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BUSA 310: Exam 2
Lien
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A claim against property that arises out of the failure to satisfy a debt
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Mechanic's lien
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Anyone who supplies labor or material who is not paid can file a lien against the property. filed at the courthouse and is good for 6 months, used to ensure payment for services/ goods provided
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Draws
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at certain stages in the building process, the contractor gets a draw which is a specific amount of money at a specified time (ex when builder builds a house, he gets paid)
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What happens if a subcontractor is not paid
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they can file a lien against the property ( not filed for general, against homeowner)
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Lein waiver
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in construction context, document from a sub contractor stating that they have received payment and will not file a future lien against the property
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Judicial lien
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a lien against property that arises out of a judgement in a lawsuit, created by court (duh)
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Writ of attachment
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court orders seizures of a party assets prior to the issuance of a judgement (ruling). protects assets until you get a judicial lien
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Writ of execution
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a court order, after judgement has been entered against the debtor to seize and sell the debtors assets. can get from court for the sale of the assets after you win the case
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Garnishment
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the legal process whereby a creditor seizes property held by a third party (ex credit contacts employers for wage garnishment)
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Mortgage
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a written instrument that gives a creditor a security interest in (and lien) on the debtors property (house)
NEED TO BE IN WRITING
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Deed of trust
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like mortgage but "power of sale". property is deeded to bank until mortgage is fully paid off, don't have to go through judicial process, more lender friendly than mortgage
NEED TO BE IN WRITING
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Do banks file liens?
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no, they normally foreclose & sell property (mortgage)
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Guarantor
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a person who makes the guarantee to pay the debt of someone else
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Rita execution
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occurs AFTER judgment has been entered against someone, court ordered seizure of property
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Guaranty
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a promise by a third party to pay the debt of another (parents on car loan for kids car for ex), when kid can't pay for car parents are liable
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Reimbursements & contribution
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in partnerships when two partners have a debt and only one pays than the other partner owes the other partner his share of debts
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Liquidation proceedings
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debtors turns over all assets to a trustee who sells )liquidates) the assets and distributes proceeds to creditors
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Reorganization bankruptcy
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most commonly used by organizations, plan is approved by bankruptcy court (mutually agreed to by creditor and debtor and the debtor is allowed to continue in business)
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Repayment bankruptcy
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court approves this type and generally puts a person on repayment plan (allowance) to allow debts to be repaid
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Bankruptcy
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unable to pay your debts in the ordinary course of business (individual/a business)
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Voluntary bankruptcy
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the debtor initiates the bankruptcy where it is voluntary in a voluntary bankruptcy there is a list of secured and unsecured creditors, debtors finances, property owned by debtor, current income of debtor, & credit counseling, debtors federal tax returns
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Bankruptcy stay
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all creditors stop debt collection activities when bankruptcy stay occurs, creditor can seek to lift the stay if the creditor is harmed by the stay
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Involuntary bankruptcy
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creditors initiate, you need 12 or more creditors and 3 creditors have an aggregated debt of $14,425, if less than 12 one debtor has to have debt of $14,425 (person can be forced into bankruptcy w/o consent)
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Secured creditor
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the debt is secured by property or equipment (mortgage/ equipment lender generally recover 70 cents per dollar owed in bankruptcy proceedings)
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Unsecured creditor
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credit card lender who does not have any secured interest in property (unsecured creditors generally 10 cents on the dollar owed in bankruptcy proceedings)
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As a lender what's better
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having a security interest in the property or asset)
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Preference
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any transfer of an asset or payments made by a bankrupt debtor within a year can be questioned by other creditors, the rationale is that the law does not want one creditor to receive preferential treatment over another creditor. courts look for fair consideration in the transaction when a preference was allegedly made (look back rule)
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Bankruptcy trustee
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can void or keep a bankrupt company lease (trustee will keep the lease if its a good deal and void if its a bad deal)
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Fraudulent conveyances
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transfer of assets done to protect yourself from a judicial judgement or threat of judgement, transferring property without fair and adequate consideration is a key component of a fraudulent conveyance
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End of bankruptcy
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the debt is discharged and there is no longer an obligation; however some debt cannot be discharged (taxes, alimony, child support, student loans). credit card debt that was incurred within 90 days of filing bankruptcy cannot be discharged
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Reaffirmation
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even though bankruptcy was complete and debt was discharged you can reaffirm the debt and the debt stays even though you went through bankruptcy. stated differently the debt and the debt stays even though you went through bankruptcy. Stated differently the debt is not discharged if it's reaffirmed. (ex reaffirming a debt with a key business supplier so the supplier will do business with you after)
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Fair debts collection act
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protects individuals from abusive behavior by collection agencies
1) can't contact you at your place of employment
2) can't call you at inconvenient times
3) can't contact you if you tell them you have an attorney
4) can't use harassing or threatening language
-can request validation of debt (proof)
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Who can collection agents talk to
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debtor and the debtors spouse
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Federal trade commission
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the agency enforces the fair debt collections act, you can get penalties plus attorney feed for successful suit under fair debts collections act
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Key of bankruptcy goal
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ensure equitable (fair) treatment of creditors
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Prenup/ Postnup
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has to be in writing
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Child custody
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addressed in court
must have best interest of the child
mostly mother
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Insurable interest
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must have relationship with person whom you're taking it out with
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Most important thing about insurance
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BE HONEST
age/health are the most important
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Divorce
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filed complaint to divorce
have to have grounds for divorce (most common = irreconcilable difference)
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Equitable distribution state
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court has right to factor into differences circumstances and award one spouse more money than another
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When is the best time to get insurance
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When you're young and healthy
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Advantage
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fixed premium
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Base amount
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policy
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Contracts
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-both parties must be legally competent
-have offer/acceptance
-25%
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Offer
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person who makes offer
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OffOR
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person who controls manner of acceptance
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OfforEE
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Person who accepts offer
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When someone invites you to negotiates
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that is NOT an offer
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Counter offers
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terminates original offer and creates new offer
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Terms of contract
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identity of party, price, quantity
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Consideration
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bargain for exchange
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Are contracts gifts?
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No, because of consideration
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Do courts protect people from bad deals
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No, courts don't care how much you were supposed to get paid
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Express contract
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written contract
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Oral contracts
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are allowed
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Statue of frauds
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specifies what contracts have to be in written
-ex LAND, service contracts where service cannot be performed in a year
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UCC
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Uniform/universal commercial code. applies to sale of tangible, moveable goods by merchants in ordinary course of business
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Warranties (from UCC)
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implied fitness and implied merchantability
-can be DISCLAIMED
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Mutual mistake
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both parties are mistaken
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What contracts aren't enforceable
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contracts that are against public policy (ex someone who wasn't an optometrist for surgery)
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Duress
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if someone's threatening you, situation for duress
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Terminate by operation of law
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1) when one party dies
2) when one party is incompetent
3) when subject matter is destroyed
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Breaching party
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party who doesn't do there duty (ex you sign a lease for 12 months, but move out after 9, you are breaching party)
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Non breaching party
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who does there duty (ex good landlord)
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Material breach
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terminates contracts
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Minor/ Immaterial breach
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does not terminate contract
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Types of damages
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1) compensatory damages (non breaching party for loss of bargain, ex sold house for 100,000, buyer doesn't buy it anymore and have to settle for 90,000. you lose 10k and can sue the person for that loss and interest)
2) consequential damages (flow from breach, ex money from posing an ad)
Can get conseq and compen both
3) liquidation damages (when parties get damage amount in contract ex if you don't perform you owe this money, mainly in construction)
4) Nominal damages (no real damages, court can award one dollar, ex pipes guy gets wrong pipes but no damages to house)
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Any breach
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entitles you to sue
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Specific performance
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when court orders you to do something, when money damages aren't enough
-LAND
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Can you get an award for doing job
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NO
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If contract is void...
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it is not enforced
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What is a minors age for contractual law
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18
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Voidable contract
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may be enforced. if contract is void it is nor enforced
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Prohibit assignment
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what contracts can do
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When can offOR revoke offer
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before it's accepted
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