Final Exam Study Guide - MGMT 455 (Business Law)
Final Exam Study Guide - MGMT 455 (Business Law) MGMT 455
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This 9 page Study Guide was uploaded by boilermaker2016 on Thursday March 3, 2016. The Study Guide belongs to MGMT 455 at Purdue University taught by Gothard in Fall 2015. Since its upload, it has received 56 views. For similar materials see Business Law in Business, management at Purdue University.
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Date Created: 03/03/16
MGMT455 Final Exam Study Guide Chapter 19 Discharge of Contracts Conditions relating to performance insurance 0 Precedent applying and paying premium for insurance everything upfront 0 Subsequent filing claim after accident 0 Concurrent paying for insurance Breach by the other party 0 EmployerEmployee gt Noncompetition agreement Discharge by new agreement 0 Covenant not to sue 3 kids hitting mailboxes typically in tort cases gt If you asked one kid let say he has a bunch of money to give you money 9 release that kid but the others as well Enter into this convenant and he pays you and only he is released 0 Release 0 Accord and Satisfaction gt Accord is new agreement that replaces old gt Abide bysatisfycomplete new agreement Joint and Several Liability 0 Suit for contribution Bankruptcy 0 Chapter 7 9 preceding by which individual gets lots of debt not pay any back 0 Chapter 11 9 Business reorganization get rid of division losing money get rid of debt 0 Chapter 13 9 individual is unable to pay debt required to pay everybody some CH 9 Bankruptcy municipality city filing bankruptcy and reordering debts ex Detroit 0 Puerto Rico cant file this because they aren t municipality Fundamental Truths of Bankruptcy 0 You have to be eligible to file gt Chapter 7 means test which measures a person s ability to pay by computing disposable income of person gt Chapter 13 person has only so much in unsecured debts Needs to have sufficient amount of disposable income to fund gt Chapter 11 have to be corporationbusiness gt Chapter 9 have to be municipality Authorized by state to file bankruptcy Has to negotiate with creditors in good faith or municipality unable to negotiate because number of creditors is impractical judge decides that City has to be insolvent broke o Secured vs unsecured debts gt Loan someone money pay you back 2 days later They don t pay you back you have the right to sue now O MGMT455 Final Exam Study Guide Loanee files bankruptcy loaner is loser Smart is when loaner asked for collateral for loan ex car Have securityfinancial interest and certain fights with car Doesn t have your money sue him and file foreclosure on car Files bankruptcy 9 no effect on car Only debts are discharged security entrants not affected car Role of Trustee gt Gathers up all assets sells them with money 9 hand out to creditors Chapter 20 Breach of Contract and Remedies HUGE Story clients with home remodel O 0 0000000000 Clients want to remodel barn Russ a contractor advertises he is the worlds best barn builder Client hires Russ Russ needed a written contract to remodel the barn Everyone signed Russ starts working Client wants to remodel house also 45k total 30k cash to get started Client agrees and pays 30k No written contract for kitchen remodel Russ begins working and insists house needs more work Client gives Russ more cash for dining area remodel no written contracts Russ never finished any of areas just kept moving on Clients paid 100k in cash and 40k in checks Clients FINALLY get suspicious Clients hire other contractor to figure out and inspect work Inspector values work at 36k total Clients have paid 145k total Clients approach Russ Russ gets mad and demands 50k more Russ walks offjob after client denies demand Going to cost 35k just to fix Russ s mess Client goes to Gothard Deemed as breach of contract oral Gothard charges them progressive attorney fees continual Gothard finds statute that allows clients to add attorney fees onto bills of losing party Client paid 30k in attorney fees up to that point Defense insisted client made contract with Russ and in turn agreed to pay Insisting client breached contract Gothard said it wasn t a home improvement Gothard won Fraud was the judgement Russ files CH 13 bankruptcy dismisses fraud Have to be eligible to file CH 13 bankruptcy so Gothard objects Bankruptcy was objected so he files CH7 and fraud judgment stood attorney fees judgment on fraud Clients have been paid 5k Does prosup every September to Russ Sheriff seized a writ of execution for Russ s backhoe for 5k O O MGMT455 Final Exam Study Guide That 5k is only money retrieved from Russ At prosup Russ said business is slow Always has new truck insisted gf paid leaseowns it Says gf owned everything One September he said he had 3k in one account and 5k in other Got writ of execution sheriff went to seize account a One account closed one account has exactly 350 quotgfquot owned house quotgfquot paid for renovations Judgment is worth well in excess of 1000000 as of today Statute of fraud 9 a home improvement contract oral or written for contractor and consumer for which the price exceeds 150 the consumer places attorney fees to the contractor O 0 Contract must contain at minimum online Home improvement contractor shall provide a completed home improvement to the consumer before it is signed by the consumer HAS TO BE IN WRITING gt If not it is deceptive practice Home improvement fraud is not bankruptable in a CH7 bankruptcy but can in a CH13 bankruptcy Chapter 37 Agency Case 1 Truck repair Case 1 Facts Truck Repair 0 O O 0000 O O 0 Client had tow truck tools equipment and had a business idea Repairing big rigs for cash was business Place name advertising for business Got real busy and asked friend to help w business Told friend to work as if he was himself to cover when client is busy First week that is exactly what happened but client couldn t pay Second week same thing Client couldn t pay again 8 weeks straight mechanic never got paid Mechanic quits and sues for money he is owed Mechanic s lawyer said he is owed 2x wages plus attorney fees If mechanic was employee mechanic is owed 2x wages plus attorney fees IS HE AN INDEPENDENT CONTRACTER 0R EMPLOYEE ludge ruled employee Case 2 Facts Client owns cake shop 0 O O 0000 Client owns cake shop 30 years At that time he hired baker and cake decorator hourly wage Arrangement went on for 30 years Employees set own hours Worked when they wanted Employees got paid only when they worked Owner wanted to retire Sell shop to bakerdecorator Negotiations went on for a year Client tries to sell to someone else Bakerdecorator tries to set up own shop They meet with lawyer Lawyer says they may be entitled to overtime for 40 hour work weeks over the years plus attorney fees plus 2x MGMT455 Final Exam Study Guide 0 Client brings in letter from lawyer stating this C ARE THEY CONTRACTERS 0R EMPLOYEES 9 Settlement They were employees Independent Contractor Principal not liable for IC contracts and torts except 0 Mechanic Liens gt Has nothing to do with a mechanic gt A remedy for a contractor at a BCM r subcontractor material man supplier to job site and work is being done on house can get paid gt If these folks are not paid they may be entitled to file a mechanic s lien gt Places a lien on property to potentially sell property and tack on attorney fees 0 Extra hazardous work 0 Nondelegable duties Story for mechanic s lien 9 wooden deck 0 A month ago wife insists to build wooden deck on house 0 Called up contractor for wooden deck Contractor wrote up written contract for 15k 10k for labor 5k for lumber Agreed to contract Gothard comes home to tons of wood in the backyard Gothard doesn t like the wood supplier Shane finishes work GothardWife love work Pay 20k 5k tip 15k required Week goes by wood supplier contacts Gothard about not being paid 5k Shane is gone just disappeared Wood supplier has the right to place mechanic s lien on house gt 60 days since last day they provided material for mechanic s lien o Gothard had no contract with wood supplier but under mechanic s lien in Indiana they can file mechanic s lien sue get property sold and tack on attorney fees What to do to avoid this 0 Pay directly to supplier 0 Write a check for 5k supplier and contractor o On contract they sign ask to waive lien rights record in county records gt That recording gets rid of supplier s lien rights In order for a third party to hold a principle liable for the acts of the agent the third party must show the agent had 0 Expressed authority 0 Implied authority 0 Apparent authority 0 Authority by Ratification Gothard hits kids on way to work They were in crosswalk but it said stop 0 Can students sue Purdue because Gothard is employed by Purdue gt If they can show that there was I Expressed authority II Implied authority OOOOO MGMT455 Final Exam Study Guide III Apparent authority said he can run over kids IV Authority by Ratification gt Then they can sue Purdue Chapter 42 Partnerships Defined Association of 2 or more people to carry on as coowners for a business for profit Creating a general partnership 0 Must sign assumed business certificate 0 Agreement 0 3 D s gt Death deceased partner s estate gets paid annuity etc gt Disability Clause for what happens with disability gt Disagreement Clause for what happens during a disagreement o Other possibilities gt Wagesbenefits periodic amendments party contributions expansion Corporation requirements 0 Must be signed in corporate capacity 0 Must file report with Indiana secretary of state every 2 years 0 Must have annual shareholder meetings with annual quotminutesquot which recaps the summary SCorporation no corporate income tax just personal income tax not taxed twice like corporation Must be 0 small business corporation or domestic corporation that doesn t have more than one class of stock OR more than 100 shareholders o no employee limit 0 no income limit Chapter 35 Bankruptcy Eligibility requirements for bankruptcy Difference between secured and unsecured debts Role of bankruptcy trustee acts like sheriff during seizure 0 bankruptcy trustee becomes owner of assets not included in exemption Chapter 7 Bankruptcy 0 Lists all debts and property 0 Preferencestransfers within 90 days for outsiders or within 1 year for insiders gt Example giving bass boat to uncle bob 0 Property 9 bankruptcy trustee gt Debtor s home retirement account property goes to trustee MGMT455 Final Exam Study Guide Landlord Tenant Vignettes Eviction entitled to due process 0 Eviction charges breakdown leave in 7 days 0 If you don t leave landlord gets writ of execution gt Sheriff shows up 72 hours later makes you leave Access Landlord denies you access to your apartment by changing your locks 0 You have right to go to court 0 3 days time you should be in Conversion 0 Last day of lease and landlord says he is keeping your new TV because you didn t pay rent 0 Inn keeper s lien law prevents you from taking items because you didn t pay rent gt True in indiana gt Only applies to transient people aka people that stay for short duration like one night or one weekend 0 Since you aren t transient you can sue landlord for 3 times value of items TV plus attorney fees Mitigation o Landlord has to mitigate the loss of the landlord s rent gt You can t pay the last 7 of 12 months of rent You are leaving 0 Landlord finally gets your apartment rented at month 4 after leaving you still owe for months 13 of not being there 0 You want release Inspections 0 Landlords can have a key because lease says so also that they can make inspections 0 At 2 AM landlord wants to make inspection gt You say no sort of up to tenant Repairs 0 Landlord insists on repairing something a week from signing lease still not done 5 months later 0 What do you do Download manual for small claims court gt Pg 17 what landlords and tenants should know Landlord has no obligation to make repairs unless specified by lease If the landlord fails to make agreed upon ESSENTIAL repairs in a reasonable time the tenant may have them completed and deduct them from your rent Security Deposits 0 Indiana law only apples to private landlords MGMT455 Final Exam Study Guide 0 May be used for only gt Reimburse the landlord for actual damages to the rental unit that are not the result of ordinary wear and tear gt To pay the landlord for all the rent in arrangement under rental agreement gt To reimbursement the landlord for utility or sewer charges paid by the landlord that are The obligation of the tenant Unpaid by the tenant 0 After return of key and forwarding address landlord has 45 days to send security deposit and letter saying what was deducted If not its presumed there is no damages 0 Can landlords take 10 for light bulb or 75 for cleaning stove liquidated damage clause from security deposit gt Not in Indiana security deposit law Bankruptcy Exemptions in bankruptcy 0 9350 exemption for tangible property would be claimed by debtor 0 350 in intangible money in the bank trustee couldn t take 200 0 unlimited dollar amount in retirement account 0 17600 exemption for the home in the bankruptcy trustee of equity Trustee becomes owner of any property that exceeds the exemptions o Debts are discharged secure liens are not in bankruptcy Let s say car is worth 10k with a lien on 6k 4k of equity TF question does the trustee sell the car NO 0 GMAC has a 6k lien on car So GMAC will knock on door tell debtor they are selling it and the money will hopefully cover the value of the lien Make a deal with GMAC Yes 0 Debtor can sign a reaffirmation agreement stating they will pay periodically in order to keep the car Let s say car is worth 5k been in a wreck Debtor owes 6k to GMAC Will bankruptcy trustee take that car No There isn t money to be made off of car 0 Lien is 6k Liens aren t discharged in bankruptcy GMAC comes to you and say they want to take the car Reaffirmation agreement not on the table because car is worth less than 6k Make agreement to pay GMAC the value of the car essentially what they would make if they sold the car In chapter 7 assignment is to keep everything and remove all debt 0 Debts that aren t discharged include gt Taxes old income taxes that are older than 3 years are dischargeable I Must have filed returns 3 years and not paid taxes all of those years gt Child support and alimony are not dischargeable MGMT455 Final Exam Study Guide DUI claims are not dischargeable getting sued for DUI claims Malicious damages to property kids destroying mailboxes Property settlement agreements ex dissolving marriage expenses Fraud is not dischargeable Court fines aren t dischargeable Student loans aren t dischargeable for the most part very difficult I quotundue hardship is criteria for not paying back school loans I court decided that undue hardship is ultimately the certainty of hopelessness on a case by case basis VVVVVV 0 Actions that make debts not dischargeable gt Debtor conceals assets within a year of filing gt Destroying records gt Making false statements in court gt Refusing court orders gt Bankruptcy once every 8 years for chapter 7 bankruptcy Let s say you have a home worth 100k mortgage of 75k on that home and you are having trouble making mortgage payment of 8k Can t find job and are behind in mortgage payment 0 0 Equity Value Mortgage 25k If debtor files chapter 7 will the trustee sell the home Yes the exemption is 176k The 75k would go to mortgage 176k will go to debtor and rest will go to unsecured debts Other options gt Go to bank and say I m back working and can pay my mortgage as it comes due I want to pay for the house and keep it Bank is happy to work with him but requires him to pay the 8k to bring mortgage current then they will work out a deal Man doesn t have 8k what do they do I Chapter 7 Lose the house File chapter 13 Chapter 13 Bankruptcy Idea is for you to keep everything you have Certain debts get discharged some don t Must pay all creditors some amount of money different from chapter 7 Would want to formulate financial plan in which you could pay all creditors some amount of money for a period of time in turn you get to keep what you owe 0 Required to pay every month to the trustee the sum of money that represents that is called your disposable earnings Plans can range from 36 months to 60 months What does that mean Disposable earnings gross income taxes living expenses What are living expenses Clients would often say mortgage car payment utilities food etc I Mortgage 1kmonth MGMT455 Final Exam Study Guide I Old car worth 5k owe 8k in CH13 you are going to require to pay fair market value of car over life of plan 5k60months 8333 3k between worth and owed is discharged I The 8k you owe over 60 months is 13333month so you must have at least that for bank I Bankruptcy trustee receives 10 of everything that goes through court on a monthly basis 13333 8333 10 2166 I Disposable earnings needs to equal at least 13333 8333 2166 238 for 60 months 0 For old car worth 5k owe 8k I CH7 9 Creditor will sell car and realize 5k I CH13 9 Creditor gets 5k over life of plan but you keep car 3k owed is discharged Debtor has to have enough disposable income to fund the plan 0 Let s add visa account doctor bill divorce lawyer fee 0 As a debtor do you have to pay them any money Maybe I Unsecured creditors in CH 13 must receive what they would have received if the debtor filed a CH7 A home worth 100k mortgage of 75k so equity of 25k If debtor filed CH7 the trustee would have sold the house and the 25k would have been paid 176k to the debtor 74k to the unsecured creditors rest to unsecured debtors would be discharged Each of the unsecured creditors would have received percentage based on what is owed total In addition to the 13333 8333 2166 you must add 740060 months 12333 for unsecured debtors If debtor doesn t have this amount and cannot fund their plan they must recourse and file a CH7 ultimately losing the house and car
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