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Yessie's Bar review pt. 3

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yessieb's version from 2015-06-29 15:16

7) Preemptive rights do not apply to a corporation issuing stock for AT&T CO:

Question Answer
AShares issued to ATTRACT or keep corporate employees
TShares sold by the corp within TWO YEARS after filing the certificate of incorporation
TTREASURY shares, which are shares previously owned by a corporate shareholder, but which were purchased back by the corp and held in its treasury
CShares of stock issued by the corp for consideration other than CASH
OShares issued to affect an ORGANIC change, such as consolidation or merger
memorize

8) Interested directors benefit from 2 Fs: BCL § 713

Question Answer
FA contract or transaction was FAIR and reasonable to the corporation when it wasapproved by the board of directors
FThe director made a FULL disclosure of his or her interest in that transaction, and the transaction was either submitted to the shareholders for approval or the board of directors approved the transaction without counting the vote of the interested director
memorize
Δ Δ
  Essay #3 July 2011 Essay #1 Feb. 2008

9) Judicial review of the actions of a board of directors is barred by the Business Judgment

Rule, as long as it falls within the GAP:
Question Answer
GThe board acted in GOOD faith
AThe board’s actions were within the scope of its AUTHORITY; AND
PThe activity was in furtherance of a lawful and legitimate corporate PURPOSE
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10) Board of directors’ committees can’t take a V-CAB:

Question Answer
VFill VACANCIES on the board of directors or on any of its committees
CFix director COMPENSATION
AAMEND, adopt, or repeal bylaws
BBYPASS the board of directors and directly submit any DAN’S PALM LAMP activity to the shareholders
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11) A corporation may not eliminate director liability, or indemnify a director for liability, if the director’s activities were conducted with BIG DR AL:

Question Answer
BBAD faith conduct
IINTENTIONAL misconduct, or a knowing violation of the law
GMisconduct undertaken for personal GAIN (e.g., insider trading, or misappropriation of a corporate opportunity)
DDeclaration of an improper DIVIDEND (b/c there was no surplus)
RImproper REDEMPTION of corporate shares (b/c there was no surplus)
AASSETS distributed to shareholders without paying corporate creditors (const fraud)
LDirector fails to dissent to an improper LOAN to a fellow director
memorize

12) The BCL allows only 20% of minority shares in a closely-held corp to petition the

Supreme Ct for dissolution by showing that the majority is engaged in ID FLOW (must
allege one of these elements):
Question Answer
IILLEGAL conduct by those in control
DDIVERSION of corporate assets to those in control Essay #3 Feb. 2012
FFRAUDULENT conduct toward the minority Essay #5 July 2007
LLOOTING corporate assets Essay #1 July 2004
OOPPRESSIVE actions
WWASTE of corporate assets
memorize

13) SECURED TRANSACTIONS A security interest can attach to three types of PIG

personal property:
Question Answer
PCommercial PAPER
IINTANGIBLE property
GGOODS
memorize

1) The ingredients for a valid contract are TACO:

Question Answer
TDefinite TERMS, express or implied
AACCEPTANCE of terms
CCONSIDERATION
OOFFER inviting acceptance
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2) An offer expires when it gets TIRED:

Question Answer
TReasonable TIME after an offer is made, or after expiration date expressly stated in an offer
IMental INCAPACITY or death of offeror or offeree
RREVOCATION of an offer communicated to an offeree before acceptance
EEXPRESS or implied rejection communicated to offeror
DDESTRUCTION of the subject matter of the offer or intervening illegality terminates an offer by operation of law
memorize

3) Options can DIE by:

Question Answer
DDESTRUCTION of subject matter
IIntervening ILLEGALITY
EEXPIRATION of a stated option time extinguishes the option
memorize

4) In NY, a signed writing takes the place of consideration for POP:

Question Answer
PPRE:EXISTING duty
OContract OPTIONS
PPAST consideration (which must be recited in the signed writing)
memorize

5) Generally, contracting parties are free to modify a 3rd party beneficiary (3PB) K, unless, prior to receiving notice of the K modification, the 3PB got MAD:

Question Answer
MMANIFESTED an assent called for in the 3PB K, at the request of one of the contracting parties (i.e., accepted a K offer arising from the 3PB K)
ACommenced a breach of K ACTION against the promisor, or
DDETRIMENTALLY relied on the K
memorize

6) Contract assignments may involve the ADA:

Question Answer
AASSIGNMENT of a contractual right to collect money owed under the K
DDELEGATION of the performance required under the K
AASSUMPTION of liability for performing the K
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7) A gratuitous assignment becomes irrevocable, and a second assignee prevails over a prior assignee of

the contract when J.P.N.C.:
Question Answer
JRecovers a JUDGMENT
PGets PAID
NCEnters a NEW CONTRACT
memorize

8) Absent express language in a K prohibiting assignment, K rights are freely assignable, except those of SIR P:

Question Answer
SWhere a STATUTE expressly prohibits the assignment of a K right (but if that claim is reduced to judgment, it is assignable)
IWhere the assignment is coupled with an IMPROPER delegation of a duty under the K to a person unqualified to fulfill that duty
RWhere the assignment increased the RISK to the other contracting party
PWhere the services to be rendered are highly PERSONAL in nature (because that would materially alter the bargain)
memorize

9) In New York, by statute (see SIR P), you cannot assign a WASP:

Question Answer
WWORKER’S COMPENSATION
AALIMONY or child support payments
SSPENDTHRIFT TRUSTS
PPERSONAL INJURY or wrongful death causes of action
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10) Look at HAIL to determine whether a breach is material or immaterial:

Question Answer
HHARDSHIP on breaching party if total material breach is declared
AAMOUNT of benefit bestowed on non:breaching party
IWhether breach was INNOCENT
LLIKELIHOOD of full performance being achieved
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11) Breach of contract defenses are I(3) FU2()MED & I S(2)IP:

Question Answer
IINFANCY
IINSANITY and INCOMPETENCY
IINTOXICATION
FFRAUD
UUNCONSCIONABILITY
UUNDUE INFLUENCE
MMISTAKE
EEQUITABLE DEFENSES
DDURESS
IIMPOSSIBILITY of performance
SSTATUTE OF FRAUDS
SSTATUTE OF LIMITATIONS
IILLEGALITY
PPAROLE EVIDENCE RULE
memorize

12) Lack of contractual capacity arises from the 3 I’s:

Question Answer
IINFANCY
IINTOXICATION
IMental INFIRMITY
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13) SI(2)R M is a fraud:

Question Answer
SSCIENTER
ID lied with an INTENT to defraud the P
IP suffered an economic INJURY
RP justifiably RELIED on D’s misrepresentation
MD misrepresented a MATERIAL fact, which induced P to enter the K
memorize
  = 13a)Badges of constructive fraud SHIFTS:
Question Answer
SSECRETLY done
HHASTILY done
IINADEQUACY of consideration
FMade to a FAMILY member or Friend
TTRANSFEROR continues to the control property
SSCIENTIFIC (knowledge) of the creditor’s claim, an inability to pay it after
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the transfer.

14) A unilateral mistake in calculating figures may allow the mistaken party the remedy of equity of rescission, if he calls the COPS:

Question Answer
CThe computational mistake was COMMUNICATED to the other party before that person changed his/her position in reliance on those mistaken figures
OThe mistake involved was one of ORDINARY negligence
PThe mistaken party gave PROMPT notice of the mistake
SThe mistake will impose SUBSTANTIAL hardship on the party if not corrected
memorize

15) The following SMART FLYS contracts must be in writing, subscribed by the party to be charged with the breach (i.e., must contain defendant’s signature) exception is SWAMP:

Question Answer
SSURETY contracts
MMARRIAGE contracts
AANSWER for debts discharged in bankruptcy
RREAL ESTATE contracts
TTESTAMENTARY promises (NY ONLY)
FFINDERS FEE arrangements
LLEASES longer than 1 year
YContracts not capable of complete performance within 1 YEAR
SUCC Article 2 SALES CONTRACTS for $500 or more
memorize

16) Use a COMB for promissory estoppel in NY:

Question Answer
CCHARITABLE pledges
OTo avoid OUTRAGEOUSLY unconscionable results
MOral MARRIAGE contracts
BPromises by gratuitous BAILEES to obtain insurance on bailed goods
memorize

17) There are 4 T:CUP elements for a constructive trust:

Question Answer
TTRANSFER of property in reliance on promise
CExistence of CONFIDENTIAL or fiduciary relationship
UUNJUST enrichment to transferee of property or to some third party, AND
PPROMISE, express or implied, to hold property for plaintiff’s benefit, which
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promise has been breached

18) A THUG may render an illegal contract enforceable, based on:

Question Answer
TTYPE of illegality & extent to which the public is harmed
HHARM that forfeiture would cause if contract was declared unenforceable due to illegality; ct looks to see whether contract has been substantially performed
UUNJUST enrichment (a windfall) to party asserting illegality defense
GRelative GUILT of each party
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19) The theory of impossibility frequently involves the 4 Ds:

Question Answer
DDEATH
DDANGER to life/ill health
DDESTRUCTION of the subject matter of the law suit
DDELAYS, temporarily causing performance to become impracticable or
memorize
impossible

20) OF MICE2 permits parole evidence:

Question Answer
OTo establish an ORAL condition precedent to legal effectiveness of contract, provided it doesn’t contradict express term(s) of the contract
FA party cannot invoke the Parole Evidence Rule to shield that party from allegations of FRAUD or Misrepresentation
MTo establish MUTUAL Mistake or claim for reformation of contract
ITo establish ILLEGALITY
CTo establish failure of CONSIDERATION
ETo EXPLAIN ambiguous or missing terms
ETo show that no ENFORCEABLE agreement was ever intended
memorize

21) Contract law does not allow damages recovery for CAPS:

Question Answer
CTo recover consequential damages, unless they were within the CONTEMPLATION OF BOTH PARTIES when the contract was executed
ADamages that party could have AVOIDED
PDamages for PAIN & suffering or emotional distress resulting from a breached contract, even if such damages were foreseeable
SSPECULATIVE damages aren’t recoverable (all damages must be proven within a reasonable certainty)
memorize

22) Generally, parties can put whatever terms they’d like into a K, except for PLUS:

Question Answer
PTerms that violate PUBLIC POLICY
LTerms providing for an excessive amount of LIQUIDATED DAMAGES
UTerms that are UNCONSCIONABLE
SClauses providing that one party can seek SPECIFIC PERFORMANCE in
memorize
the event of a breach (the contract does NOT have to enforce these clauses)

23) Apply a TISSUE to a covenant restricting a former employee from competing:

Question Answer
TTIME restriction must be reasonable (usually two years or fewer)
IINABILITY of the employee to gain work elsewhere
SThe geographic SPACE/SCOPE of the restriction must be as narrow as possible (must only be to the extent necessary to protect employer’s interest)
SUEThe employee services must be SPECIAL, UNIQUE, or EXTRAORDINARY
memorize

24)ICOP limits the Perfect Tender Rule:

Question Answer
IINSTALLMENT contracts
CTimely delivery was COMMERCIALLY IMPRACTIBLE by an event notcontemplated by the parties.
ODelivery in good faith, OBJECTIVELY and reasonably believing the goodswould be acceptable to the buyer
PPRIOR TO DELIVERY DATE set forth in the contract, conforming goods are delivered to replace the nonconforming goods
memorize

25) Additional terms will not be added to the contract when OCAN:

Question Answer
OThe offeror OBJECTS to additional terms within a reasonable time
CThe offer expressly CONDITIONS the agreement on accepting the terms in the offer as they are
AThe additional terms materially ALTER the offer
NEither or both parties are NON:MERCHANTS
memorize

26) A J STRAW clause materially alters an offer if it would cause surprise or hardship to the offeror if the offeror was not made aware of its existence:

Question Answer
JBestowing JURISDICTION on a particular court, or requiring offeror to consent to jurisdiction in particular state
SShortening the STATUTE OF LIMITATIONS to sue for non:conforming goods
TLimiting TORT liability or limiting a buyer’s right to sue for consequential damages
RAltering UCC rules for RISK OF LOSS
AAdding an ARBITRATION CLAUSE (unless customary to do so in the trade)
WAdding a clause negating a WARRANTY (e.g., one of merchantability or fitness)
memorize

27) Exceptions to the Statute of Frauds requirement are SWAMP:

Question Answer
SContracts for SPECIALLY manufactured goods
WWAIVER
AJudicial ADMISSION of contract
M“MERCHANT MEMORANDUM”
PPART PERFORMANCE
memorize

28) If a sales contract is silent on a topic, the UCC implies the following CIDER rules:

Question Answer
CSeller is not obligated to extend CREDIT to the buyer
IBuyer has the right to INSPECT the seller’s tendered goods (except no right to inspect when the transaction involves a bill of lading)
DSeller’s tender of DELIVERY is implied to be at seller’s place of business, unless both parties know that the goods are located elsewhere
EBuyer and seller must EXCHANGE performance concurrently
RRISK OF LOSS is on the party in the best position to bear that risk
memorize

29) SOAL:V and SORE:V affect risk of loss:

Question Answer
SOAL VSALE ON APPROVAL LATE VESTING (goods held by the buyer are not subject to claims of the buyer’s creditors)
SORE VSALE OR RETURN EARLY VESTING (title and ROL vest immediately in the buyer, even though the buyer has a right to rescind the K)
memorize

30) Remedies available to a seller are SPARKLE:

Question Answer
SSTOPPING goods in transit
PSuing for the entire contract PRICE
ADemanding ASSURANCES
RRE:SELLING goods to another buyer
KKEEPING part of a breaching buyer’s deposit, never more than $500
LSuing for LOST Profit
EEXERCISING the right to reclaim goods delivered to the insolvent buyer
memorize

31) Remedies available to a buyer are CID’S WAR:

Question Answer
CCOVER
IINCIDENTAL & consequential damages
DDAMAGES for lost benefit of the bargain, or for the price paid
SSPECIFIC PERFORMANCE on a contract for unique goods
WBreach of WARRANTY
AACCEPTANCE revocation
RREJECTING non:conforming goods
memorize