Estimated study time: 45 minutes
Content:
Contracts (common law for services and real estate; UCC Article 2 for sale of goods): Formation requires offer, acceptance, and consideration. Common law requires mirror-image acceptance; UCC applies the "battle of the forms" — additional terms in an acceptance between merchants become part of the contract unless they materially alter it, the offeror objects, or the offer limits acceptance to its terms.
The Statute of Frauds requires certain contracts in writing: contracts for the sale of goods ≥$500 (UCC); real estate contracts; contracts not performable within one year; guaranty/suretyship contracts; contracts for the sale of securities. An oral contract within the Statute of Frauds is voidable, not void.
Agency law: An agent acts on behalf of a principal. Authority types: (1) Express (explicitly granted); (2) Implied (reasonably necessary to carry out express authority); (3) Apparent (third party reasonably believes agent has authority based on principal's manifestations — principal is bound even if agent lacks actual authority); (4) Ratification (principal adopts unauthorized act after the fact). Principal liable for agent's torts committed within scope of employment (respondeat superior).
Business entities: Sole proprietorship (unlimited personal liability); Partnership (general partners have unlimited personal liability; limited partners limited to investment); LLC (members have limited liability; pass-through taxation by default); S Corporation (limited liability; pass-through; max 100 shareholders, one class of stock, US-resident shareholders only); C Corporation (limited liability; double taxation). Corporation formation requires filing articles of incorporation with the state; a corporation is a legal entity separate from its shareholders.
Bankruptcy (Federal Bankruptcy Code): Chapter 7 (liquidation — trustee sells assets, distributes to creditors, debtor receives discharge); Chapter 11 (reorganization — debtor retains assets, proposes plan, must be confirmed by creditors); Chapter 13 (individual reorganization — debtor repays debts from future income over 3–5 years). Priority of payment in Chapter 7: secured creditors (up to collateral value) → Chapter 7 administrative expenses → domestic support obligations → wages earned within 180 days (up to $15,150) → employee benefit plan contributions → grain farmers/fishermen → consumer deposits → taxes → general unsecured creditors → equity holders.
Uniform Commercial Code (UCC) Article 9 — Secured Transactions: A security interest is created by a security agreement (authenticated, description of collateral, value given, debtor has rights in collateral). Perfection (priority against third parties) usually by filing a financing statement (Form UCC-1). PMSI (purchase money security interest) in consumer goods auto-perfected; in non-consumer goods must file within 20 days of debtor receiving collateral to get super-priority.
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