4 20 15 and 4 22 15 Final Review Chapter 11 16 Final Tuesday April 28 7 9pm in Daniel 313 150 MC questions need 2 scantrons Chapter 11 o Domestic and International Sales article 2 of uniform commercial code Applies to sales of goods by merchants Goods defined as tangible personal property Article 2 applies to contracts of sales of deals by merchants not intangible property services real property etc Article 2 Uniform commercial code is to clarify and make the law uniform across all states Article 2 is more generous than common contract law Article 2 says a contract can be formed in any manner that forms an agreement between 2 parties and has provisions to fill in gaps to try to make it a contract Article 2 Designed to encourage commerce Statue of frauds sale of good of 500 or more have to be in writing to be enforceable Parole Evidence rule Oral evidence or testimony can t contradict terms of written contract Article 2 says something vague or missing of contract can bring in parole evidence to fix o Sellers and Buyers basic rights and obligations Seller Deliver goods that conform with contract number quality timing Buyer Pay for goods in accordance to contract If goods show up the buyers first right is to inspect the goods goods in conformance buyer just has to pay Some goods don t comply o Buyer reject all goods and get back payments has to notify seller right away because they have the time to cure the problem if the time constraint hasn t passed o Seller can accept conforming and reject non conforming goods o Buyer can accept all goods o Article 2 imposes creates certain warranties Express Warranties Every contract subject to article 2 seller has good clear title to Any statement or promise seller makes about goods creates a Any description of goods seller gives to buyer creates a the goods warranty warranty Final Review pg 1 4 20 15 and 4 22 15 Any model or sample of goods given to buyer creates a warranty that all items will be the same Implied Warranties Every contract of article 2 Merchantability goods seller delivered to buyer have to be usable for the customers business and meet certain quality standards Sometimes implied warranty of fitness for particular purpose o Warranties carry strict liability Sellers like to disclaim all warranties that they can needs to be in written agreement signed by buyer Contracts often contain maximum damages liability amount to limit seller s exposure o Remedies and Damages Non Breaching party always has the right to sue for damages Buyer has obligation to mitigate damages try to find another supplier etc Breaching party can be sued for damages compensatory cost of new product at higher price transportation cost etc o Article 2 of Uniform Commercial Code only applies to contracts of sale of goods only in the US Convention of contracts on international sale of goods if ratified by company where customer is located has similar laws to article 2 pertaining to if there is a breach Best thing to do is to specify in contract how disputes will be resolved Arbitration certain country law etc Chapter 13 Negotiable Instruments o Negotiable Instruments article 3 of UCC Negotiability you can transfer something for value Requirements Written Instrument check Unconditional order or promise to pay Has to state certain sum of money to be paid Signed by maker or drawer Instrument has to be made to the order of or to bearer 4 types 3 party instruments drawer drawee payee o Orders to pay Drafts Checks type of draft More limited can only be payable on demand or in future Person making payment can be anything anyone payable on demand and entity that is making payment of check is only a bank or financial institution 2 party instruments Final Review pg 2 4 20 15 and 4 22 15 o Notes Promissory note o Certificate of deposit issued by bank deposit money with them they agree to pay you interest rate and principle in the future o Credit sell to expand their business opportunity Creditor extending the money selling on credit Should have credit policy to who and how much background credit check on people or get someone else to do it for you o Salary previous debts other assets if they don t keep promise assets that they ll pledge as security Have collections policy use agency send letter etc Secured Transactions Financing agreement signed by person buying goods Then take agreement and file with the state Puts everyone on notice that you have a claim over an asset perfected security interest Inventory Floating Lien o Lien legal claim someone has on your assets Garnishment court order that lets you get up to 25 of someone s net pay Mechanics Lien real property someone remodels your kitchen can put a lien on your house like a mortgage and if you don t pay they can force the sale of your house Possessory Lien Someone in possession of your personal property and done some work on it you have to pay for it before they have to give it back Attachment Lien Court order not to do anything with property asset until court hears case and reaches decision example divorce can t sell house under attachment lien until who decides Judgment Lien You win you re entitled get rid of execution from court police go out seize assets and sell them Debtor owes money Debt financing o Pledge assets as security o Find someone to co sign with you Sureity primarily liable creditor can sue you directly Guarantor secondarily liable creditor has to sue debtor first then guarantor o Bankruptcy voluntary Individual filing Final Review pg 3 4 20 15 and 4 22 15 Has to take credit Counseling then can file After file have to take debtor counseling Also if you are asking to get debts discharged you can only get once every 8 years Type 1 Chapter 7 individuals and businesses Hopelessly in debt Business seizes liquidates to pay debts Individual all assets sold to pay off debtors then rest if they qualify are discharged Creditors position is frozen can t try to change debt or Trustee in bankruptcy s primary responsibility maximize position Under debtors assets Type 2 Chapter 13 individual only Rough time can work it out with some more time Submit to court your financial plan of when you can get current you can have up to 5 years to get current Gives people more time to catch up Can change to Chapter 7 if this doesn t work Type 3 Chapter 11 Corporation Reorganization of debts of business Business continues employees keep jobs No major business decisions made without approval of trustee in bankruptcy and or