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Study Guide for Test 2 BA 335
SALES
Formation of sales contracts
Warranties
Concept of Title and Transfer of Title
FOB
Seller Delivery
Conditional Sales Agreements
Sale on Approval
Responsibility for Loss
Perfect Tender Rule
Remedies of Seller and Buyer
WARRANTIES
Definition of Warranty
Types of Warranties
Breach of Warranty
TORTS
Definition of Tort
Types of Torts and applicability to business
PRODUCT LIABILITY
Who may be sued (Chain of manufacture)
Why may they be sued- theories of liability ( negligence and strict liability)
Applicable Law- Common Law, state statutes (UCC Article 2), Federal Statutes
Elements of a product liability lawsuit
D under a legal duty (chain of manufacture)
D breached duty (remember type of defects)
P suffered injury as a result of breach
Role of Federal Regulation
Defenses to a product liability lawsuit
BUSINESS ORGANIZATIONS
Types of Business Organizations
How to form each
Advantages/Disadvantages of each
Partnership Operations and Types (Limited and General)
Limited Liability Company formation and operation (generally)
Corporations
Formation
Designation of Subchapter S
Records required
Role of Shareholders, Directors, Officers
Piercing the Corporate Veil
Issues regarding shareholder relations
Termination and Liquidation of Corporations
PLEASE NOTE: These are samples only. The actual test will be longer, have more questions and cover more subjects. This sample is being made available to you to allow you to get a preview of the types of questions that will be in the test. The answer key is posted separately.
a. Food and Drug Administration
b. Drug Testing Commission
c. American Scientific Commission
d. United States Pharmaceutical Association
a. Election of Directors
b.Election of Officers
c. Authorization of Loan to Corporation
d. All of the Above
Advantages: Limitation of liability of owners
Ability to add ownership by non active participants
Separation of management from Ownership
Access to additional capital
Disadvantages: Complex and Expensive in formation
Corporate Formalities requirement
Double Tax/ Tax restrictions
Open End Credit has set amount of credit allocated by lender that borrower draws down as needed and pays back amount monthly determined by borrower, subject to minimum amount set by lender. Examples would include credit card debt and home equity loans
Closed End Credit is a term loan with a set amount disbursed at the same time. The borrower pays back this credit in equal monthly installments of principal and interest. Examples would include car loan, home mortgage
The Smith family sues Security First for $125,000 in property damage and $200,000 for mental anguish related to the loss of their home. The 3 neighbors also sue for property damage in the amount of $500,000 and $1 million for mental anguish.
Please evaluate the liability of Security First.
Security First owed a duty to use reasonable care in producing a light that was free of defects. ___ out of 3 points
Did Security First Breach that duty of Care? The lights had either a product or design defect that caused the lens to separate. Did SF breach duty of care by not testing the lights in actual weather conditions? ____ out of 4 points
Was the Defect the proximate cause of damage? To the Smith property? To the neighbors property? What about the wind intervening to cause the damage to neighbors houses? ____ out of 3 points
Issue: When did title pass to Burt: at the date of paying the deposit or when he was to pick up the Motorhome? ( ___ out of 5 points)
Analysis: What was the intent of the parties? Since nothing specifically said, must infer intent from their actions. Facts indicating conditional sale include leaving the motorhome with the seller and paying only a deposit, not the entire sales price. Facts that might point to regular sale is the lack of any specific conditions put on buyer that boat was his only when price paid. (___ out of 5 points)
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