By operation of law, the trustee automatically becomes the owner of all of the debtor’s
property in excess of the property to which the debtor is entitled under exemption laws.
When a buyer makes a purchase without relying on the seller’s skill and judgment, no
warranty of fitness for a particular purpose exists.
The two most common instruments used to provide the capital structure of a
corporation are stocks and bonds.
Larceny is best defined as the taking of personal property from the presence of the
victim by the use of force or fear.
John received a promotion at work and felt new clothes would be necessary in the new
position. John went to a local store and charged three ties on his charge account at a
cost of $60 each. Bill, a friend of John’s, saw a sidewalk vendor selling ties at a cost of
three for $10 and bought three at that price. The friends compared purchases that night
and found that they had purchased identical ties. John became enraged and said that he
would not pay the charge-account bill because the ties were clearly not worth $60 each.
Bill indicated that he would testify on John’s behalf if litigation ensued. What would be
the probable outcome of the lawsuit?
A payee is not liable on an instrument until the payee transfers the instrument to
someone else.
Miriam issued two checks. The first check was made payable to her neighbor for a used
car that the neighbor sold to Miriam. The second check was a rent payment to Miriam’s
landlord for the current month’s rent.
The car was purchased on the basis of the neighbor’s written assurance that the car had
only 38,000 miles of use. After Miriam took possession of the car, Miriam’s mechanic
checked the vehicle and substantiated that the odometer had been turned back. The car
had actually been used for 79,000 miles. Miriam stopped payment on the check and
offered to return the car. Meanwhile, the neighbor had purchased a computer and had
negotiated Miriam’s check to the vendor in payment. Discouraged by the problems with
the car, Miriam decided to take a vacation. She issued a written stop payment to her
bank on the rent check because she intended to use this money for the vacation.
Although the drawee bank had ample time to act, it made an error and paid the rent
check instead of stopping payment. Two lawsuits resulted. In the first, the vendor of the
computer sued Miriam on the check. In the second, Miriam sued her bank for paying
over her timely stop payment order. Decide both cases.
A buyer has the right to accept some commercial units of a shipment and reject other
commercial units.
The Securities Act of 1933 deals with the original distribution of securities by the
issuing corporations.
A local newspaper devotes its New Year’s Day issue to people who have performed
heroically during the past year. One of the people included in the article was Janet, a
local actress. Eight months earlier, a fire started in the theater while she was in the
middle of a performance. Rather than running out, she stayed to help frightened
members of the audience get out of the theater. The New Year’s article stated that Janet
had been unable to find work as an actress because of burns to her hands and feet and
that, as a result, she owes a great deal of money. Janet sued the newspaper for invasion
of privacy. Based on what you have learned in this chapter, how should the case be
decided?
A societé anonyme is the European counterpart of a U.S. corporation.
Under the statute of frauds, an oral contract must be completed within one year after
performance begins.
A limited liability company is treated like a partnership under federal tax law and has
the limited liability feature of corporations.
Ethical violations can cause lasting detriment to a company’s ability to do business
through impacts on the company’s reputation.
Under the RMBCA, a preincorporation subscription agreement is irrevocable for three
(3) months unless the subscription agreement provides a longer or shorter period, or all
of the subscribers agree to revocation.
State governments may regulate business in all of its aspects, even if such regulation
imposes a burden on interstate commerce.
Instruments are negotiable when they contain the terms required by contract law.