Business Law II DSST #2

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Fungible
Being of such nature or kind as to be freely exchangeable or replaceable, in whole or in part, for another of like nature or kind.
Bona Fide
“In good faith”.
Warranty of Title
Automatic and guarantees the title is legally owned by the seller, free of lien, and good in question is not an infringement on another’s rights.
Express Warranties
Goods fulfill statement made by seller.
Implied Warranties
Goods are fit for standard use.
Disclaimers
Can negate warranties.
“As Is” Disclaimer
Voids warranties of merchantability.
Specific Use Disclaimer
Voids implied warranties of fitness for a specific purpose.
Magnuson-Moss Warranty Act
1975. Designed to prevent deception in warranties by making them easier to understand.
Full Warranty
Free repair of replacement for a defective part. May not cover every aspect
Limited Warranty
Has a time limit. Must be clearly stated that it is limited.
Strict Product Liability
Defective when sold. Actual harm must have occurred; defect must be the cause of damage.
Manufacturing Defects
When product doesn’t conform to specs, even if care is exercised.
Design Defects
The design incurs unreasonable risk of harm.
Warning Defects
Sufficient warning of hazards incurred by use or reasonable misuse is not present.
Defenses to Liability
Consumer assumes risk. Product is misused. Comparative negligence.
Click-On Agreement
Agreement that arises when a buyer, engaging in a transaction on a computer, indicates his or her assent to be bound by the terms of an offer by clicking on a button that says, for example, “I agree”.
Browse-Wrap Agreement
Terms and conditions of use that are presented to an internet user at the time certain products, such as software, are being downloaded but that need not be agreed to before being able to install or sue the product.
Shrink-Wrap Agreement
An agreement whose terms are expressed in a document located inside a box in which goods (usually software) are packaged.
E-Contract
A contract that is formed electronically
Digital Signature
A private cryptographic key that, when matched with a corresponding public key, recognizes the signature.
Cybernotary
Manages digital signatures.
Signature Dynamics
Records the signature with a pad and stylus.
Uniform Electronic Transactions Act of 1999
UETA. Defines e-signatures.
Partnering Agreements
Provide ground rules for all subsequent online transactions between two parties.
Uniform Computer Information Transactions Act of 2000
UCITA. Governs computer information sales and leases.
Agent
Any employee who deals with third parties.
Principal
Employer
Performance, Notification, Loyalty, Obedience, Accounting
Five duties of an agent.
Actual Authority
Should be in writing if agent will be doing written contracts.
Apparent Authority
Occurs when the principal causes the third party to think someone is an agent. Any actions the implied agent takes will be treated as if he were an agent by courts.
Power of Attorney
A written document, which is usually notarized, authorizing another to act as one’s agent; can be special or general
Special Power of Attorney
Written document allowing the agent to do specified acts only.
General Power of Attorney
Written document allowing the agent to transact all business for the principal.
Contract Liability
Principle is liable if he is disclosed or partially disclosed to the third party.
Disclosed Principal
Principal’s identity is known when contract is formed.
Partially Disclosed Principal
Principal’s identity is unknown, but the third person knows that agent is or may be acting for a principal when contract is formed.
Undisclosed Principal
Principal’s identity is unknown, and third person does not know the agent is acting for someone else. Agent is liable.
Respondeat Superior
Principal is liable for agents’ actions if they were “in the scope of employment”.
Renunciation
Giving up a right, such as a right of inheritance, a gift under a will or abandoning the right to collect a debt on a note.
Revocation
Mutual cancellation of a contract by the parties to it.
Fair Labor Standards Act of 1938
Established a federal minimum wage, mandated overtime pay, and banned child labor.
Occupational Safety and Health Act of 1970
OSHA. Charged with keeping workplaces safe.
Consolidated Omnibus Budget Reconciliation Act of 1986
COBRA. Allows employees to continue in a company’s group insurance plan after termination if they pay the fees.
Family Medical Leave Act of 1993
FMLA. Allows employees to take up to 12 weeks per year of unpaid leave in a company with 50+ employees.
Sole Proprietorship
The simplest form of business. Owner pays personal income tax on all profits and is personally liable for all business debts.
Partnership
Created by agreement of the parties. Partners have unlimited liability for partnership debts.
Uniform Partnership Act of 1997
Governs partnerships. UPA.
Limited Partnership
Limited partner contributes capital but has no right to participate in management. A general partner is responsible for management and is liable for all partnership debts.
Certificate of Partnership
Filing of it forms a limited partnership.
Corporation
Owned by shareholders. Liability is limited to investment. Profits taxed twice.
Limited Liability Company
LLC. Limited liability of corporations and tax benefits of partnerships. Profits taxed once.
Limited Liability Partnership
Partnership for professionals who normally do business as partners in a partnership.
Joint Venture
An organization created by two or more people for one transaction or a limited activity. Usually a set time and for a specific project.
Syndicate
An investment group to finance a particular project. Could be a corporation, or general or limited partnership.
Joint Sock Company
A hybrid. Similar to a corporation but otherwise resembling a partnership.
Business Trust
Formed by a written trust agreement. Investors transfer cash or property to trustees in exchange for certificates of investment shares.
Cooperative
An association, which may or may not be incorporated, that is organized to provide an economic service to its members.
Distributorship
A manufacturer (franchisor) licenses a dealer (franchisee) to sell its product. Often has an exclusive territory.
Chain-Style Business Operation
When a franchise operates under a franchisor’s trade name.
Manufacturing or Processing Plan Arrangement
Exists when a franchisor transmits to the franchisee the essential ingredient or formula to make the product.
Business Premises
Who buys equipment and furnishings.
Draft, Check, Promissory Note, Certificate of Deposit
4 types of negotiable instruments.
Uniform Commercial Code Article 3
UCC. Governs negotiable instruments.
Drafts and Checks
Orders to pay.
Promissory Notes and CDs
Promises to pay.
Drawer
The person creating the draft.
Drawee
The person ordered to pay by the drawer.
Payee
The recipient of the funds.
Time Drafts
Payable at a certain date.
Sight Drafts
Payable on presentation.
Trade Acceptance
A draft in which the drawer is also the payee. The drawee is the buyer of the goods.
Promissory Note
Written promise by the Maker to pay the Payee.
Holder in Due Course
HDC. This person acquires additional rights to the instrument than the assignor had, which means most defenses against payment are revoked. Gave something of value for the instrument; took it in good faith.
Primary Liability
Incurred by the maker and acceptor (a drawee who agrees to pay).
Secondary Liability
Falls on the drawer and unqualified endorsers if the drawee dishonors the instrument.
Transfer Warranty
Transferor guarantees that the transferor is entitled to enforce the instrument and everything is good to go.
Presentment Warranty
The presenter has no knowledge of unauthorized signatures, alteration, or other defect.
Insufficient Funds
Overdraft. The bank can either dishonor it or pay it and charge the customer’s account, creating an overdraft.
Stale Checks
Non-certified checks over 6 months old. Bank has option of whether or not to pay.
Stop-Payment Order
Often used when checks are stolen or when a breach of contract has occurred.
Forged or Altered Checks
Bank is liable, unless customer was negligent or the holder knew the signature was forged.
E-Money
Governed by regulation E. Includes ATM cards, Smart Cards, Stored-Value Cards, Credit card machines, Direct deposits, etc.
Depository Bank
Where a check is deposited.
Payor Bank
The bank on which a check is drawn.
Collecting Bank
Any bank except the payor bank that handles a check during the collection process.
Intermediary Bank
Any bank except the payor bank and the depository bank to which an item is transferred in the collection process.
Chattel Paper
Any writing evidencing a debt secured by personal property.
Secured Party
Creditor who holds a security interest in a debtors capital.
Debtor
One who owes payment to a creditor.
Security Interest
The interest in collateral should the debtor default on the loan.
Collateral
Subject of security interest.
Financing Statement
Publicly filed document giving notice of the secured party’s interest in collateral.
Perfection
Secured party protecting his rights to collateral.
Deficiency
Unless otherwise agreed, or if the collateral was intangible, the debtor may be held liable for any remaining debt after disposition.
Lien
Claim against property to satisfy debt.
Mechanic’s Lien
For work done on real property.
Artisan’s Lien
For value added to personal property (possessory).
Judicial Lien
Issued by a court to ensure payment, allows seizure.
Garnishment
Usually extracted from paycheck.
Homestead Exemption
Allows the debtor to retain a certain amount as a homestead exemption when going bankrupt.
Bankruptcy Code Chapter 7
Liquidation.
Bankruptcy Code Chapter 11
Reorganization.
Workouts
An alternative to Bankruptcy Code Chapter 11. An out-of-court agreement of how parties can work out a payment plan.
Bankruptcy Code Chapter 13
Individual repayment plan.
Categories: Business Law