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ACCT 324-002 notes (11/4-11/20)

by: Maddi_Jones

ACCT 324-002 notes (11/4-11/20) ACCT 324 002

Marketplace > University of South Carolina > Accounting > ACCT 324 002 > ACCT 324 002 notes 11 4 11 20
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These are my notes from the day after Exam 2 (Nov. 4th) until Friday, Nov. 20. This includes notes from chapters 48-52 and the first part of chapter 7. I hope they help!
Survey of Commercial Law
Julius David Johnson (P)
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This 13 page Bundle was uploaded by Maddi_Jones on Saturday November 21, 2015. The Bundle belongs to ACCT 324 002 at University of South Carolina taught by Julius David Johnson (P) in Fall 2015. Since its upload, it has received 42 views. For similar materials see Survey of Commercial Law in Accounting at University of South Carolina.


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Date Created: 11/21/15
Wednesday – Nov. 4 notes Ch. 48 – The Nature of Property, Personal Property, and Bailments o Categories of Property o Real Property: land and anything permanently attached to it (fixtures)  Darla Moore building o Personal Property: property not attached to land  Must be moveable!  Ex. Your computer, shirt, car, water bottle, etc.  Tangible: anything you can touch  Intangible: stocks, patents o Transfer of Personal Property o Voluntary Transfer-  Sale and purchase: acquiring party gives value to the seller in exchange for title to property.  Gift: ya just give it to ‘em. No money is exchanged o Involuntary Transfer-  Abandoned property: stuff the owner has purposely discarded  If you find abandoned property and keep it, you now have ownership  Lost property: true owner has accidentally left it or dropped it somewhere  If you find someone’s lost phone, they have second dibs after the original/true owner.  Mislaid property: owner has intentionally placed it somewhere but forgot where they left it.  Where did I put my keys?  Same rules apply as lost property o Elements of a Gift o Delivery from donor to donee  “Actual” delivery: you actually do it  “Constructive” delivery: delivery of item gives access to gift  Ex. Car keys o Donative intent o Acceptance of property (by done) o “inter Vivos” vs. “Causa Mortis” o “inter Vivos”- gift made by donor during their lifetime  If you break off your engagement or wedding, and the man asks for the ring back, you have to give it back because it’s a conditional gift. o “Causa Mortis”- made in contemplation of “imminent and impending” death  If your Dr. says you have cancer and have 3 months to live, you then go home giving your assets to family members like cars, house, and other property. The reality is you’re not sick, so you want your stuff back.  For it to be effective, elements of delivery, donative intent and acceptance must occur before the donor’s death. o Bailment: special relationship where one party transfers possession of personal property to another party so they can use it for a certain amount of time. o Ex. Coat check, dry cleaners, valet parking o Bailor has Right to Expect Bailee to: o Take care of their property o Only use their property as stated in their agreement o Not alter the property without consent o Return their property in good condition o Duties of Bailor o They must give compensation for the bailment o They must reimburse bailee for any necessary costs incurred during the bailment o Documents of Title o Bill of Lading: document issued by the party who transports goods.  Usually verifies receipt of the goods shipped. o Warehouse Receipt: receipt issued by the party who stores goods for compensation o Special Bailments o Common Carriers- licensed to provide transportation services to the public  Ex. FedEx, USPS, UPS o Innkeepers- regularly make lodging available to the public  Ex. hotels -------------------------------------------------------------------- O-------------------------------------------------------------------- Nov. 6 & 9 notes – Ch. 49 o Real Property o Land, and anything permanently affixed to it (fixtures) o Fixture o Anything that’s originally moveable like personal property, but then becomes permanently attached to the land.  Ex. Light fixtures in your kitchen o Exceptions to “Fixture” Status: o Written agreement between the parties that certain things will stay personal property o Personal property attached to realty for the use of a business renting the property  This is a “trade fixture”  Ex. Barber chairs in a barber shop o Interests in Real Property o Free Simple Absolute- right to possess the will for life to their heirs when they die  Most complete interest you can get in real property o Conditional Estate- comparable to a free simple absolute but it ends under a specified condition o Life Estate- granted for a person’s lifetime where they have the right to possess the property and terminates when the life estate holder dies. The property passes onto another party stated by the original life estate holder. o Interests in Real Property continued  Future Interest- person’s right to ownership in the future.  Leasehold Estate- person’s right to possess the property for a certain amount of time.  Easement- right to use a portion of another’s land for a specific purpose.  Not an ownership or possessory interest  Ex. Ron has the right to drive his car across Jenny’s property to get to his property. o Nonpossessory Estates o Easement- right to use part of another’s land for a specific reason without taking anything away from it.  Ex. You live on the back part of an island and the only bridge connection is in your neighbor’s yard. You can drive through his land to get to the bridge. o Profit: right to enter another’s land and take part of it or a product of it.  Ex. Right to harvest timber o License: temporary, revocable right to use another’s property  Ex. Football ticket- if you go crazy at a game, the police can kick you out of your seat, you don’t own that seat, you just had the right to sit there when the ticket is applicable. o Co-Ownership of Real Property o Tenancy in Common- the people that own the property can own equal or unequal ownership shares. o Joint Tenancy- everybody owns an equal share  When pop dies and leaves “the children the farm” it’s split equally between the kids. o Tenancy by the Entirety- Just like joint tenancy, but just for married people.  If there is a divorce, you each split the property half and half. o Co-Ownership of Real Property (continued) o Condo Ownership- owner acquires title to a “unit” within a building with undivided interest in the land and common areas. o Cooperative Ownership- investor resident acquires stock in the corp. owning the facility and in return you get a permanent lease on one of the units. o Voluntary Transfer of Real Property o Requires:  Execute a deed  Deliver the deed to the “grantor”  Accept grantee’s expression of intent to possess and own property  Record deed with county office, and put it on file.  Protects interests of grantee o Deed Requirements o Identification of grantor o expression of grantor’s intent to convey the property o Adequate description of the property o Any warranties/promises made by the grantor o General Warranty Deed o Contains the following promises:  Grantor owns the interest they’re conveying  They have the right to convey the property  No mortgages against the property that aren’t already stated in the deed  Grantee won’t be disturbed by anyone who has a better claim on the property  Grantor provides the grantee with any other documents they might need to have full title of the property. o Other Types of Deeds o Special Warranty Deed- no representation of guarantees contained in “general warranty” deed. Grantor is promising that they haven’t done anything to lessen value of the property transferred. o Quitclaim Deed- seller/grantor doesn’t make any warranties. o Types of Involuntary Transfers o Adverse Possession- when someone treats something as if it’s their own against the real owner’s will. o Condemnation- govt. takes something against your will for public use.  Must pay fair market value o Restrictions on Land Use o Restrictive covenants- promises to use or not use land in a certain way  Ex. Neighborhood rules say you must have specific Christmas lights, so you have to follow these rules. o Zoning- allow for the development of community and protect “health, safety, and welfare” of citizens.  Ex. Can’t have a nuclear factory in a neighborhood.  Ex. Can’t have a sex shop across the street from an elementary school. -------------------------------------------------------------------- O-------------------------------------------------------------------- Wednesday Nov. 11 notes Ch. 52 – Wills and Trusts o Estate Planning- process where you decide what to do with your property (real and personal) during and after life. o Uniform Probate Code- guides states in developing laws to help people with estate planning o Important Estate Planning Tools o Will: legal document saying how you want your property distributed after death o Trust: allows a person to transfer property to another person.  Ex. Both parents die at the same time, the 4 year old daughter receives an enacted trust. She gets everything at the age of maturity. o Reasons to Engage in Estate Planning o Provide financially for your family o Reduce taxes  Certain ways to leave property so you don’t have to pay estate taxes o Promote family “harmony”  If you divide everything ahead of time equally or fairly, it helps prevent family fights from them feeling like the distribution is unfair. o Allows people in non-traditional family relationships to gain benefits of traditional family relationships.  If you were just living with someone, and not married and you died without estate planning, your partner wouldn’t get anything because you weren’t legally related. o Intestacy Statutes- outline how a person’s property will be distributed without a will o You want to get a will when you have a kid!!! o General laws: go to spouse first, then kids (downward lineage), then ancestors (upward lineage), then outward to siblings, aunts, uncles, etc. o Requirements for a Valid Will o Testamentary Capacity- must be old enough to write one and be of “sound mind’  Must be 18 in SC  Must know exactly what they’re doing  Must know who exactly you’re leaving your things to o Document must be in writing (typed)  SC doesn’t accept oral wills o Testator’s Signature  Must initial each page o Must have a witness saying “yes, they signed this in their right mind”  Can’t be related by blood or marriage to serve as a witness  Can’t have a best friend either rd  Have to have a completely unbiased 3 party (usually a notary public) o Special Kinds of Wills o Oral Will- declares verbally their last wishes  SC doesn’t recognize these!  Ex. Someone on their death bed wishing the house going to his son o Holographic Will- testator writes and signs in their own hand writing and doesn’t require a witness because everything is handwritten. o Mutual Will- will that 2 or more testators plan where they leave their property to each other. o Legal Issues Related to Wills o Challenge: contest will when:  Fails to meet legal requirements  Testator is a victim of fraud/undue influence o Changing will by writing a will “codicil”  “codicil” is a separate document with new provisions that show changes in will  Basically an amendment to your will  Testator must satisfy same procedures to make a valid codicil as those followed in making the original will. o Revoking will- most common method is destruction of a will o Settlement of estate- by way of a personal representative through process known as probate. o Creation of Trust o Delivers and transfers title to property to another person who holds the property and uses it for the benefit of the beneficiary. o Trusts are created through formal, written documents o Common trust components:  Trust Corpus: property held in trust  Income Corpus: “trust income” o Types of Trusts o Express  Living Trust: created while alive  Testamentary Trust: created through a will o Implied: created by court  “involuntary trust”  Resulting trust or constructive trust  Ex. Person buys a piece of property but puts it in another person’s name  Ex. Assets of partnership are affected with fraudulent behavior from a partner -------------------------------------------------------------------- O-------------------------------------------------------------------- Friday Nov. 13 notes Ch. 52 continued, Ch. 51 – Insurance Law o Termination of Trust o Through provision in trust which says the date where the trust will end, or specifies an event that will make it end.  Ex. My daughter will get my money on her 45 birthday if I die before hand. o End-of-Life Decisions: “Advance Directives” o What extent of life support should you take upon medical emergencies?  Ex. DNR or put me on life support  If in a coma, you can’t make these decisions, so you appoint someone to make them for you. o Living wills- lets you express your wishes regarding medical treatment in case of a medical emergency, or if you suffer from a life-threatening illness. o Health care proxies/ durable powers of attorney- lets you make medical decisions for others.  If your spouse was in a car accident and was in a coma, if given the authority, you may speak for your spouse as to whether they would want to be kept on life support or taken off. o Uniform Anatomical Gifts Act (UAGA) o Allows anyone over 18 be an organ donor. You can donate one or all of your organs. Ch. 51 – Insurance Law o Nature of the Insurance Relationship o Insured party- person who pays to get the insurance o Premium- payment on policy o Insurer (underwriter)- party who receives premiums and insures the insured party o Beneficiary- person who gets the insurance proceeds  You can name your children as beneficiaries o Policy- documents with agreement between the insured party, beneficiary and insurer o Risk- potential loss o Insurable interest- economic interest in the life or property  Life interest must exist when the policy is made  Property interest must exist when there’s loss) o Insurance Contract o Application for insurance- you make an offer to buy the insurance and either accept or reject the policy. o Effective date- the date the policy becomes effective. o Binder-gives temporary insurance until you actually make the decision to either accept or reject the application made.  Don’t have full access to coverage during your decision making time unless you have a binder. -------------------------------------------------------------------- O-------------------------------------------------------------------- Monday Nov. 16 notes Ch. 51 continued o Elements of an Insurance Contract o Incontestability Clause: after the policy has been in effect for a certain amount of time (usually two years), the insurance company can’t contest statements made in the policy. o Anti-Lapse Clause: the insured has a grace period to pay premium (usually 30 days). o Appraisal Clause: insured and insurer choose disinterested appraiser for second opinion on damages.  When you can’t make an agreement on how much the damage is worth, you can go get a third party opinion from an appraiser, if that doesn’t work then it goes to an umpire. o Arbitration Clause: Disputes must be submitted to an arbitrator o Canceling the Insurance Policy o You can cancel it at any time as the insured. o Insurer can only cancel if either party breaches its duties o Insurer and Insured Obligations o Insurer Duties: defend insured  If the insured gets in a wreck, they are obligated to find an attorney to the best of their ability.  Pay anything owed to the insured  If you get in a car accident, the insurance company pays for your damages and the damages done to the other damages done in the wreck. o Insured Duties: disclose all information truthfully  Cooperate with insurer. o Insurer’s Defenses for Non-Payment of Claims (not limited to the following) o Breach of contract o Lack of insurable interest o Illegal activity o Types of Insurance o Individual- insured party is the one purchasing insurance  Ex. Renter’s insurance o Group- party isn’t the insured or insurer that’s purchasing the insurance  Ex. Employers buy this! o Personal- covers your own life/health insurance o Commercial- covers business interests o Property- protects property from loss or damage  Types of Property Insurance:  Fire- protects from fire damages  Livestock- protects owner from loss due to injury or death of livestock o If you’re a farmer and a disease infects your livestock, you’re covered.  Water, Weather & Natural Forces- covers things that are of natural forces, things you couldn’t control like floods. o Casualty- protects insured from accidental injury or even death o Liability- protects business from tort liability to third parties  Types of Liability Insurance:  Contractor’s Liability- protects contractors from liability for injuries that might happen while on the job (doesn’t cover injuries to their own employees)  Garage Liability- protects garage owners from people getting injured in their shop.  Product Liability- protects producer/manufacturer of good from loss due to damages paid to people injured using the good. o Brakes on car don’t work, your car company is covered.  Professional Liability- protects members of specific professions from liability associated with their profession. o Doctors have this. o Commercial General Liability Policy- o Life Insurance o Whole-Life: protection for your whole life  You can build up the interest the insurance company owes you. o Term-Life: gives coverage for specified term  The beneficiary is only paid if the insured party dies during the designated term.  If you go the whole 30 year term for example without dying, you still don’t get any money from the insurance company. Ch. 50 – Landlord-Tenant Law o Landlord-Tenant Law: Terminology o Landlord (lessor): property owner o Tenant (lessee): person who is “renting” from the landlord o Leasehold estate: right to possess temporary rights to the place you’re renting o Lease: contract between landlord and tenant  Get a copy of this please, for your own sake… o Types of Leases o Definite term: automatically expires at the end of the designated term st  Ex. Your lease says you’re renting there from August 1 until July 31st o Periodic Tenancy: created for a recurring term  Ex. Month to month lease  Either landlord or tenant can terminate at any time if you give notice o Tenancy at Will: you can terminate it at any time you want o Tenancy at Sufferance: tenant fails to leave property after termination of lease o Fair Housing Act o Prohibits the landlord from discriminating on the basis of race, color, sex, religion, national origin, or familial status. -------------------------------------------------------------------- O-------------------------------------------------------------------- Nov. 18 notes Ch. 50 continued o Rights and Duties of Landlord and Tenant: Terminology and Rules of Law o Covenant of Quiet Enjoyment- promise that the tenant has the right to quietly enjoy the property they are renting/leasing.  If Alison lives in apartment A and Ben lives in apartment B, both have the same landlord Charles. If Alison keeps accidently flooding the sink, creating damage to Ben’s apartment and Charles knows of the situation but does nothing about it, then Charles breaches his contract with Ben by not fulfilling his promise to quietly enjoy his apartment. o Actual Eviction- landlord physically prevents the tenant from trespassing on any particular part of the property or all of it. o Constructive Eviction- property becomes unsuitable for use because of the landlord.  If in the cold of the winter, your heat breaks and you let your landlord know and they don’t do anything about it, then they have made it an unsuitable environment to live in. o Implied Warranty of Habitability- requires property to be ready for “ordinary” residential purposes.  Could you live in it??  Ex. A tree outside of the house corrupts the foundation of the house where when it rains, it floods the house and creates mold. You can’t be expected to live in a room with mold and water. o Waste- a tenant conduct that causes permanent damage to the landlord’s property.  If a tree out front is blocking the wanted sunlight to your living room, and you cut it down to allow more sunlight without your landlord’s consent, not cool, you gotta pay for that. o Alterations- changes that affect condition of the property, usually can’t be made without the landlord’s consent.  If you don’t like the color of the walls, ask your landlord for permission to repaint the walls.  Installing shelves is another alteration example.  Adding a back deck… basically adding any fixtures to the house need permission. o Examples of Duties and Corresponding Rights of Landlord and Tenant o Duty:  Landlord duty to put tenant in possession o Corresponding Right:  Tenant’s right to retain possession. o Duty:  Landlord duty of covenant of quiet enjoyment o Corresponding Right:  Tenant’s right to quietly enjoy property. o Duty:  Tenant duty not to commit waste o Corresponding Right:  Landlord’s right to reimbursement for tenant’s waste. o Previous slide continued o Common Areas: areas used aby all tenants  Ex. Stairways, halls, etc. have to meet safety requirements. o Options when landlord fails to repair leased property:  Terminate lease, withhold rent, repair and deduct costs of repair, sue landlord. o Continued o Rent- what you gotta pay to the landlord to use the property. o Rent Escalation Cause- clause in the lease that allows landlord to increase rent for increases in cost of living, property taxes or tenant’s commercial business. o Landlord’s Lien- landlord’s right to any of the tenant’s property when they don’t pay their rent. o Liability for Injuries on the Premises o Landlord Liability- has the responsibility to create a safe common living condition. If they have knowledge of a hazard, they must act accordingly.  If they foresee crimes such as car break-ins, they must act to create a safer environment, maybe put up parking lot lights, hire a security guard, etc. o Tenant’s Liability- must keep the property in a “reasonably safe” condition, but is only responsible for those areas where customer or visitor reasonably expected to go.  If you’re renting space for a store, the tenant has the responsibility to keep customer grounds safe for them to browse through. o Transferring Interests of Leased Property o Landlord Transfer of Interest- landlord may transfer property to a new owner and they become the landlord until the tenant’s lease expires. o Tenant Transfer of Interest  Assignment: transfer of tenant’s entire interest in the leased property.  Sublease: transfer of less than the full interest in the leased property. o Termination of Lease o Breach of condition by landlord- landlord interferes with the tenant’s use and enjoyment of premises. o Forfeiture- tenant/landlord fails to perform conditions specified in their lease.  Courts don’t like this one, they want the landlord and tenant to work it out. o Destruction of premises- disaster destroys premises. o Surrender- mutual agreement between landlord and tenant  Get it in writing. o Abandonment- tenant moves out of lease before the end of the term specified in their lease. -------------------------------------------------------------------- O-------------------------------------------------------------------- Nov. 20 notes Ch. 7 – Crime and the Business Community o Elements of a Crime o “Actus Reus” is wrongful behavior (guilty act) o “Mens Rea” is the wrongful state of mind (guilty mind)  Ex. Wrongful purpose, knowledge, recklessness, or negligence o Classifications of Crimes o Felonies- very serious crimes with a punishment of imprisonment for 1+ years or death.  Ex. Murder o Misdemeanors- less serious crimes punishable by fines or less than a year of jail time.  Ex. Public misconduct o Petty Offenses- minor misdemeanor with a punishment of small fines or very little jail time.  Ex. Petty theft auto o Crimes Affecting Business: Property Crimes o Robbery- forceful taking of another person’s property  MUST BE FORCEFUL, IF NOT IT’S THEFT  If there’s a gun to your head, it’s aggravated robbery o Burglary- breaking and entering o Larceny- take something secretly from a place of work for example.  Petty larceny- stealing office supplies for your school benefit  Grand larceny- driving off in your boss’s nice car and not bringing it back o Arson- intentional burning of any structure or real property  Can be a building or a forest.  If you use explosives, it’s still arson. o Crimes Affecting Business: “White Collar” Crimes o Bribery- offer to give money or other benefits in order to get their agreement.  Ex. Salt Lake City bribed the Olympic committee to hold the ’02 Winter Olympics o Extortion- black mail  “If you don’t do this, I’ll tell your wife that you cheated on her.” o Fraud- impersonating or lying to usually steal peoples’ money  Ex. Scammers calling you impersonating the IRS stealing your money.  So many types of fraud. o Embezzlement- wrongful conversion of someone else’s property by someone who is lawfully in possession to that property.  Ex. A lawyer has a retainer from a client and use their money to pay his own bills. The money is legally his because it’s a down payment for his work, but the work hasn’t been completed so there’s money left over and he wrongfully used it. o Computer Crimes- internet spam o Defenses to Crimes o Infancy- not old enough to fully understand the nature of their act o Mistake- if there’s a mistake of fact, hard to make this defense because it’s hard to prove  “I didn’t realize that this was a crime!”…… It doesn’t work like that…. o Intoxication- must involuntarily be put in your system o Insanity- their mental condition impaired them to the point of not knowing right from wrong  Temporary insanity: temporarily losing your mind o Duress- doing something illegal because someone forced you to.  Threat of harm must be immediate  Ex. A person says “give me all of the money in the cash register or I’ll shoot you” o Entrapment- where the govt. or police give you the idea to commit the crime.  Cop says hey go do this drug deal, but then arrests him for doing the drug deal. o Necessity- you commit a crime lesser than the crime you’re trying to stop someone else from doing.  You break into a building to stop somebody from burning it down. o Justifiable Use of Force- you can’t bring a gun to a knife fight.  You can only use the amount of force on someone that’s being used against you.


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