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125 Cards in this Set
- Front
- Back
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requirement for principal/agent: |
Principal
minor - NOT OK incompetent - NOT OK consent - MUST HAVE Agent minor - OK incompetent - OK consent - don't know |
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what are the 2 situations where writting is required in principal/agent relationship
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1 - buy/sell LAND
2 - can't perform within 1 YEAR |
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who is required to sign power of attorney - principal or agent
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ONLY principal
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explain following duties of principal:
duty of loyalty duty of obedience duty of reasonable care |
duty of loyalty - no kickbacks, self dealing, avoid conflicts of interest AND don't disclose confidential info
duty of obedience - do NOT exceed authority duty of reasonable care - liable if negligent to principal AND 3rd party |
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what 2 things trigger tort damages against agent
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negligence OR intentionally breaching
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when can a principal sue agent for contract damages
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if agent was paid
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what happens with kickbacks if found (recovery of secret profits)
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court imposes a constructive trust on profits - agent must repay
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relating to duties of principal to agent - what is the basics of compensation
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unless agreed upon otherwise, principal has implied duty to give consideration
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what is the GR of power to terminate agency relationship
EXCEPTION |
GR - terminate at will (power, not right - can be sued)
Agency coupled with an interest (A creditor of P) - only agent can terminate |
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what are the 3 ways agency power can arise - what 3 types of power
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actual authoirty
apparent authority ratification |
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what are the 2 types of actual agency authority
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express - oral/written
implied - reasonably necessary to carry out duties (fly to CA to meet with owners of baseball team) |
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what is NOT implied actual authority of business mgr (1)
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mortgages (borrow money)
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in what 3 ways can actual agency authority be terminated
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1 act of parties (quit) - remember agency coupled with an interest
2 accomplish objective/time 3 automatically by operation of law |
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what are the things that terminate actual agency authority automatically by operation of law
be FAMILIAR |
death
incapacity discharge in bankruptcy failure to acquire license destruction of subject matter subsequent illegality |
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what is apparent agency authority
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job title
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if I show up and say I'm an agent of Koch - are they liable for my action
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GR - NO, unreasonable for 3rd party to take my word for it
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actual or apparent agency authority:
3rd party reasonable belief agent's reasonable belief |
3rd party reasonable belief - apparent
agent's reasonable belief - actual (implied) |
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what agency authority is a job title
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apparent
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if P tells A not to exceed $500 on widgets, what authority is destroyed/left
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destroyed - actual
left - apparent |
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what must happen to terminate apparent authority
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notice given to 3rd parties
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what notice must be given to old/new customers:
actual ntoice constructive |
Old - actual ntoice
New/rest of the world - constructive (paper) |
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what notice must be given to 3rd parties when agency is terminated by operation of law
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NO NOTICE
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what is ratification in agency law and what are the 3 conitions
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A must have indicated there was P
P must be disclosed ALL material info FULL ratification must happen - no partial |
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when can ratification NOT take place in principal agent relationship
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3rd party withdraws before P ratifies
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is an agent liable for contract
P disclosed P partially disclosed P undisclosed |
P disclosed - NO
P partially disclosed - YES P undisclosed - YES |
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when will a disclosed principal be liable (3)
when will an undisclosed principal be liable (2) |
actual
apparent ratify ONLY actual - can't have apparent ratify |
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can you have apparent authority if principal is undisclosed
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NO - just actual
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if an agent has actual authority - when is a principal NOT liable
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NEVER - always liable
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if a 3rd party wants to push liablity on P AND A - is this possible
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NO - must pick 1
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are principals liable for torts of agents
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GR - no
Unless they are: employees and within scope of employment |
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what must be present to prove they are an employee
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control manner of performance - UPS is contractor because we don't tell them how to get package there
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is an employer liable for employees:
negligence intentional torts |
negligence - YES
intentional torts - NO |
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what is the only time P is liable for contractors
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authorized tortious act or work involved ultrahazardous activity
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what are the bankruptcy cases:
7 9 11 12 13 |
7 - liquidation
9 - municipal debt adjustment 11 - reorg 12 - family farmers 13 - invididual debt adjustment |
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which are OK for I, P or C
7 11 13 |
7 - I P or C
11 - I P or C 13 - I only |
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when is a trustee NOT required
7 11 13 |
7 - R
11 - NOT REQUIRED 13 - R |
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what are the tests for dismissal or conversion of CH 7
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step 1 - current monthly income (6 month avg) vs. state median income - if below, get to stay at 7
step 2 - if above: net monthly income - certain allowed expense) if less than 6,500 - Get to stay at 7 if more than 11,000 - go to 13 or dismiss if in between - only abuse if the amount 25%+ of unsecured claims |
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what are 2 examples of when 7 is OK even if abuse is present
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INCOME WILL GO DOWN
serious illness active duty |
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what is the 1 group that is NOT subject to abuse dismissal for 7
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disabled veterans
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who is NOT eligible for CH 7
who is NOT eligible for CH 11 |
7 - No RIBS railroads, savings institutions, insurance companies, banks and small business investment companies
11 - No BIBS - savings institutions, insurance companies, banks and small business investment companies |
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what are railroads NOT eligible for
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7
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what does CH 7 and 11 do in the way of collections
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automatic stay on MOST creditors
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which can be voluntary/involuntary
7 11 13 |
7 - either
11 - either 13 - only voluntary |
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do Ls have to outway Assets to file 7
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NO
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can spouses file 7 jointly
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YES - to save on fees
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which 2 can be involuntary cases
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7 and 11
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to force 7 or 11 - what are the rules
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unsecured, undisputed creditors
0-12 = 1 more than 13,500 12 + = just need 13,500 in total |
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does a debtor need to own more than 13,500 to file 7 or 11
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NO - only in involuntary situations
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what happens at the 341 meeting for creditors
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debtor must attend - creditors get to examine debtor
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what 3 things are included in bankruptcy estate
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real AND personal property at time of filing
income generated from estate property (ie rental) assets received from divorce, inheritance or insurance within 180 days after filing |
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what assets received from divorce, inheritance or insurance are included in estate
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within 180 days after filing
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what property is EXCLUDED from estate (3)
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post-petition earnings
spend thrift trusts education IRAs/state tution programs |
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what property is exempt from bankruptcy per states
be familiar |
things needed to live
homestead car household goods unmatured life insurance tools of trade health aids gov't benefits alimony/child support |
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of the exemptions from bankruptcy estate under state rules - what 3 priorities don't apply
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PMSI
mortgage on property tax liens |
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what happens if debtor making preferential payments
antecedent debts made within 90 days |
trustee can disaffirm preferences
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what are the 2 words to look for relating to antecedent (preexisting debts)
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prepaying
accelerating payments if made within 90 days (1 year if insider) TRUSTEE CAN DISAFFIRM |
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what are 2 typical things trustee can't set asside during bankruptcy
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ordinary course of business (electric bill)
domestic support (alimony/child support) |
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what happens if unsecured creditors don't file on petition
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left out
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what things will prevent us from getting discharge in bankruptcy
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DRAWING
Discharge within 8 years Records, failure to keep Assets, don't know where Willfully concealing assets Individual, not one Not obeying court orders Gulity of bankruptcy crime |
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are all debts discharged under bankruptcy?
be familiar |
NO
taxes due within 3 years of filing debts incurred by fraud luxury goods open-ended credit to consumers debts undisclosed in bankruptcy petition embezzlement alimony, support willful and malicious injury (negligent torts are dischargeable) drunk driving fines and penalties educational loans denial of discharge debt incurred to pay taxes debts incurred due to vioations of security laws condo/coop/HOA dues restitution for federal crimes prisoner's court fees fines for federal election law debt owed to pension/profit sharing |
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what are the key (tested) nondischargeable debts
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WAFTED
Willful/malicious injury Alimony Fraud Taxes Educational loans Debts undisclosed |
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what are the 3 elements of reaffirming discharged debts
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must reaffirm before discharge
can rescind within 60 days must be read rights |
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what can happen if you act in bad faith during bankruptcy
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can be revoked
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what is the order (3) of distribution of estate
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secured claimants
priority claimants general creditors |
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if a secured creditor has 110% LTV - what happens
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100% is secured - 10% unsecured
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what happens if money runs out at a particular level
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split pro rata
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what are the priority claimants for distribution
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SAG WEG CTI
Support obligations to spouse/kids Admin expenses of bankruptcy (fees to lawyer/trustee/CPA) GAP creditors (after petition before relief in ordinary course) Wages up to 11K within 180 days prior to filing Employee benefits up to 11K within 180 days prior to filing(combined with wages) Grain farmers and fishermen Consumer deposits for goods (2400) Taxes Injury claims caused by intoxicated driving |
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what wages/benefits are priority benefits in distribution
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only those unpaid within 180 days prior to filing
only up to 10,950 combine wages/benefits |
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who approves Ch 11 plan
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committee of unsecured creditors
plan filed within 120 days |
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what does a trustee do in Ch 11
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NOTHING - GR - NOT REQUIRED
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who maintains possession during Ch 11
exception |
GR - debtor
exception - fraud, dishonesting mismanagement, competence |
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what % must approve Ch 11 plan
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2/3 amount and 1/2 number of claimants
binding to ALL creditors |
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what happens upon confirmation of Ch 11
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debtor discharged from all pre-confirmation debts (except same list not discharged in 7)
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what do the following relate to:
1933 Act 1934 Act |
1933 Act - IPOs
1934 Act - post IPO purchases and sales |
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what does the 1933 act ensure
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info is there - NOT accuracy, etc.
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who must register with SEC on 1933 (3)
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issuers
underwriters dealers |
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what 2 parts must be in registration for sale of securities
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prospectus - summarizes info in part 2
audited BS and IS and other material facts |
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what are shelf registrations
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if issuer files under 1934 and info kept current - only need to file one registration for future offers
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what type of laws are security laws, fed or state
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fed - must also comply with any state laws
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what if the timetable of securities:
before registration after registration |
30 days before registration - NO sales activities
within 20 days after registration - oral offers to sell OK after that - everything OK |
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what are the special rules for seasoned issuers
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for continuously reporting under 1934 for 12 months+
at least 700 million in debt may release some info during waiting period may make oral or written offers ANYTIME |
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delete
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delete
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are the following required to register under 1933/34 act
charitable orgs munis |
charitable orgs - NO NFP
munis - NO Gov't |
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are the following required to register:
casual sales exchanges (dividends and splits) intrastate sales |
casual sales - NO
exchanges (dividends and splits) - NO intrastate sales - NO |
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what is Reg A
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partial exemption
unaudited FS - OK for small issues (less than $5MM) |
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what is Reg D and what are the 3 requirements
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private offering
no advertising immediate resale prohibited (LT investment) SEC notified within 15 days |
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what are the requirements for 504, 505 and 506:
dollar limit limit on unaccredited buyers limit on accredited buyers |
dollar limit
504 - 1MM 505 - 5MM 506 - NONE limit on unaccredited buyers 504 - NONE 505 - up to 35 506 - up to 35 but must be sophisticated limit on accredited buyers ALL NONE |
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is Reg D limited to 35 investors
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NO - 505 and 506 has limit of 35 UNACCREDITED investors
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what is an accredited investor
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worth 1MM
or 200M in income officers or directors |
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for civil liablity under 1933 - what type of misstatements can we be liable for:
intentional unintentional |
BOTH
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who is liable under 1933 act for damages - what must the person show
KNOW |
anyone who signs
show: acquired stock suffered a loss contained material misrep or omission |
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what is required to sue under 1933:
intent to deceive negligence |
NEITHER
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what is the most likely defense under 1933 and what type of defense is it
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due diligence
must prove we were diligent |
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what reports are required under 1934 and what are they
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10-K - annual report
10-Q - quarterly 8K - changes |
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what are the other reports needed to file other than 10-K 10-Q and 8-K
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5% TiPP
5%+ owners Tender offers for 5%+ Proxy solicitations Proxy statements |
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what is the difference in fraud under 10b-15 (anit-fraud) and liability under 1933
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fraud must have reliance and scienter
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is negligence sufficient for anti-fraud
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NO - must have scienter
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does breach of contract for CPA liability generally require privity - who can benefit
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GR - YES
only client and 3rd party that CPA KNOWS ABOUT |
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what is the best defense for breach of contract for CPA liability
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client didn't cooperate - hindered performance
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what is a tort
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wrongful act
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what are the 4 aspects of negligence
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owed duty
breached duty breach caused damages |
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what are the 2 tested negligence cases relating to CPA liability
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failure to warn about I/C weakness
failure to have critical review |
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what is the best defense for failure to act with due care
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due diligence - GAAP/GAAS
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what are the 5 elements of fraud
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MAIDS
Misrepresentation of fact Actual/justified reliance Intent to induce reliance Damages Scienter |
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what are the 3 levels of CPA liability that get us in trouble
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Negligence
Fraud Constructive Fraud |
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what is constructive fraud
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gross negligence - acted recklessly - unintentionally
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what happens if a CPA is liable of: who can sue
negligence fraud constructive fraud |
negligence - only client and 3rd parties CPA KNOWS ABOUT
fraud/constructive fraud - anyone who proves MAIDS can sue |
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what is the best defense for fraud
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lack of scienter/good faith
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what are the following: negligence/constructive fraud/fraud
lack of reasonable care lack of slight care actual intent to deceive |
lack of reasonable care - negligence
lack of slight care - constructive fraud actual intent to deceive - fraud or criminal fraud |
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if a CPA is sued under securities laws - why does this matter
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CPA liable to general public for fraud and negligence
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what 3 things must be proven under Section 11 (1933) vs. 5 under 10b-5 (1934) (4 things)
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Section 11
bought stock suffered loss f/s had material misrep 10b-5 above PLUS scienter and reliance |
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what is the main difference between Section 11 and 10b-5
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10b-5 must prove scienter and reliance whereas 11 doesn't have to
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what audit requirements does Private Securities Litigation Reform Act 1934 require (3)
don't memorize |
procedures to:
detect illegal acts identify related party transactions eveluate going concern |
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under Private Securities Litigation Reform Act 1934 - what if we find illegal acts
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inform audit committee NOW
if nothing done - go directly to board if board doesn't report to SEC - rat the client out (may resign first) |
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what 3 things does sarbanes oxley say is a crime - what happens
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GO TO JAIL
alter/destroy/falsify docs shred workingpaper before 7 years defraud public |
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do CPAs typically have client privilege under:
federal law state law |
NO
NO |
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what 6 times can we give client documents
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subpoenaed
prospective CPA firm buyer (only with client consent) quality review panel lawsuit brought by client AICPA investigation GAAP/GAAS requires |
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if we're selling a CPA firm - can we show workpapers without client's consent
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NO - MUST HAVE CONSENT
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what is the requirement before we can have insurance interest
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lawful and substantial economic interest AT TIME OF LOSS
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what parties have insurable interests
DON'T MEMORIZE |
owner
purchaser of goods (when identified) tenant remainderman partner is p-ship property 50%+ shareholder in corp prop contract to purchase real estate secured party |
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do creditors have insurable interest
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ONLY secured
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what is coinsurance clause and what is the formula
KNOW |
partial loss
face value/coinsurance % x FMV at time of loss X loss CAN NEVER EXCEED POLICY AMOUNT |
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in coinsurance clause - what 2 things do we get the lesser of
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policy or actual amount of loss
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does negligence bar recovery from insurance
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NO
but intentional damage (fraud) does |
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what does subrogation mean
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insurance company can step into your shoes and sue someone
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