Exam 1 Qs
civil law system
a system of law derived from Roman law that is based on codified laws (legal principles enacted into law by legislature) rather than on case precedents
What are the two types of federal agencies?
executive and regulatory
What function does a severability clause serve? Choose 2 answers.
1. it specifies what will happen with a potentially unenforceable part of a contract 2. it preserves the rest of the contract if one part is unenforceable
In which of these situations might a court pierce the corporate veil? Choose 2 answers. 1. More than half of the officers have resigned or been fired due to low profits. 2. Personal and corporate money is mixed together in one account. 3. The corporation does not have sufficient capital to operate and meet its debts. 4. The corporation has borrowed money from a shareholder.
2, 3
Of the four sources of American law, which is considered the supreme law of the land?
constitutional law
If unforeseen difficulties arise during the performance of a contract, may the parties change the terms of the contract without giving additional consideration?
yes, if the modification is fair and equitable
Which statement is true about the ability of minors to enter into contracts?
A minor may enter into any contract an adult can, except for contracts that are expressly prohibited for minors.
What is the term for the legal ability to enter into a binding contract?
contractual capacity
Which of the following provisions are typically in a charter for a corporation? Choose 2 answers. 1. the name and address of the corporation's agent 2. the intended business purpose of the corporation 3. the advertising plan for the corporation 4. the trade secrets of the corporation
1, 2
What are 3 ways in which a merchant status can arise?
1. *deals in goods of the kind* involved in the sales contract 2. by occupation, *holds himself out as having special knowledge and skill* related to the practices or goods involved in the transaction 3. by employing a merchant as a broker, agent, or other intermediary in a transaction
Which of the following is legally sufficient consideration? Select 2 answers.
1. a promise to do a legal act 2. forbearance of a legal act
What are the four sources of American law?
Constitutional, Statutory, Regulatory (administrative), Common (case law)
When might a contract made by a mentally incompetent person be enforceable?
The incompetent person was lucid at the time the contract was made.
international law
a body of written and unwritten laws observed by independent nations and governing the acts of individuals as well as governments
What is a requirement for the initial formation of a corporation?
a charter (articles of incorporation)
regulatory agency
a department, bureau, or independent agency whose primary mission is to impose limits, restrictions, or other obligations on the conduct of individuals or companies in the private sector (ex: FTC, SEC, FCC); President does not have as much authority over these and there are fixed terms for officers
A corporation that is formed in one state but does business in another state is referred to in the second state as
a foreign corporation
natural law theory
a higher or universal law exists that applies to all human beings, and written laws should imitate these inherent principles
Article 2A covers any transaction that creates....
a lease/sublease of goods
An agreement will lack consideration if:
a person makes a promise in return for an act which has already taken place
What is true of the tax liability of C corporations? a. C corporations pay taxes on profits at the corporate level. b. C corporations pay income tax only on corporate income that has been distributed to the owners as dividends. c. C corporations only pay taxes on income that has not been distributed as dividends. d. C corporations do not pay any taxes.
a. C corporations pay taxes on profits at the corporate level.
criminal law
addresses wrongs committed against society for which society demands redress (prison/fines are usually remedy)
Under which source of American law are federal agencies?
administrative law
If a provision in the Florida state constitution conflicts with a provision in the U.S. Constitution: a. neither provision applies b. the provisions are balanced to reach a compromise c. the state constitution takes precedence d. the U.S. constitution takes precedence
d. the US constitution takes precendence
equitable remedies
given to a party to enforce a right or to compensate for violation of a right
A contract for a purpose that causes the parties to violate a law is...
illegal and void
Administrative Procedure Act
imposes requirements agencies must follow during rulemaking
executive agency
independent agency that deals with certain specific areas within the government (ex: FDA); the President has authority to appoint and remove officers
stare decisis
let the decision stand (cornerstone of common law)
What type of corporation is formed for the purpose of doing a public service instead of making money?
nonprofit
When contracts involve a combination of goods and services, courts generally use what test to determine whether the contract is primarily for the sale of goods or services?
predominant factor test
equitable maxims
provide guidance in deciding if plaintiffs should be granted equitable relief
merchant
someone who is in the business of buying or selling particular goods and who possesses or uses an expertise specifically related to those goods
Under which source of law are uniform laws?
statutory law
What are the characterizations of "goods" subject to Articles 2 and 2A of the UCC?
tangible and movable
cyberlaw
the emerging body of law that governs transactions conducted via the internet
In order for an accord and satisfaction to be valid, the debt must be:
unliquidated
A contract for an illegal purpose is...
void
If a buyer agrees to purchase "all the widgets I require" and the seller agrees to sell him "all the widgets you require" is there sufficient consideration?
yes, because this is a requirements contract
What is the key difference between national law and international law?
government authorities can enforce national law - other countries or international organizations are responsible for enforcing international law (and may or may not choose to participate)
Uniform Commercial Code
recognized as the most important statute in business law, it includes provisions which regulate certain sales of goods and negotiable instruments between states
What is the main function of administrative agencies?
rulemaking (make legislative rules that are legally binding on all businesses)
Which type of corporation is taxed like a partnership, with shareholders paying personal income tax on business income?
s-corporation
A creditor on a liquidated debt of $1 million may agree to take which of the following from the debtor in satisfaction of that debt? Select 2 answers.
1. a horse in exchange for the $1 million that is due 2. 100 cents on the dollar
What are the 3 elements of a consumer lease?
1. a lessor who regularly engages in the business of leasing or selling 2. a lessee (except an organization) who leases the goods "primarily for a personal, family, or household purpose" 3. total lease payments that are less than a dollar amount set by state statute
What types of contracts violate public policy? Choose 3 answers.
1. employment contracts that forbid membership in a union 2. a candidate for public office paying his competitor to retire 3. conducting trade with a country that is an enemy to the United States
What elements are required for courts to apply the doctrine of promissory estoppel? Choose 3 answers.
1. enforcement of the promise is necessary to avoid injustice to the promise 2. there was a detrimental result from reliance on the promise 3. the promise must be definite and relied upon
What factors may cause a person to lack contractual capacity? Choose 3 answers.
1. mental incompetence 2. being under the age of majority (usually 18) 3. severe intoxication
What factors are used to judge if consideration is adequate to ensure a fair bargain? Choose 2 answers.
1. promises must be made with voluntary consent 2. promises exchanged may not be a preexisting duty
What factors may overturn a minor's right to disaffirm a contract? Choose 3 answers.
1. the minor misrepresented the minor's age while engaging in business as an adult 2. the minor ratifies the contract after reaching the age of majority 3. the contract is for necessaries
When are covenants not to compete in employment contracts considered to be against public policy? Choose 2 answers.
1. when the geographical restriction is too broad 2. when the specified time of restraint is excessive
What documents spell out the powers of a corporation? Choose 2 answers. 1. certificate of corporate power 2. the bylaws 3. the charter 4. de facto documentation
2, 3
A police officer who finds a missing child as part of his duties may not collect any reward for finding the child. Why?
because the officer already had a pre-existing duty to do so
National Conference of Commissioners on Uniform State Laws
draft uniform laws that can be adopted by states; created the Uniform Commercial Code in 1952
historical law
emphasizes the evolutionary process of law by concentrating on the origin and history of the legal system
What does Article 2 not deal with the sale of?
real property (real estate), services, or intangible property (stocks or bonds)
civil law
spells out the rights and duties that exist between persons and between persons and their gov'ts, as well as the relief available when a person's rights are violated ($$ is usually remedy)
administrative law
the body of law created by administrative agencies in order to carry out their duties and responsibilities
constitutional law
the body of law derived from the U.S. Constitution and the constitutions of the various states.
common law
the body of law developed from custom or judicial decisions in English and U.S. courts, not attributable to a legislature
statutory law
the body of law enacted by legislative bodies (as opposed to constitutional law, administrative law, or case law)
national law
the law of a particular nation
Who is liable for contracts entered into on behalf of the corporation before the corporation is formed?
the promoter
case law
the rules of law announced in court decisions; interprets statutes, regulations, and constitutional provisions, and governs all areas not covered by statutory or administrative law
positive law (national law)
the written law of a given society at a particular point in time, applies only to the citizens of that nation or society
T/F: Judges apply common law rules when deciding cases.
true
In a bilateral contract, the consideration which supports the forming of the contract is:
a promise to perform
substantive law
all laws that define, describe, regulate, and create legal rights and obligations
procedural law
all laws that establish the methods of enforcing the rights established by substantive law
remedies at law
awards of land, money, and items of value
How does the governance of a closely held corporation compare to the statutory model of corporate governance? a. They are very different, with shareholders having less influence than directors in a closely held corporation and more influence in the statutory model. b. They are very different, with shareholders having more influence in a closely held corporation than in the statutory model. c. They are very similar, with shareholders having the most influence on the corporate governance in both models. d. They are very similar, with directors having the most influence in both models.
b. They are very different, with shareholders having more influence in a closely held corporation than in the statutory model.
legal realism
based on the idea that law is just one of many institutions in society and that it is shaped by social forces and needs
Most nations today have a _______ or _______ law system.
common; civil
remedies in equity
specific performance, injunction, rescission (only granted when remedies at law are unavailable or inadequate)
