry to the workplace), sit-down strikes (striking within the workplace), strikes that are a violation of a no-strike clause, and secondary boycotts (boycotting a supplier of the employer).

5. What is a mortgage?

A written instrument that gives a creditor (the mortgagee) an interest in, or lien on, the debtor's (mortgagor's) real property as a security for a debt. If the debt is not paid, the property can be sold by the creditor and the proceeds used to pay the debt.

8. Define and describe methods of acceptance, including the "mirror image" rule.

Acceptance of an offer to buy goods involves "either a prompt promise to ship or by the prompt or current shipment of conforming or nonconforming goods." Mirror Image Rule: a common law rule that requires, for a valid contractual agreement, that the terms of the offeree's acceptance adhere exactly to the terms of the offeror's offer.

5. Define the "Ultramares Rule" and an accountant's liability to third parties.

According to the Ultramares Rule, a professional only has liability to those with whom he had a direct contractual relationship. It has since been modified so that if a third party has a sufficiently close relationship or nexus with an accountant, then the ultramares privity requirement may be satisfied.

11. Differentiate between termination by act and termination by operation of law.

Act of termination methods: - lapse of time - purpose achieved - occurrence of a specific event - mutual agreement - termination by one party Operation of law methods: - death or insanity - impossibility - changed circumstances - bankruptcy - war

1. Differentiate between an agent's "actual" authority and "apparent" authority.

Actual authority is expressed or implied and arises from what the principal makes clear to the agent. Apparent authority occurs when the principal, either by word or action, causes a third party to reasonably believe that the agent has authority to act, even though the agent has no express or implied authority. This may occur because of a pattern of conduct over time.

1. What is the purpose of Administrative Law?

Administrated law is created by administrative agencies to carry out legislature created by Congress to assist in their duties and responsibilities.

13. Explain Affirmative Action and its purpose.

Affirmative Action involves job-hiring policies that give special consideration to members of protected classes in an effort to overcome present effects to past discrimination. These programs promote diversity in schools and workplaces and to reduce or eliminate discriminatory practices in respect to hiring, retaining, and promoting employees.

10. How can an agency be terminated?

Agencies can be terminated by an act of the parties or by operation of law.

7. What are the three requirements for HDC?

An HDC must first be a holder of a negotiable instrument and must have taken the instrument 1. for value, 2. in good faith, and 3. without notice that it is defective (such as when the instrument is overdue, dishonored, irregular, or incomplete).

3. Describe accommodation parties.

An accommodation party is a person who signs an instrument for the purpose of lending his or her name as credit to another party on the instrument (a cosigner).

11. Define "reasonable accommodation."

An accommodation that enables a disabled employee that is otherwise qualified to perform the necessary job and does not cause "undue hardship" on the employer.

3. Describe when an agent would have emergency powers.

An agent has emergency powers when an unforeseen emergency demands action by the agent to protect the property and rights of the principal, but the agent is unable to communicate by the principal.

4. Define and describe Creditor's Composition agreements.

An agreement formed between a debtor and his or her creditors in which the creditors agree to accept a lesser sum than that owed by the debtor in full satisfaction of the debt.

4. Differentiate between authorized and unauthorized signatures.

An authorized agent's signature binds a principal on an instrument if the agent clearly names the principal in the signature. In this manner, the agent is not liable on the instrument. Unauthorized signatures arise in two situations: - when a person forges another person's name on a negotiable instrument. - when an agent who lacks the authority signs an instrument on behalf of a principal. An unauthorized signature is wholly inoperative and will not bind the person whose name is signed or forged.

12. What is a guaranty?

An express contract in which a third party to a debtor-creditor relationship (the guarantor) promises to be secondarily liable to the debtor's obligation.

11. What is a suretyship?

An express contract in which a third party to a debtor-creditor relationship (the surety) promises to be a primarily responsible for the debtor's obligation.

5. Define and describe implied warranties.

An implied warranty is one that the law derives by implication or inference from the nature of the transaction or the relative situation or circumstances of the parties. Merchants impliedly warrant that the goods they sell or lease are merchantable and, in certain circumstances, fit for a particular purpose. In addition, an implied warranty may arise from a course of dealing or usage of trade.

7. Describe transfer warranties.

An implied warranty, made by any person who transfers an instrument for consideration to subsequent transferees and holders who take the instrument in good faith that: 1. the transferor is entitled to enforce the instrument. 2. all signatures are authentic and authorized. 3. the instrument has not been altered. 4. the instrument is not subject to a defense or claim of any party that can be asserted against the transferor. 5. the transferor has no knowledge of any bankruptcy proceedings against the maker, the acceptor, or the drawer of the instrument.

4. Define an "independent contractor."

An independent contractor is one who works for, and receives payment from, an employer but whose working conditions and methods are not controlled by the employer. An independent contractor is not an employee but may be an agent.

3. Who can and cannot file for Chapter 7 bankruptcy?

Any "person" - defined as including individuals, partnerships, and corporations - may be a debtor in a Chapter 7 proceeding. Railroads, insurance companies, banks, savings and loan associations, investment companies licensed by the Small Business Association, and other credit unions cannot file Chapter 7.

8. Describe presentment warranties.

Any person who presents an instrument for payment or acceptance makes the following warranties to any other person who in good faith pays or accepts the instrument: 1. the person obtaining payment or acceptance is entitled to enforce the instrument or is authorized to obtain payment or acceptance on behalf of a person who is entitled to enforce the instrument. 2. the instrument has not been altered. 3. the person obtaining payment or acceptance has no knowledge that the signature of the drawer of the instrument is unauthorized.

1. What is a secured transaction?

Any transaction in which the payment of a debt is guaranteed, or secured, by personal property owned by the debtor or in which the debtor has a legal interest.

1. Describe the scope and purpose of Articles 2 and 2A of the UCC.

Article 2 of the UCC sets forth the requirements for sales contracts, as well as the duties and obligations of the parties involved in the sales contract. Article 2A of the UCC covers similar issues for lease contracts. Bear in mind, however, that the parties to sales or lease contracts are free to agree to terms different from those stated in the UCC.

1. Explain how Articles 3 and 4 of the UCC govern EFT's.

Article 3 sets for the requirements for all negotiable instruments, including checks. Article 4 establishes a framework for deposit and checking agreements between a bank and its customers. It also governs the relationships of banks with one another as they process checks for payment. A check therefore may fall within the scope of Article 3 and yet be subject to the provisions of Article 4 while in the course of collection.

9. What is the bank's duty to accept deposits for interest bearing accounts?

Banks must pay interest based on the full balance of a customer's interest-bearing account each day. Before opening an account, new customers must be provided with the following information: - the minimum opening balance and the minimum balance to be paid interest - the interest, stated in terms of the annual percentage yield on the account - how interest is calculated - any fees, charges, and penalties and how they are calculated A customer's monthly statement must disclose the interest earned on the account, any fees that were charged, how the fees were calculated, and the number of days that the statement covers.

4. Differentiate between shipment contracts and destination contracts.

Shipment contract: a contract in which the seller is required to ship the goods by carrier. The buyer assumes liability for any losses or damages to the goods after they are delivered by the carrier. Generally, all contracts are assumed to be shipment contracts if nothing to the contrary is stated in the contract. Destination contract: a contract in which the seller is required to ship the goods by carrier and deliver them at a particular destination. The seller assumes liability for any losses or damage to the goods until they are tendered at the destination specified in the contract.

3. Define and describe the different types of delivery.

Shipment contract: requires or authorizes the seller to ship goods by a carrier, rather than deliver them at a particular destination. Destination contract: seller agrees to deliver conforming goods to the buyer at a particular destination.

2. Define and describe "signature liability," including primary and secondary liability.

Every party, excluding a qualified indorser, who signs a negotiable instrument is either primarily or secondarily liable for payment of that instrument when it comes due. A person who is primarily liable on a negotiable instrument is absolutely required to pay the instrument - unless, of course, he or she has a valid defense to payment. Liability is immediate when the is signed or issued. No action by the holder of the instrument is required. Only makers (writer) and acceptors (bank) of instruments are primarily liable. Drawers and indorsers are secondarily liable. On a negotiable intrument, secondary liability is contingent liability. In other words, a drawer or an indorser will be liable only if the party that is primarily responsible for paying the instrument refuses to do so - that is, dishonors the isntrument.

2, Differentiate between an agent's "express" authority and "implied" authority.

Express authority is defined as authority expressly given by one party to another. In agency law, an agent has express authority for a principal if both parties agree, orally or in writing, that an agency relationship exists in which the agent had the power to act in the place of, and on behalf of, the principal. Implied authority is defined as authority that is created not by explicit written or oral agreement buy by implication. In agency law, implied authority of the agent can be conferred by custom, inferred from the position the agent occupies, or implied by virtue of being reasonably necessary to carry out express authority.

6. Define and describe the Family and Medical Leave Act.

FMLA requires employers of 50 or more employees to provide an eligible employee with up to 12 weeks of unpaid family or medical leave during any 12 month period for a qualified event.

12. Differentiate between the shipping terms FOB, FAS, and CIF (or CC&F).

FOB (Free on Board) : indicates that the selling price of goods includes transportation costs to the specific FOB place named in the contract. The seller pays the expenses and carries the risk of loss to the FOB place named. If the named place is the place from which the goods are shipped, the contract is a shipment contract. If the named place is the place to which the goods are going to be shipped, the contract is a destination contract. FAS (Free Alongside) : requires that the seller, at his or her own expense and risk, deliver the goods alongside the carrier before risk passes to the buyer. An FAS contract is essentially an FOB contract for shipment. CIF or C&F (cost, insurance, and freight or cost and freight) : requires among other things, that the seller "put the goods in possession of a carrier" before risk passes to the buyer.

4a. Example 1 of "Public Accountability Laws"

Freedom of Information Act (FOIA) of 1966 requires the federal government to disclose certain records to any person or entity upon written request, even if no reason is given for the request.

2. Explain the accountant's "Duty of Care."

Generally, an accountant must possess the skills that an ordinarily prudent accountant would have and must exercise the degree of care that an ordinarily prudent accountant would exercise.

5. What is the general rule for forged drawer's signatures?

Generally, the bank suffers the loss. It may be able to recover at least some of the loss from the customer if the customer's negligence substantially contributed to the forgery. It may also obtain partial recovery from the forger of the check or from the holder who presented the check for payment if the holder knew that the signature was forged.

11. Define and describe the Health Insurance Portability and Accountability Act.

HIPAA establishes requirements for employers that offer health insurance to its employees. It also restricts the manner in which employers can collect, use, and disclose the health information of employees and their families.

1. What are the two kinds of liability associated with negotiable instruments?

Signature liability & Warranty liability

9. Differentiate between "horizontal" and "vertical" mergers.

Horizontal mergers occur between firms that compete with each other in the same market. Vertical mergers occurs when a company at one stage of production acquires another company at another stage of production.

5. Differentiate between voluntary and involuntary proceedings.

If a debtor files the petition, the bankruptcy is voluntary. If one or more creditors file a petition to force the debtor into bankruptcy, the bankruptcy is involuntary.

8. What can a creditor/lender do if a homeowner defaults?

If a homeowner defaults, the lender has the right to foreclose on the mortgage property. (Foreclosure is the legal process by which the lender repossesses and auctions off the property that has secured the loan.)

10. Describe the foreclosure procedure.

If all efforts to find another solution fail, the lender will proceed to foreclosure. The lender must strictly comply with the state statute governing foreclosures. Avery state allows a defaulting borrower to redeem the property before the foreclosure sale by paying the full amount of the debt, plus any interest and costs that have accrued.

2. What are the two methods of negotiation?

If an instrument is an order instrument, it is negotiated by delivery with any necessary indorsements. It requires both delivery and indorsement. If an instrument is payable to a bearer, it is negotiated by delivery. Indorsement is not necessary.

6. What is a bank's liability for altered checks?

If the bank fails to detect an alteration, it is liable to its customer for the loss because it did not pay as the customer ordered. The bank's loss is the difference between the original amount of the check and the amount actually paid.

7. Describe the remedies a seller has when the buyer breaches.

If the buyer breaches contract before the goods have been delivered, the seller may: - cancel or rescind the contract - resell the goods and sue to cover damages - sue to recover the purchase price or lease payments due - sue to recover damages for the buyer's nonacceptance of goods

11. Describe the general rule of priority, including possible exceptions.

In many cases the party who has a perfected security interest will have priority. Exceptions include: - Buyers in the ordinary course of business - PMSI in goods other than inventory and livestock - PMSI in inventory - Certain buyers of the collateral

2. What are the seller's and buyer's obligations under the good faith provision?

In performing a sales or lease contract, the basic obligation of the seller or lessor is to transfer and deliver conforming goods. The basic obligation of the buyer or lessee is to accept and pay for conforming goods in accordance with the contract.

5. Describe the employer-independent contractor relationship.

Independent contractors work for an employer but are not considered employees because those who hire them have no control over the details of their work performance. The relationship between a principal and an independent contractor may or may not involve an agency relationship.

11. Define and describe "insurable interest."

Insurable interest is an interest either in a person's well-being or in property that is sufficiently substantial that insuring against injury (or to the death of) the person or against damage to the property does not amount to a mere wagering (betting) contract.

1. Define and describe "negotiation."

Negotiation is the transfer of an instrument in such form that the transferee becomes a holder.

3. How are employer-employee relationships the same as agent-principal relationships?

Normally, all employees who deal with third parties are deemed to be agents. Because employees who deal with third parties are generally deemed to be agents of their employers, agency law and employment law overlap considerably.

7. Define and describe the Occupational Safety and Health Act.

OSHA establishes safety standards that employers must follow depending on the industry. OSHA requires employers post certain notices in the workplace, maintain specific records, submit certain reports, and keep records of occupational injuries and illnesses.

6. Define and describe an offer, including "open" terms.

Offer: the moment an offer is met by an unqualified acceptance, a binding contract is formed. The verbal exchanges, correspondence, and actions of the parties may not reveal exactly when a binding contractual obligation arises. An offer must be definite enough for the parties (and courts) to ascertain its essential terms when it is accepted. Open terms may include open price (not yet agreed upon pricing), open payment terms (unspecified payment terms), open delivery terms, open duration of contract, open options and cooperation with regard to performance.

4. How do statements of opinion or value affect express warranties?

Only statements of fact create express warranties. A seller or lessor who makes a statement that merely relates to the the value or worth of the goods, or states an opinion about or recommends the goods, does not create an express warranty.

11. Define and describe Parol Evidence.

Parol evidence is a term that originally meant "oral evidence," but that has become to refer to any negotiations or agreements made prior to a contract or any contemporaneous oral agreements made by the parties.

6. Differentiate between perfection by attachment and by possession.

Perfection by attachment means that the security interests are automatically perfected at the time of their creation. Perfection by possession occurs when the collateral is transferred to the secured party.

3. How is a security interest perfected?

Perfection is usually accomplished by filing a financial statement.

8. Define and describe "proceeds."

Proceeds are the cash property received when collateral is sold or disposed of in some other way.

4. Describe "ratification," as it pertains to a principal and agent.

Ratification occurs when the principal affirms, or accepts responsibility for an agent's unauthorized act. When ratification occurs, the principal is bound to the agent's act, and the act is treated as if it had been authorized by the principal on the outset. Ratification can either be express or implied.

4a. Describe the Fair Labor Standards Act as it pertains to child labor.

The FLSA prohibits oppressive child labor. Children under 14 are allowed to do only certain types of work (examples include delivering newspapers, working for their parents, and working in the entertainment and limited agricultural industries). Children 14-15 are allowed to work only in non-hazardous occupations. There are numerous restrictions on daily hours and how many days per week that can be worked. Children 16-18 are not restricted in the amount of work that they can perform but cannot work in hazardous occupations. These restrictions all fall away after age 18 when the person is legally considered an adult.

4b. Describe the Fair Labor Standards Act as it pertains to minimum wages.

The FLSA provides that a minimum wage of $7.25 per hour must be paid to employees in covered industries. If the state minimum wage is greater than the federal minimum wage, the state rate prevails. When an employee receives tips while on the job, the employer is required to pay only $2.13 an hour in direct wages only if that amount, plus the tips received, equals at least the federal minimum wage. If an employee's tips and direct wages do not equal the federal minimum wage, the employer must make up the difference.

3. Describe the actions that can be taken by the FTC.

The FTC can issue: -Formal Complaints -Cease-and-Desist Orders -Requirements for Counter-Advertising -Multiple Product Order

6. What is the Fair Packaging and Labeling Act?

The Fair Packaging and Labeling Act requires food product labels to identify the product, the net quantity of the contents, the manufacturer, and the packager or distributor.

8. What is the purpose of the Federal Food, Drug, and Cosmetic Act?

The Federal Food, Drug, and Cosmetic Act (FDCA) protects consumers against adulterated (contaminated) and mis-branded foods and drugs.

11. Describe how the Federal Reserve System clears checks.

The Federal Reserve System acts as a clearinghouse by providing each bank with an account so that banks can exchange checks and drafts drawn on each other and settle daily balances.

4b. Example 2 of "Public Accountability Laws"

The Government in the Sunshine Act (or Open Meeting Law) of 1976 requires that "every portion of every meeting of an agency" be open to "public observation." The act also requires the establishment of procedures to ensure that the public is provided with adequate advance notice of scheduled meetings and agendas.

14. What is the purpose of the Immigration Reform and Control Act?

The IRCA makes it illegal to hire, recruit, or refer for a fee someone not authorized to work in this country.

15. Explain the purpose of the Immigration Act.

The Immigration Act places a cap on the number of visas that can be issued to immigrants each year. Most work visas are set aside for workers who can be characterized as "persons of extraordinary ability," members of the professions holding advanced degrees, or other skilled workers or professionals.

18. Describe the Labor Management Relations Act.

The LMRA was passed to proscribe certain unfair union practices, such as the closed shop (a firm that requires union membership as a condition of employment). It did, however, preserve the legality of the union shop (a firm that does not require union membership as a prerequisite for employment but can, and usually does, require that workers join the union after a specified amount of time on the job). The LMRA also prohibits unions from refusing to bargain, engaging in certain types of picketting, and featherbedding (requiring employers to hire more employees than necessary).

8. Explain the Magnuson-Moss Warranty Act.

The Magnuson-Moss Warranty Act of 1975 was designed to prevent deception in warranties by making them easier to understand. Under the act, no seller is required to give a written warranty for consumer goods sold. The act also requires the warrantor to make certain disclosures fully and conspicuously in a single document in "readily understood language."

16. Describe the National Labor Relations Act.

The NLRA established the right of employees to engage in collective bargaining and to strike and also defines a number of employer practices as unfair to labor.

17. Describe the Norris-LaGuardia Act.

The Norris-LaGuardia Act restricts the power of Federal courts to issue injunctions against unions engaged in peaceful strikes. In effect, this act declared a national policy permitting employees to organize.

4c. Example 3 of "Public Accountability Laws"

The Regulatory Flexibility Act of 1980 provides that whenever a new regulation will have a "significant impact upon a substantial number of small entities," the agency must conduct a regulatory flexibility analysis. The analysis must measure the cost that the rule would impose on small businesses and consider less burdensome alternatives.

4d. Example 4 of "Public Accountability Laws"

The Small Business Regulatory Enforcement Fairness Act (SBREFA) allows Congress to review new federal regulations for at least 60 days before they take effect.

4. Describe the Telemarketing and Consumer Fraud and Abuse Prevention Act of 1994.

The TCFAPA directed the FTC to establish rules governing telemarketing and to bring actions against the fraudulent telemarketers. The FTC's Telemarketing Sales Rule (TSR) requires a telemarketer to identify the seller's name, describe the product sold, and disclose all material facts related to the sale. The telemarketer must also remove a consumer's name from a list of potential contacts if requested. An amendment to the TSR established to national Do Not Call Registry which prohibits telemarketers from calling consumers who have placed their names on the list.

Describe the Truth-in-Lending Act and the Fair and Accurate Credit Transactions Act.

The TILA is basically a disclosure law. It is administered by the Federal Reserve Board and requires sellers and lenders to disclose credit loan terms so that individuals can shop around. The FACT Act established a national fraud alert system designed to combat identity theft.

11. Explain how "unconscionability" can affect a warranty.

The UCC sections dealing with warranty disclaimers do not refer specifically to unsconscionability as a factor. Ultimately, however, the courts will test warranty disclaimers with reference to the UCC's unconscionability standards. Factors such as lack of bargaining position, "take-it-or-leave-it" choices, and a buyer's or lessee's failure to understand or know of a warranty disclaimer will be relevant to the issue of unconscionability.

1. Describe the UCC's "Good Faith" provision.

The UCC's good faith provision, which can never be disclaimed, reads as follows: "every contract or duty within this Act imposes an obligation of good faith in its performance or enforcement." Good faith means honesty in fact. For a merchant, it means honesty in fact and the observance of reasonable commercial standards of fair dealing in the trade. In other words, merchants are held to a higher standard of performance or duty than are nonmerchants.

5. Describe the "imposter rule."

The UCC's imposter rule provides that an imposter's indorsement will be effective - that is, not a forgery - insofar as the drawer or maker is concerned.

9. Describe an agent's duties to the principal.

The agent's duties to the principal include: - Performance (use of reasonable diligence and skill in performing the work) - Notification (off all matters that come to his or her attention concerning the subject matter of the agency) - Loyalty (to act solely for the benefit of his or her principal and not in the interest of the agent or a third party_ - Obedience (follow all lawful and clearly stated instructions of the principal) - Accounting (unless otherwise agreed, the agent must keep and make available to the principal an account of all property and funds received and paid out on the principal's behalf)

3. Describe the bank-customer relationship.

The bank-customer relationship includes: - a creditor-debtor relationship - an agency relationship - a contractual relationship

11. Describe the function and powers of the bankruptcy trustee.

The basic duty of the trustee is to collect the debtor's available estate and reduce it to cash for distribution, preserving the interests of both the debtor and the unsecured creditors. The trustee is held accountable for administering the debtor's estate. The trustee has the power to require persons holding the debtor's property at the time the petition is filed to deliver the property to the trustee. The trustee has specific powers of avoidance enabling the trustee to set aside a sale or other transfer to the debtor's property and take the property back for the debtor's estate.

6. Explain the "entrustment" rule.

The entrustment rule is the transfer of goods to a merchant who deals in goods of that kind and who may transfer those goods and all rights to them to a buyer in the ordinary course of business.

10. Describe the federal limitations on HDC rights, including FTC Rule 433.

The federal government limits the rights of HDCs in certain circumstances because of the harsh effects that the HDC rules can sometimes have on consumers. Under the HDC doctrine, a consumer who purchased a defective product (such as a defective auto) would continue to be liable to HDCs even if the consumer returned the defective product to the retailer. To protect consumers who purchase defective products, the FTC adopted Rule 433 which effectively abolished the HDC doctrine in consumer transactions. FTC Rule 433 severly limits the rights of HDCs that purchase instruments arising out of consumer credit transactions. The rule applies to consumers who purchase goods or services for personal, family, or household use using a consumer credit contract. The regulation prevents a consumer from being required to make payment for a defective product to a third party HDC who has acquired a promissory note that formed part of the consumer's contract with the dealer who sold the defective good.

4. Describe the "perfect tender" rule, including possible exceptions to the rule.

The perfect tender rule is a common law rule under which a seller was required to deliver the buyer goods that conformed perfectly to the requirements stipulated in the sales contract. A tender of nonconforming goods would automatically constitute a breach of contract. Under the UCC, the rule has been greatly modified. Exceptions to the perfect tender rule: - a contrary contractual agreement of the parties - cure ( a seller's right to repair, adjust, or replace defective or nonconforming goods under certain circumstances)

6. Define "monopolization."

The possession of monopoly power in the relevant market and the willful acquisition or maintenance of that power, as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident.

10. Define "interlocking directorates."

The practice of having individuals serve as directors on the board of two or more competing firms simultaneously.

9. Explain how additional terms may affect acceptance of an offer.

Whether additional terms become part of the contract depends, in part, on whether the parties are non-merchants or merchants. When one party or both are non-merchants: the contract is formed according to the terms of the original offer and does not include any of the additional terms in the acceptance. When both parties are merchants: the additional terms automatically become part of the contract unless one of the following conditions arises: the original offer expressly limited acceptance to its terms. the new or changed terms materially alter the contract. The offeror objects to the new or changed terms within a reasonable amount of time.

3. Explain the "Administrative Procedure Act."

Sometimes, Congress specifies certain procedural requirements in an agency's enabling legislation. In the absence of any Congressional directives concerning a particular agency procedure, the APA of 1946 applies. One of Congress's goals in enacting the APA was to provide for more judicial control over administrative agencies.To that end, the APA provides the courts "hold unlawful and set aside" agency actions that are found to be "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law." Under this standard, parties can challenge regulations as contrary to law or as so irrational that they are arbitrary and capricious.

9. Describe the Americans with Disabilities Act.

The ADA prohibits disability-based discrimination in all workplaces with 15 or more workers. The ADA requires employer "reasonably accommodate" the needs of persons with disabilities unless to do so would cause an employer "undue hardship."

8. Describe the Age Discrimination in Employment Act.

The ADEA prohibits employment discrimination on the basis of age against individuals 40 years of age or older. The act also prohibits mandatory retirement for non-managerial works. For the act to apply, an employer must have 20 or more employees, and the employer's business activities must affect interstate commerce.

13. Describe how the CISG applies to the international sale of goods.

The CISG (Contracts for the International Sale of Goods) was formed by the 1980 United Nations Convention and governs international contracts only if the countries of the parties to the contract have ratified the CISG and if the parties have not agreed that some other law will govern their contract. It is to international sales contracts what Article 2 of the UCC is to domestic sales contracts. The CISG does not apply to consumer sales.

2. What is the purpose of the Clayton Act of 1914?

The Clayton Act is aimed at certain anti-competitive or monopolistic practices that the Sherman Act does not cover. The substantive provisions of the act, sections 1, 2, 3, 7, and 8, deal with four distinct forms of business behavior - which are deemed illegal but not criminal. For each provision, the act states that the behavior is illegal only if it tends to substantially lessen competition or to create monopoly power.

9. Describe the Consumer Product Safety Act.

The Consumer Product Safety Act of 1972 created the first comprehensive scheme of regulation over matters of consumer safety. The act also established the Consumer Product Safety Commission which has far-reaching authority over consumer safety. The CPSA requires distributors of consumer products to notify the CPSC immediately if they receive information that a "product contains a defect which...creates a substantial risk to the public" or "an unreasonable risk of serious injury or death."

2. When do warranties arise in sales transactions?

Title warranties automatically arise in sales and lease contracts unless a seller or lessor disclaims or modifies title warranties by including specific language in the contract.

6. Explain the term "merchantability" as it pertains to implied warranties.

To be merchantable, goods must be "reasonably fit for the ordinary purposes for which goods are used." They must be of at least average, fair, or medium-grade quality. The quality must be comparable to quality that will pass without objection in the trade or market for goods of the same description.

27. Who is eligible for Chapter 12? Under what conditions?

a family farmer whose gross income is at least 50% farm dependent and whose debts are at least 50% farm related and the total debt must not exceed $4,031,575 - a close corporation or partnership at least 50% owned by the family farm can also qualify. A family fisherman is define as one whose gross income is at least 50% dependent on commercial fishing operations and whose debts are at least 80% related to commercial fishing and the total debt must not exceed $1,868,200.

10. Describe the disclaimers that can be made on express and implied warranties.

a seller or lessor can disclaim all oral express warranties by including in the contract a written disclaimer. it must be in clear language that is conspicuous and called to a buyer's or lessor's attention. generally, unless circumstances indicate otherwise, implied warranties of merchantability and fitness are disclaimed by an expression such as "as is" or "with all faults."

9. Describe what happens when there are "overlapping" warranties.

express and implied warranties are construed as cumulative if they are consistent with one another and are considered as being in agreement with each other. if the warranties are inconsistent, the courts usually apply the following rules to interpret which warranty is most important: - express warranties displace inconsistent implied warranties, except implied warranties of fitness for a particular purpose. - samples take precedence over inconsistent general descriptions. - exact or technical specifications displace inconsistent samples or general descriptions.

21. Who is eligible for "fast-track" Chapter 11?

small business debtors whose liabilities do not exceed $2.49 million and who do not own or manage real estate

16. Describe the homestead exemption, including the maximum equity amount.

the bankruptcy code limits the amount of equity that can be claimed under the homestead exemption. if the debtor acquired the homestead within 3.5 years preceding the date of filing, the maximum equity exempted is $155675.

23. When must a reorganization plan be filed?

only the debtor may file a plan within the first 120 days after the date of the order for relief.

13. Describe the different types of EFT systems.

- ATMs - POS Systems (online terminals) - Direct deposits/withdrawals - Internet payment systems (banking funds transfer or bill pay)

4. Describe and give examples of "Public Accountability Laws."

- As a result of growing public concern over the powers exercised by administrative agencies, Congress passed several laws to make agencies more accountable through public scrutiny.

12. Describe the four defenses to employment discrimination.

- Assert that the plaintiff failed to meet his initial burden of proving that discrimination occurred. - The discrimination was a result of a business necessity. - The discrimination was a result of a bona fide occupational qualification system. - The discrimination was the result of a seniority system.

2. What are the exceptions to the employment at will doctrine?

- Contract Theory: does the employment manual create an implied contract? - Tort Theory: was the discharge of employment abusive in procedure (emotional distress/defamation)? - Public Policy: does the discharge of employment violate a fundamental public policy of the jurisdiction (whistle-blowing)?

2. Differentiate between disparate treatment involving intentional and unintentional discrimination.

- Disparate Treatment discrimination occurs when an employer intentionally discriminates against employees who are members of a protected class. - Disparate Impact discrimination occurs when certain employer practices or procedures, although not discriminatory on their face, unintentionally have a discriminatory effect.

13. Describe the types of employee privacy acts.

- Electronic Communications Privacy Act: prohibits employers from intercepting an employee's personal electronic communications unless they are made on devices and systems furnished by the employer. - Employee Polygraph Protection Act: generally prohibits employers from requiring employees or job applicants to take a polygraph test or suggesting or requesting that they do so. - Genetic Information Nondiscrimination Act: prevents the improper use of genetic information by employers and during hiring, firing or promotion and for health insurance providers when calculating insurance premiums and determining coverage.

5. What defenses can an employer make against charges of sexual harassment?

- Ellerth/Faragher Affirmative Defense - The conduct was not sufficiently severe or pervasive to create a hostile environment.

8. What are types of exclusionary practices?

- Exclusive Dealing Contract - Tying Arrangements

2. Describe the two types of administrative agencies.

- Executive: federal executive agencies include the cabinet departments of the executive branch, which assist the President in carrying out executive functions, and the sub-agencies within the cabinet departments. Executive agencies usually have a single administrator who is appointed by the President to oversee the agency and can be removed by the President at any time. -Independent Regulatory Agencies: outside the federal executive departments. Examples include the FTC and the SEC. Rather than having a single person as its head, an independent agency usually is run by a commission or board made up of several members, one of whom serves as the agency's chair. Commissioners or board members typically serve for fixed terms and cannot be removed without just cause.

16. What types of real/personal property of a debtor are protected (exempt)?

- Household furniture up to a specified dollar amount. - Clothing and certain personal possessions, such as family pictures or a Bible. - A vehicle(s) for transportation (at least up to a specified dollar amount). - Certain classified animals, usually livestock but including pets. - Equipment that the debtor uses in a business or trade, such as tools or professional instruments, up to a specified dollar amount.

10. Describe remedies for breach of international sales contracts.

- sue for money damages, including foreseeable consequential damages - avoid obligations under the contract if the seller breaches - avoid obligations under the contract if the buyer breaches the contract, fails to accept delivery, or fails to pay - sue for specific performance

17. Describe how property will be distributed in voluntary bankruptcies.

1. secured creditors 2. unsecured creditors 3. any remaining portion to the debtor

9. How can foreclosure be avoided?

- If the borrower may be able to make payments in the future, the lender may grant a forbearance, which is a postponement of part or all of the payments on a loan for a limited time. - The borrower and lender may also enter into a workout agreement - a contract that describes their respective rights and responsibilities as they try to resolve the default without proceeding to foreclosure. Usually, the lender agrees to delay seeking foreclosure in exchange for the borrower providing additional financial information that might be used to modify the mortgage. - When a borrower is unable to make mortgage payments, a lender may agree to a short sale - that is, a sale of the property for less than the balance due on the mortgage loan. Usually, the borrower has to show some hardship. The lender often has approval rights in a short sale.

14. Describe the guaranty defenses.

- Incapacity & Bankruptcy - Statute of Limitations - Fraud

13. What actions will release surety and guarantor?

- Material modification to the terms of the original contact without the surety's/guarantor's consent. - Surrender of the collateral to the debtor or impairment of the collateral without the surety's/guarantor's consent. - Any payment of the principal obligation by the debtor or another person on the debtor's behalf.

5. Describe some of the common indorsement problems.

- Misspelled names - Instruments payable to entities - Alternative vs Joint payees

14. Explain the disposition procedures.

- Notify the debtor of its proposal to retain the collateral. - If, within 20 days, the secured party receives an objection from the debtor, the secured party must sell or otherwise dispose of the collateral. - Sale can be public or private - Every aspect of the disposition methods must be commercially reasonable. - Proceeds are distributed - Deficiency Judgement - Redemption Rights

13. Describe the basic remedies for default, including repossession, judicial remedies, and disposition of collateral.

- Repossession - Disposition of Collateral - Deficiency Judgement

7. What protections are available to the creditor?

- Requiring mortgage insurance if they do not make a down payment of at least 20%. - Recording the mortgage with the appropriate office in the county where the property is located. - Including contract provisions that are aimed at protecting their investment, such as a prepayment penalty clause.

15. Describe the rights of the surety and guarantor.

- Right of Subrogation (any right the creditor had against the debtor now becomes the right of the surety) - Right of Reimbursement - The Right of Contribution

6. Describe the different types of sexual harassment.

- Tangible Employment Action - Retaliation by employers - Harassment by Co-workers and others - Same Gender Harassment - Sexual Orientation Harassment - Online Harassment

3. Describe the Davis-Bacon Act and the Walsh-Healy Act.

- The Davis-Bacon Act requires contractors and subcontractors of working on federal government projects to pay "prevailing wages" to employees. - The Walsh-Healy Act applies to U.S. government contracts. It requires that a minimum wage, as well as overtime pay at 1.5 times regular pay rates, to be paid to employees of manufacturers or suppliers entering into contracts with agencies of the federal government.

3. What are some of the defenses to negligence?

- The accountant was not negligent. - The accountant was negligent but the negligence was not the proximate cause of the client's losses. - The client was also negligent.

5. Describe how a security interest can be perfected without filing.

- The collateral is transferred into the possession of the secured party. - If the security interest is one of a limited number under the UCC that can be perfected on attachment (purchase-money security interest in consumer goods) and (assignment of a beneficial interest in an estate of a deceased person).

10. Describe the priorities given to the different creditor interests.

- When two or more parties have claims to the same collateral, a perfected secured party's interest has priority over most other parties. - When two or more secured parties have perfected security interests in the same collateral, generally the first to perfect by filing or possession has priority. - When two conflicting security interests are unperfected, the first to attach (be created) has priority.

6. What schedules must be prepared for Chapter 7 bankruptcy?

- a list of both secured and unsecured creditors, their addresses, and the amount of debt owed to each - a statement of the financial affairs of the debtor - a list of all property owned by the debtor, including property that the debtor claims is exempt - a list of current income and expenses - a certificate of credit counseling - proof of payments received from employers within 60 days prior to the filing of the petition - a statement of the amount of monthly income, itemized to show how the amount is calculated - a copy of the debtor's federal income tax return for the most recent year ending immediately before the filing of the petition

8. What is the availability schedule for deposited checks?

- any local check (drawn on a bank in the same area) deposited must be available for withdrawal by check or as cash within one business day from the date of deposit. - for non-local checks, the funds must be available for withdrawal within not more than 5 business days. - under the Check 21, a bank must credit a customer's account as soon as the bank receives the funds. - for cash deposits, wire transfers, and government checks, funds must be available on the next business day. - the first $100 of any deposit must be available for cash withdrawal on the opening of the next business day after deposit.

10. Describe what property will be included in the bankruptcy estate.

- community property owned by a husband and wife - property transferred in a transaction voidable by a trustee - proceeds and profits from the property of the estate

14. What types of transfers will not constitute a preference?

- payments made for services rendered within 15 days before the payment is not a preference

1. What are the goals of bankruptcy law?

1. To protect a debtor by giving him a fresh start without creditors' claims. 2. Ensure equitable treatment of creditors who are competing for a debtor's assets.

15. What property is exempt?

- under $22,975 in equity in the debtor's residence and burial plot (homestead exemption) - interest in a motor vehicle up to $3,675 - interest, up to $550 for a particular item in household goods and furnishings, wearing apparel, appliances, books, animals, crops, and musical instruments ( the aggregate total of all items is limited to $12,250) - interest in jewelry up to $1550 - interest in any other property up to $1225, plus any unused part of the $22975 homestead exemption up to $11500 - interest in any tools of the debtor's trade up to $2300 - a life insurance contract owned by the debtor - certain interests in accrued dividends and interest under, or loan value of, life insurance contracts owned by the debtor not to exceed $12250 - professionally prescribed health aids - the right to receive social security and certain welfare benefits, alimony and support, certain retirement funds and pensions, and education savings accounts held for a specific period of time - the right to receive certain personal-injury and other rewards up to $22975

5. Describe the buyer's obligations, as it pertains to payment, inspection, and acceptance.

- unless otherwise stated in contract, the buyer or lessee must make payment at the time and place the goods are received. - unless otherwise stated in contract, the buyer or lessee has an absolute right to inspect the goods before making payment to verify the goods tendered conform to the contract. If the goods are not as ordered, the buyer or lessee has no duty to pay. - acceptance of the goods in full - partial acceptance of the goods if some of the goods are nonconforming

11. Describe the types of discharge from liability.

-Discharge by payment or tender of payment (when the primarily liable party pays to a holder the full due amount) - Discharge by cancellation or surrender (writing paid across the face of an instrument, intentionally tearing up an instrument, crossing out a party's signature, surrendering the instrument to the party to be discharged) - Discharge by material alteration - Discharge by reacquisition - Discharge by impairment of recourse - Discharge by impairment of collateral

8. Define and describe a "bailee."

A bailment is a temporary delivery of personal property, without passage of title, into the care of another, called a bailee.

7. Describe the bank's duty to accept deposits.

A bank has a duty to accept the customer's deposits of cash and checks. When checks are deposited, the bank must make the funds represented by those checks available within a certain time frame. A bank also has a duty to collect payment on any checks payable or indorsed to its customer and deposited by the customer into his account. Cash deposits made in US currency are received into the customer's account without being subject to further collection procedures.

2a. Define an encumbrance.

A claim against.

1. What is a lien?

A claim or encumbrance against specific property to satisfy a debt.

4. Describe how the UCC applies to a merchant.

A person gains merchant status when he, acting in a mercantile capacity, possesses or uses an expertise specifically related to the goods being sold. A merchant is held to slightly different, stricter standards.

2c. Define an artisan's lien.

A possessory lien given to a person who has made improvements and added value to another person's personal property as security for payment for services performed.

8. Describe when an agent or principal may be liable to a third party as it pertains to torts, crimes, and negligence.

A principal who acts through an agent may be liable for harm resulting from the principal's own negligence or recklessness. A principal who authorizes an agent to commit a tort may be liable to the persons or property injured thereby. A principal may be liable when a third person sustains a loss due to the agent's misrepresentation. Was the agent acting within his scope of authority? An agent is liable for his or her own crimes.

4. Describe "Liability for Fraud."

A professional may be held liable for fraud if he misrepresents, either by misstatement or omission of a material fact, knowingly made with the intention of deceiving another and on which a reasonable person would and does rely to his or her detriment.

1. Define "Professional Breach of Contract."

A professional owes a duty to his clients to honor the terms of their contracts and to perform the contracts within the stated time period. If the professional fails to perform as agreed in the contract, then he has breached the contract and the client has the right to recover damages from the professional.

9. Describe the "floating lien" concept.

A security interest in proceeds, after-acquired property, or of credit (or all three); a security interest in collateral that is retained even when the collateral changes character, classification, or location.

3. Define and describe express warranties.

A seller or lessor creates an "express" warranty by making representations concerning the quality, condition, description, or performance potential of the goods.

7. Describe an "E-Agent."

A semi-autonomous computer program that is capable of executing specific tasks.

3. What is an "indorsement?"

A signature placed on an instrument for the purpose of transferring one's ownership rights in the instrument.

12. Explain what a termination statement is.

A statement that demonstrates to the public that the filed perfected security interest has been terminated.

2b. Define a mechanic's lien.

A statutory lien on the real property of another, created to ensure payment for work performed and materials furnished in the repair or improvement of real property, such as a building.

12. What are "voidable rights?"

A trustee steps into the shoes of the debtor. Thus, any reason that a debtor can use to obtain the return of his or her property can be used by the trustee as well. These grounds include fraud, duress, incapacity, and mutual mistake.

8. Differentiate between an agency by agreement, by ratification, by estoppel, and by operation of law.

Agency by agreement: based on an express or implied agreement that the agent will act for the principal and that the principal agrees to have the agent so act. An agency by agreement can take the form of an express written contract, be created by an oral agreement, or implied by conduct. Agency by Ratification: occurs when a person who is in fact not an agent or acting out of the scope of his authority and makes a contract on behalf of the principal. If the principal affirms that contract by word or by action, an agency by ratification is created. Ratification involves a question of intent, and intent can be expressed either by words or conduct. Agency by Estoppel: occurs when a principal causes a third person to believe that another person is the principal's agent, and the third person acts to his or detriment in reasonable reliance on that belief. When this occurs, the principal is "estopped to deny" (prevented from denying) the agency relationship. An agency by estoppel arises when the principal's actions have created the appearance of an agency that does not in fact exist. Agency by Operation of Law: occurs despite the absence of a formal agreement in some situations. This may occur in cases of emergency or in family relationships.

7. How is an agency relationship formed?

Agency relationships are normally consensual - that is, they come about by voluntary consent and agreement between the parties. Generally, the agreement need not be in writing, and consideration is not required. An agency can be created in four ways: by agreement of the parties, by ratification, by estoppel, and by operation of law.

11. Describe and differentiate between the rights and remedies of agents and principals.

Agent Rights: compensation, reimbursement and indemnification, safe working conditions, and the right to perform duties without interference by the principal. Agent Remedies: Demand for accounting in the instance of dispute and No right to specific performance. Principal Rights: the right to fiduciary duties performed by the agent including performance, notification, loyalty, obedience, and accounting. Principal Remedies: Contract remedies include constructive trust, avoidance, and indemnification. Tort remedies are also available for misrepresentation, negligence, deceit, libel, slander, or trespass.

4. Differentiate between blank, special, qualified, and restrictive indorsements.

Blank indorsement: an indorsement that specifies no particular indorsee and can consist of a mere signatuer. An order instrument that is indorsed in blank becomes a bearer instrument. Special indorsement: an indorsement on an instrument that indicates the specific person to whom the indorser intends to make the instrument payable; that is, it names the indorsee. Qualified indorsement: an indorsement on a negotiable instrument in which the indorser disclaims any contract liability on the instrument; the notation "without recourse" is commonly used to create a qualified indorsement. Restrictive Indorsement: any indorsement on a negotiable instrument that requires the indorsee to comply with certain instructions regarding the funds involved. A restrictive indorsement does not prohibit the further negotiation of the instrument.

10. Define the Consolidated Omnibus Budget Reconciliation Act.

COBRA enables employees to continue healthcare coverage after their jobs have been terminated and they are no longer eligible for group coverage through the employer. COBRA prohibits an employer form eliminating a worker's medical, vision, or dental insurance on the voluntary or involuntary termination of the worker's employment.

2. Differentiate between Cashier's checks, Traveler's checks, and certified checks.

Cashier's check: when a bank draws a check on itself. The bank assumes responsibility for paying the check, making it more readily acceptable as a substitute for cash. Traveler's check: an instrument that is payable on demand, drawn on or payable at a financial institution, and is designated as a traveler's check. The issuing institution is directly obligated to accept and pay its traveler's checks according to the check's terms. The payee must sign upon issue and upon use. Certified check: a check that has been accepted by the bank on which it is drawn. Essentially, the bank, by certifying the check, promises to pay the check at the time the check is presented.

26. Describe Chapter 12 bankruptcy.

Chapter 12 is for farmers and fishermen and provides for adjustments of debts by persons with regular, fixed incomes.

24. Describe Chapter 13 bankruptcy.

Chapter 13 is for individuals and provides for the adjustment of debts by persons with regular, fixed incomes.

2. Define and explain the purpose of Chapter 7 bankruptcy.

Chapter 7 bankruptcy provides for liquidation proceedings (the selling of all nonexempt assets and the distribution of the proceeds to the debtor's creditors).

4. How is a Chapter 7 bankruptcy proceeding commenced?

Chapter 7 can be commenced by the filing of either a voluntary or an involuntary petition of bankruptcy - the document that is filed with a bankruptcy court to initiate bankruptcy proceedings.

12. Define and describe the Check Clearing and Check 21 Act.

Check 21 allows banks to present a substitute check for clearing rather than the original paper document. This allows financial institutions to use a digital image and transmit the information electronically. This helps to prevent the check from being paid twice and reduce the expense of paper storage and retrieval.

7. What is the potential liability of accountants under the securities law?

Civil liabilities for misstatements and omission of material facts in registration statements and the standard of due diligence.

2. Explain how online deceptive advertising is monitored.

Congress passed the federal CAN-SPAM Act to combat unsolicited commercial emails. Guidelines are also in place requiring "clear and conspicuous" disclosures of any qualifying or limiting information for advertisements. Guidelines also require all ads must be truthful and not misleading, the claims must be substantiated, and ads cannot be unfair.

3. Describe "Constructive Discharge."

Constructive discharge is the termination of employment brought about by making an employee's working conditions so intolerable that the employee feels compelled to leave.

8. How can creditors force a Chapter 7 bankruptcy?

Creditors can file a petition for bankruptcy action on an individual if: - the debtor has 12 or more debtors, and three or more of these creditors have unsecured claims totaling at least $15,325 and they join in the petition - the debtor has fewer than 12 creditors, one or more creditors have a claim totaling $15,325.

1. Define "Deceptive Advertising."

Deceptive advertising is advertising that misleads consumers, either by making unjustified claims concerning a product's performance or by omitting a material fact concerning the product's composition or performance.

1. Describe "Employment at Will."

Employment at Will is a common law doctrine under which either party may terminate an employment relationship at any time for any reason, unless a contract specifies otherwise.

2. Explain how identification takes place with both existing and future goods, and goods that are part of a larger mass.

If the contract calls for the sale or lease of specific and ascertained goods that are already in existence, identification takes place at the time the contract is made. Any goods that are not in existence at the time of contracting are known as future goods. If a sale or lease involves unborn animals to be born within 12 months after contracting, identification takes place when the animals are conceived. If a sale involves crops that are to be harvested within 12 months (or the next harvest season occuriring after contracting, whichever is longer), identification takes place when the crops begin to grow. In the sale or lease of any other future goods, identification occurs when the seller or lessor ships, marks, or otherwise designates the goods as those to which the contract refers.

10. How is risk of loss affected when the seller breaches? When the buyer breaches?

If the goods are so nonconforming that the seller breaches contract and the buyer has the right to reject them, the risk of loss does not pass to the buyer. The general rule is that when a buyer or lessee breaches a contract, the risk of loss immediately shifts to the buyer or lessee. However, the seller or lessor must have already identified the contract goods, the buyer or lessee bears the risk for only a commercially reasonable time after the seller has learned of the breach, and the the buyer is liable only to the extent of any deficiency in the seller's insurance coverage.

7. Describe the remedies for sexual harassment.

If the plaintiff proves that unlawful discrimination occurred, he or she may be awarded reinstatement, back pay, retroactive promotions, and damages. Compensatory damages are available only in cases of intentional discrimination.

8. Describe the remedies a buyer has when the seller breaches.

If the seller refuses to deliver the goods, the buyer may: - cancel or rescind the contract - obtain goods that have been paid for if the seller is insolvent - sue to obtain specific performance if the goods are unique or if damages are an inadequate remedy - buy other goods (obtain cover) and recover damages from the seller - sue to obtain identified goods held by a third party (replevy goods) - sue to obtain damages

7. Describe how prior dealings or customs can affect implied warranties.

Implied warranties can arise as a result of course of dealing or usage of trade. Without evidence of the contrary, when both parties to a sales or lease contract have knowledge of a well-recognized trade custom, the courts will infer that both parties intended for that custom to apply to their contract.

20. Describe Chapter 11 bankruptcy.

In a Chapter 11 (reorganization) action, the creditors and debtor formulate a plan under which the debtor pays a portion of the debts and is discharged of the remainder.

1. Explain what an agent-principal relationship is.

In a principal-agent relationship, the parties have agreed that the agent will act on behalf and instead of the principal in negotiating and transacting business with third parties.

13. Describe "preferences" as they pertain to the bankruptcy proceedings.

In bankruptcy proceedings, property transfers or payments made by the debtor that favor one creditor over others. The bankruptcy trustee is allowed to recover payments made both voluntarily and involuntarily to one creditor in preference over another.

9. What is an "Automatic Stay?" What are the exceptions?

In bankruptcy proceedings, the suspension of virtually all litigation and other action by creditors against the debtor or the debtor's property; the stay is effective the moment the debtor files a petition in bankruptcy. Exceptions include: - collection efforts can continue for domestic-support obligations. - proceedings against the debtor related to divorce, child custody or visitation, domestic violence, and support enforcement are not stayed. - investigations by a securities regulatory agency can continue - certain statutory liens for property taxes are not stayed

6. How can you distinguish whether a person is an employee or an independent contractor?

In deciding whether a worker is categorized as an employee or an independent contractor, courts often consider the following questions: - How much control does the employer exercise over the details of the work? - Is the worker engaged in an occupation or business distinct from that of the employer? - Is the work usually done under the employer's direction or by a specialist without supervision? - Does the employer supply the tools at the place of work? - For how long is the person employed? - What is the method of payment - by time period or at the completion of the job? - What degree of skill is required by the worker?

5. Explain labeling and packaging laws.

Labels must be accurate and they must be in words that are easily understood by the consumer.

5. Define a lease agreement and consumer leases.

Lease agreement: in regard to the lease of goods, an agreement in which one person (the lessor) agrees to transfer the right to the possession and use of property to another person (the lessee) in exchange for rental payments. Consumer Lease: a consumer lease involves three elements: - a lessor who regularly engages in the business of leasing or selling - a lessee (except an organization) who leases the goods "primarily for a personal, family, or household purpose." - Total lease payments that are less than $25,000.

7. Define and describe "risk of loss" and how it applies to shipment and destination contracts.

Risk of loss bears the question, "who suffers the financial loss if goods are damaged, destroyed, or lost in transit?" Under the UCC, risk of loss does not necessarily pass with title. When risk of loss passes from a seller or lessor to a buyer or lessee is generally determined by the contract between the parties. Like risk of loss, the risk of liability that arises from the goods does not necessarily require the passage of title. And like risk of loss, when this risk passes from a seller to a buyer is generally determined by the contract between the parties. In a shipment contract, the risk of loss passes to the buyer or lessee when the goods are delivered to the carrier. In a destination contract, the risk of loss passes to the buyer or lessee when the goods are tendered to the buyer or lessee at the specified destination.

6. Describe the Sarbanes-Oxley Act of 2002.

SOX was created require stricter rules on both foreign and domestic accounting firms and the financial reporting of public companies.

2. Define the terms "sale" and "goods."

Sale: the passing of title (evidence of ownership rights) from the seller to the buyer for a price. Good: an item of property that is tangible and movable.

9. Describe the different types of conditional sales.

Sales on Approval: a type of conditional sale in which the buyer may take the goods on a trial basis. The sale becomes absolute only when the buyer approves of (or is satisfied with) the goods being sold. Sale or Return: a type of conditional sale in which title and possession pass from the seller to the buyer; however, the buyer retains the option to return the goods during a specified period even though the goods conform to the contract.

8. What is the purpose of State Workers' Compensation Laws?

Sate Workers' Compensation Laws establish an administrative procedure for compensating employees injured on the job.

1. Describe and explain the major provisions of the Sherman Antitrust Act.

Section 1 and 2 contain the provisions of the Sherman Act: - Section 1: Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is hereby declared to be illegal and is a felony punishable by fine and/or imprisonment. - Section 2: Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce upon the several States, or within foreign nations, shall be deemed guilty of a felony.

5. Explain the purpose of Section 2 of the Sherman Antitrust Act.

Section 2 condemns every person who shall monopolize, or attempt to monopolize the market.

7. Describe "price discrimination."

Setting prices in such a way that two competing buyers pay two different prices for an identical product or service.

19. Explain how unions can be organized.

Step 1: have employees sign authorization cards, stating a desire to be represented by a certain union. If a majority is signed, the union organizers present the cards to the employer and ask for a formal recognition. The employer can approve or deny. Step 2: if the employer chooses not to voluntarily recognize the union, the union organizers must present the cards to the NLRB with a petition for election.

12. Explain the purpose of the Affordable Care Act (Obamacare) and when it applies to businesses.

The ACA requires most employers with 50 or more full-time employees to offer health insurance benefits to its qualified employees. It also extends tax credits of up to 35% for employers who do offer health insurance benefits.

10. What is a disability?

The ADA defines a disability as including any of the following: - A physical or mental impairment that substantially limits one or more of the major life activities of the affected individual. - A record of having such an impairment. - Being regarded as having such an impairment.

10. Describe a principal's duties to an agent.

The principal's duties to the agent include the following: - Compensation (the principal has a duty to pay the agent in a timely manner for services rendered) - Reimbursement and Indemnification (the principal must reimburse the agent for any funds disbursed at the principal's request or for any necessary expenses. The principal must also indemnify an agent for liabilities incurred because of authorized and lawful acts and transactions.) - Cooperation (cooperate with the agent and to assist the agent in performing his duties and must do nothing to prevent that performance) - Safe Working Conditions (provide a safe working premises, equipment, and conditions for all agents and employees.)

20. Define "collective bargaining."

The process by which labor and management negotiate the terms and conditions of employment, including working hours and workplace conditions.

5. Explain the purpose of the Worker Adjustment and Retraining Notification Act.

The purpose of WARN is to provide employees of large businesses with an advance notice of layoff or shutdown. It also provides the federal and/or state government with notification so that they have the opportunity to provide resources, such as job training to displaced workers.

7. Describe the Substantial Abuse-Means Test.

The purpose of the test is to keep upper-income people from abusing Chapter 7 by providing a formula to determine whether the debtor has the means to file under other bankruptcy methods or if the debtor is not abusing the bankruptcy rules.

8. Describe the "shelter principle?"

The shelter principle extends the benefits of HDC status and is designed to aid the HDC in readily disposing of the instrument. Anyone, no matter how far removed from an HDC, who can ultimately trace her or his title back to an HDC comes within the shelter principle. The idea is based on the legal authority that the transferee of an instrument receives at least the rights that the transferor had. By extending the benefits of HDC status, the shelter principle promotes the marketability and free transferability of negotiable instruments.

15. Describe what happens to the proceeds from dispositions.

They are dispensed in a prioritized order: -reasonable expenses incurred by the secured party for repossessing, storing, and reselling the collateral. - Balance of debt owed to the secured party - Junior lienholders who have made written or authenticated demands. - Any surplus to the debtor, unless the collateral consists of accounts, payment intangibles, promissory notes, or chattel paper.

1. Describe the purpose and function of Title VII of the Civil Rights Act of 1964.

This act and its amendments prohibit job discrimination against employees, applicants, and union members on the basis of race, color, national origin, religion, and gender. It prohibits discrimination in the hiring process, discipline procedures, discharge, promotion, and benefits.

2. How is a security interest created? List three elements.

Three requirements must be met for a creditor to have an enforceable security interest: - Unless the creditor has possession of the collateral, there must be a written or authenticated security agreement that clearly describes the collateral subject to the security interest and is signed and authenticated by the debtor. - The secured party must give the debtor something of value. - The debtor must have rights in the collateral.

6. Define and describe "warranty liability."

Transferors make certain implied warranties regarding the instruments that they are negotiating. Warranty liability arises even when a transferor does not sign the instrument. Warranty liability is particularly important when a holder cannot hold a party liable on his signature, such as when a person delivers a bearer instrument. Unlike secondary signature liability, warranty liability is not subject to the conditions of proper presentment, dishonor, or notice of dishonor. Both transfer and presentment warranties attempt to shift liability back to the wrongdoer or to the person who dealt face to face with the wrongdoer and thus was in the best position to prevent the wrongdoing.

8. Explain confidentiality and privilege as it pertains to the accountant-client relationship.

Under common law, conversations between professionals and their clients are not privileged.

4c. Describe the Fair Labor Standards Act as it pertains to overtime.

Under the FLSA, employees must pay employees who work more than a 40 hour work week at least 1.5 times this regular pay rate for any time worked over 40 hours in the week. Certain executive and administrative employees are exempt.

7. Explain the Postal Reorganization Act of 1970.

Under the Postal Reorganization Act, a consumer who receives unsolicited merchandise sent by US Mail can keep it, throw it away, or dispose of it in any manner that he sees fit. The recipient will not be obligated to the sender.

10. Describe the Statute of Frauds, including how it pertains to merchants and exceptions to the rule.

Under the Statute of Frauds, sales contracts for goods priced at $500 or more and lease contracts requiring total payments of $1,000 or more must be in writing to be enforceable. In sales contracts, merchants can satisfy the Statute of Frauds if, after the parties have agreed orally, one of the merchants sends a signed written (or electronic) confirmation to the other merchant within a reasonable amount of time. Exceptions to the rule are specially manufactured goods for a particular buyer or specially manufactured or obtained for a particular lessee, if the goods are not suitable for resale or lease to others in the ordinary course of the seller's or lessor's business, or if the seller or lessor has substantially started to manufacture the goods or has made commitments for the manufacture or procurement of the goods.

9. Differentiate between universal and personal defenses against liability.

Universal defenses (valid against all holders, including HDCs and holders through HDCs): - forgery of a signature on the instrument. - fraud in the execution - material alteration - discharge in bankruptcy - minority - illegality, mental incapacity, and extreme duress Personal defenses (used to avoid payment to an ordinary holder of a negotiable instrument. They are not a defense against an HDC or holder through an HDC): - breach of contract or breach of warranty - lack or failure of consideration - fraud in the inducement (ordinary fraud) - illegality - mental incompetence - ordinary duress or undue influence rendering the contract voidable - discharge by previous payment or cancellation - unauthorized completion of an incomplete instrument - nondelivery of the instrument

3. When does title pass between seller and buyer?

Unless otherwise explicitly agreed, title passes to the buyer at the time and place the seller performs by delivering the goods.

5. Differentiate between void and voidable titles.

Void Title: a title that does not legally exist, usually due to the seller being a thief. A seller has a voidable title to goods obtained by fraud, paid for with a dishonored check, purchased from a minor, or purchased on credit with the seller was insolvent.

6. When is an agent's act considered unauthorized?

When an agent has no authority but nevertheless contracts with a third party.

6. Differentiate between a holder and a holder in due course (HDC).

When an instrument is transferred, an ordinary holder obtains only those rights that the transferor had in the iinstrument. In this respect, a holder has the same status as an assignee. Like an assignee, a holder normally is subject to the same defenses that could be asserted against the transferor. A holder in due course takes an instrument free of most defenses and claims that could be asserted against the transferror. An HDC is a holder who meets certain acquisition requirements and therefore receives a higher level of protection from defenses and claims asserted by other parties.

3. Explain what law applies when a transaction combines both goods and services.

When contracts involve a combination of goods and services, courts generally use the predominant-factor test to determine whether a contract is primarily for the sale of goods or the sale of services. If a court decides that a mixed contract is primarily for a goods contract, any dispute, even a dispute over the services portion, will be decided under the UCC.

4. Describe the bank's duties to honor checks, as it pertains to overdrafts, postdated checks, stale checks, stop-payment orders, and incompetence or death of the customer.

When the bank receives an item properly payable from its customer's checking account but the account contains insufficient funds to cover the amount of the check, the bank has two options. It can either dishonor the item, or it can pay the item and charge the customer's account, thus creating an overdraft. The bank can subtract the difference plus a service charge from the customer's next deposit because the check carries with it an enforceable implied promise to reimburse the bank. A bank can expressly agree with a customer to accept overdrafts through what is called an "overdraft protection agreement." A bank may charge a postdated check against a customer's account unless the customer notifies the bank, in a timely manner, not to pay the check until the stated date.The bank should treat the notice like a stop-payment order until the appropriate date. A bank is not obligated to pay an uncertified check presented more than 6 months from its date (stale check). When receiving a stale check for payment, the bank has the option of paying or not paying the check. If a bank pays a stale check in good faith without consulting the consumer, the banks has the right to charge the customer's account for the amount of the the clerk. A bank must honor a stop-payment order by a customer on a specific check as long as it has not already been certified, has a valid legal ground for stop-payment, and must be issued within a reasonable time and manner. Neither the incompetence nor death of a customer revokes a bank's authority to pay an item until the bank knows of the situation and has reasonable time to act on the notice.

19. When will discharge be revoked?

a discharge may be revoked within one year if it is discovered that the debtor acted fraudulently or dishonestly during the proceeding

12. What is the Statute of Limitations for a breach of warranty?

a cause of action for breach of contract under the UCC must be commenced within four years after the breach occurs unless the parties agree to a shorter period. The action for breach of warranty accrues when the seller or lessor tenders delivery, even if the buyer or lessee is unaware of the breach at that time.

6. Explain the concept of "anticipatory repudiation."

an assertion or action by a party indicating that he will not perform an obligation that the party is contractually obligated to perform at a time in the future.

22. Define and describe a DIP (debtor in possession).

in chapter 11, a debtor who is allowed to continue in possession of the estate in property (the business) and to continue business operations

1. What is a warranty?

in sales and lease law, an assurance or guarantee by the seller or lessor about the quality and features of the goods being sold or leased.

18. Define and describe the effects of discharge.

the primary effect of a discharge is to void, or set aside, any judgement on a discharged debt and prohibit any action to collect a discharged debt. A discharge does not affect the liability of a co-debtor.