LAW 3220 1st Edition Final Exam Study GuideChapter 11 - Domestic and International Sales by Merchants● UCC Article 2: promotes uniformity in contracts○ only applies to the sale of goods (tangible, personal property) by merchants○ “fills in the blanks” to complete contracts & encourage commerce○ Statute of Frauds■ contracts for sales over $500 must be in writing○ Parole Evidence Rule■ can introduce if topic is vague or unclear, or left out of the original document● Sellers and Buyers Basic Obligations and Rights○ Sellers must deliver goods of the specific quality and quantity by a specified time○ Buyers must deliver payments for goods that meet the above according to the payment terms specified by the contract○ Buyers have the right to inspect goods before completing payment■ Can return goods if they do not meet specifications■ Can accepts some and return some■ Can accept all○ Sellers have the right to remedy any discrepancy if addressed before the due date● Warranties○ Express warranties■ created by statements or promises by the seller■ created by any description given by the seller■ created by any prototype or model provided by the seller○ Implied Warranties■ Merchantability● goods delivered to buyer will be merchantable in their business (uniform, and fit to be resold)■ Fitness to a particular purpose● If a buyer relies on sellers knowledge to purchase a product, the seller is liable for the products ability to perform○ Disclaimers■ Article 2 allows disclaimers that are clearly written■ buyers must agree to disclaimers● Damages○ non-breaching parties have the right to sue for compensatory damages■ obligated to mitigate damages incurred● Convention on Contracts for the International Sale of Goods○ Covers the commercial sale of goods in international transactions○ similar to UCC article 2○ if selling internationally, it is best to specify within the contract what laws will apply to the saleChapter 12 - Business Organizations● Sole Proprietorship○ easiest and simplest to setup○ the owner IS the business■ personally liable for debts○ revenue taxed as personal income tax○ hardest to raise capital if needed■ no external equity financing■ debt financing options dependent on personal credit history● Partnership○ an association of 2 or more persons to carry on a business for profit○ formed by a written partnership agreement○ if 1 of the parties dies or files for bankruptcy, the partnership is dissolved○ revenue is taxed as personal income tax○ partners are personally liable for the debts of the business○ ability to raise capital is limited by the number of partners and their contributions● Limited Partnership○ allows for general and limited partners■ must be at least 1 general partner● personally liable for the debts of the business● entitled to run the day-to-day operations of the business■ unlimited limited partners● not personally liable for the debts of the business○ can only lose up to their personally contributed equity● passive investors, do not have managerial duties○ formed by a written partnership agreement○ if the general partner(s) dies, files for bankruptcy, or leaves the partnership, the partnership is dissolved● Corporation○ a separate legal entity established under state law■ filing of articles of incorporation with the secretary of state■ certificate of incorporation○ limited liability for owners and shareholders of the business■ exception - piercing the corporate veil: holds shareholders personally responsible for the debts of the corporation, can be judged by the court if they feel the corporation was set up and/or run fraudulently○ income is potentially taxed twice■ federal & state corporate tax on profits■ personal income tax on dividends○ 3 groups to be familiar with:■ Shareholders● owners● equity financing■ Board of Directors● elected by shareholders● overall management duties for the business● legally immune from “honest mistakes”■ Managers● selected by the board of directors● responsible for day-to-day operations● legally immune from “honest mistakes”○ the only business entity by law that can have a perpetual existence■ can be terminated voluntarily (dissolution) or involuntarily (bankruptcy)○ greatest ability to raise capital● Syndicate○ not a separate legal entity○ used to raise funds for a specific project, typically large real estate endeavors● Franchises: An Alternate Form of Organization○ Franchisor - owner■ parent company■ often owns largest locations○ Franchisee - operator■ pays fees to open and operate■ operates under a franchise agreement■ easies the startup commitment and costs of opening a business○ Franchisors are required to provided an offering circular to prospective franchisees○ A “quick” way to get into business● Considerations for Choosing a Business Organization:○ Liability○ Transferability of Ownership○ Management & Personal Involvement○ Continuity of Life○ Tax○ Ability to Raise CapitalChapter 13 - Negotiable Instruments● UCC Article 3● Negotiable instruments:○ must be a written instrument○ must be an unconditional promise or order to pay○ must be signed by the maker/drawer○ must be made payable to the order of a specified party or to “bearer” (risky)○ must state a fixed sum to be paid● Three Party Instruments○ Drafts■ can be payable currently or in the future■ can be fulfilled by any bank, business, or financial institution○ Checks■ a type of draft■ payable on demand■ can be fulfilled by a bank only● Two Party Instruments○ Promissory Note■ sum owed■ interest (if applicable)■ payment schedule○ Certificate of Deposit● Credit○ Credit Policy○ Credit Terms○ useful for expanding sales, but carries some risk of non-payment○ Sureties - primarily liable○ Guarantor - secondary liability○ Liens■ wage garnishment■ mechanic’s lien■ possessory lien■ attachment lien● temporary lien on property that prevents sale until completion of a court case■ judgement lien● legal lien, follows an attachment lien if suing party wins● needs writ of execution to force property sale and claim judgement winnings● Bankruptcy○ Chapter 7■ available to individuals and