Past Exam Questions PDF

Past Exam Questions (Mid1&2) Banking relationships are: Contractual/ Debtor-creditor/ Agent-principal/ Fiduciary Situations where bank acts as an agent to its depositors: Bank sells security on behalf of customer Bank collects checks on behalf of customer Fiduciary relationship: Complete and...

Past Exam Questions (Mid1&2) Banking relationships are: Contractual/ Debtor-creditor/ Agent-principal/ Fiduciary Situations where bank acts as an agent to its depositors: Bank sells security on behalf of customer Bank collects checks on behalf of customer Fiduciary relationship: Complete and strict separation of interests Care, loyalty, full disclosure, confidentiality, trust between partners Ex: bank providing inv advise, bank should recommend products that are best for customer not ones that only generate more profit for bank Certified check: Personal check which bank guarantees to pay Verified by bank, ensures there are sufficient funds to cover PMT and puts them aside Bank guarantees there will be enough cash available in the holder\'s account when the recipient decides to use the check Cashier's check: issued by bank, drawn from bank\'s funds, signed by bank's employee Bank draws on its own funds payable to specified payee Personal check: Written by customer without guarantee from bank Bank: is liable to the drawer for the amount of an alteration in value if a forged check is paid A check that is dated after its actual date of issue: Postdated check A bank must honor checks unless: insufficient funds "stale" or expired good reason to be suspicious of check good reason to be suspicious of holder of check Subrogation: Right of insurer once it has paid the insured for a loss, to proceed against 3^rd^ parties responsible for that loss 3^rd^ party collect damage on behalf of another party Insurable interest: Where the policyholder would suffer financial loss if insured item is damaged Insurable interest is required to insure against some risk: To make sure people only insure things that could actually cause them loss To prevent fraud & abuse Indemnity in insurance context: Indemnity: sec against loss Insurer compensates injured by restoring them to their prior financial status Insured doesn't profit from insurance claim but is compensated for actual loss When insurer issues a binder: Temporary contract issued by insurer providing immediate coverage until final policy issued Agreed upon amount of the loss that the insured pays: Deductible Why must risk be a contingent risk to be insurable: Contingent risk means it may or may not occur Because insurance is designed to cover uncertain events and they only profit from risk that end up not happening Restrictive indorsment on negotiable instrument: Limits how instrument can be used Limits who can receive PMT How an employer can control an employee after an employment contract is terminated: Non-Disparagement: employee can't say anything -ve about the company Non-Competition: employee can't work with competitor nor start a similar business Protecting Company Info: employee must keep certain info confidential Garden-leave: employee remains on payroll but doesn't work for the company nor other company 3 subjects typically addressed in a shareholders' agreement among the shareholders of a limited liability company (LLC): How shares can be bought Voting rights of each shareholder Handling disputes In a limited liability company (LLC), the liability of the company is \"limited\" in the following ways: Members risk losing only the money they invested in the business, not their personal assets If sued, creditors can only claim assets that belong to the LLC, not the personal assets of the members Subjects covered in a general partnership agreement: Admitting/expelling partners Raising/spending money Nature of business Dealing with life (ex: death) Non-competition Joint and several liability: Partners are both principal & agent We partners together are liable for the risk, also each one of us is responsible 100% for the risk Joint venture: 2 or more parties that seek the development of a single project for profit, sharing the risks associated with its development Natural person: Human with rights & responsibilities Legal person: Entity created by law with rights & responsibilities Law treats as if it were a person for legal purposes From a property law perspective: Condominium is a form of ownership in which the owner has sole ownership of a specific unit or space and joint ownership of the common areas in a building Emerson identifies rights which \"naturally accompany land ownership\", rights include: Surface rights Rights to fixtures Riparian rights Rights to trees crops or vegetation Law of bailment: Transfer of possession but not title \"Leasehold\" under general & international principles of law: Leasehold: grants tenant right to use land or a building for a given time It is a possessory property interest because it grants the tenant the right to possess and use the property Ex: renting an apartment, the lessee signs a lease agreement with the lessor, granting them the right to live in the apartment for a specified period, in exchange for monthly rent PMTs Write a limited power of attorney in which Alan Johnson authorizes Neal Johnson to sell Alan's iPhone to any interested buyer for 8 SAR: I Alan Johnson grant Neal Johnson power to sell my iPhone to any interested buyer for 8 SAR. Signature: Witness: Date: Draft of general partnership: Date.... Name of partnership..... Purpose of partnership.... Profit/ loss sharing.... Governing law.... Contributions of each partner.... Duties of each partner..... Signature of each partner.... When court disregards corporate entity, 2 conditions must be met: Purpose to fraud, company used to defraud allowing owners to hide behind corporate structure Improper operation of corporation Apparent authority: When 3^rd^ party reasonably believes that an individual has authority to act on behalf of a person Ex: store manager lets an employee give discounts to customers, customers may believe the employee has authority to offer discounts even if only the store manager can approve them Duties of principal to agent: Duty to compensate Duty to inform of known risks Duties of Agent to Principal Duty to notify Duty to account Greatest source of dispute in commercial agreement: Mutal agreement Least source of dispute in commercial agreement: Legal purpose Holder writes "without recourse" on negotiable instrument: Holder isn't responsible if instrument isn't paid later Requirements of a valid offer: Clear intent/ sufficiently definite/ communicated to the other party Patent: Right granted to inventor giving them control of sale & use of invention for about 20 yrs Elements of a plaintiff's case in a contract action: Existence of contract Contract was breached Breach directly caused loss Suffered actual loss Plaintiff must prove 4 things to prove negligence: Duty of care Violation of duty Violation caused loss Suffered actual loss Legally enforceable contract: Legal capacity / Legal purpose/ Mutual agreement/ Consideration Negotiable contract: Written Signed Definite time Fixed amount Unconditional promise to pay To order or to bearer Mitigation of damages is applied to damages claims in contract actions: Limit unnecessary financial burdens Prevents unfair loss Encourage fairness Why must contract have a legal purpose to be legally enforceable? Because no government would enforce an illegal contract Because illegal purposes such as fraud are considered void and unenforceable in court Contacts are "discharged" or ended by: Performance, agreement, or operation of law Contract is discharged by operation of law in event of: Subsequent illegality Impossibility of performance Bankruptcy Statute of limitations Agency contract: Agent acts on behalf principal Agent has authority to enter into contracts Distributorship contract: Distributor buys products from supplier & resells them to customers Distributor has no authority to enter into contracts on behalf of supplier Independent contractor: Provide services but doesn't act as agent Option contracts: Grants option holder the right to buy or sell an asset at a set period Other party is obligated to keep the offer open during that time \"Rescission\" in the context of contract law means: Restoration of parties to respective positions they occupied prior to entry into a contract as if the contract never had existed Principal purpose of \"notarizing\" a signature on a contract, if notarization is required for some reason: To authenticate the identity of the parties signing the contract Limitations on damages: Foreseeability/ Certainty/ Mitigation Fraud: Misrepresentation of mat fact Knowingly made Made with intent to defraud Justifiably relied upon Causing injury to other party An offer expires when: As stated Reasonable period of time Rejection Withdrawn Counteroffer Death Qualitatively different forms of consideration: Promise to do something Promise to not do something Promise to pay money Limited/special power of attorney: Agent responsible for specific affairs General power of attorney: Agent responsible for all affairs Past Exam Questions (Mid1&2&Final) The board of directors of a corporation answers to, and is primarily responsible to: Each shareholder equally Emerson, at page 94, observes "the basic principle of contract interpretation is to determine the intent of the parties from words or actions taken as a whole, not from isolated words, actions, or events" True Emerson, at page 102, observes "An advertisement is not an offer unless it is addressed specifically to an identified or identifiable person or group" True "If an offer does not specify a period of time during which it is to remain open, it expires after the passage of a reasonable time" True A limited liability corporation has a legal personality independent of its shareholders recognized by government. True Confidentiality agreements in employment contracts are easy to enforce because breaches usually are easy to prove and to document. False A limited liability company is one form of a corporation limited by shares. False Legal capacity "is a legally defined level of financial strength sufficient to enable a party to perform his or her contractual commitments" False (mental and financial) A single person cannot from any type of company under the new Saudi Companies Law because all entities listed under the new law require a minimum of two owners. False In what ordinary situation is a banks customer a creditor of the bank? When a customer deposits money in a bank, the bank might use this money for other actions but still keep in mind that they have to provide this amount to the customer whenever he asks for it immediately (the bank owes the customer who deposited his money in the bank the same amount he deposited) A cashier's check always is drawn on the credit of: The bank Define "duress": anything that deprives a person from free will (coercion) Members of a corporate board of directors have the following duties: -attend meeting of the board -remain informed about the business and affairs of the corporation -disclose any conflicts of interest to all shareholders -not engage in self-dealing in any manner with the corporation while serving on its board -~~resign their board membership if any potential conflict of interest arises while they serve on such board.~~ WRONG The two conditions required to "pierce the corporate veil" and to hold shareholders individually personally and unconditionally liable without limit for the activities of a corporation are: -Fraudulent purpose -operation of corporation as if it did not exist According to Goldman & Sigismond, a stop-payment order is: -instruction by the maker (or drawer) of a check to his bank to refuse payment on a particular check when it is presented for payment Moussad's ten-year-old son, Mishari without first obtaining permission from his father, used his father's credit card to buy SR54,091.00 worth of toys from online seller. The cred card was issued by Moussad's bank in Moussad's name only. As between Moussad's son Mishari and the online toy seller, the better argument is that Mishari is not responsible in contract for the cost the toys because: Mishari lacks legal capacity An agency relationship can be created by: -necessity or law-contract-conduct-ratification of unauthorized act Define "insurance policy" as defined in Goldman & Sigismond: A contract whereby risks are transferred; the insurer issues a policy covering (paying compensation in the event of) certain occurrence (risks) that if they occur will result in a loss to the insured Neal very much wanted to solve the problem of his bothersome brother Alan once and for all. Neal posted an advertisement on an internet auction site says "Alan for highest bidder" Would the highest bidder have an enforceable contact? No, because he has to own and have control of him In a sole proprietorship or establishment: the concept of agency is inapplicable because the sole owner is both sole principal and agent Banking relationships: can involve elements of agency If an offer is silent as to the period of time during which it is to remain open, the offer expires: upon rejection In order to be legally valid a negotiable instrument must: (Please circle the single worst answer) contain a conditional or contingent promise or order to pay a fixed amount of money A tort is private wrong against a fellow citizen 3 qualitatively different examples of consideration sufficient to form a legally binding contract: A person agrees to pay \$500 to purchase a used laptop from another person. A person agrees to pay a contractor \$10,000 for the future construction of a deck. An person agrees not to pursue a lawsuit against another party in exchange for a settlement payment. Please analyze the factors favoring, and the factors disfavoring, the possibility that a single individual citizen may incorporate a limited liability company pursuant to the new Saudi Arabian Companies Law \[of 2016\]. This, in other words, will be a company owned by one individual shareholder. Why is this a very positive development? What new risks might it create? Favoring: ease of formation without as it doesn't require additional partners Disfavoring: increased risk for creditors since the company's liabilities are limited to its assets New risks it might create: absence of multiple shareholders reduces accountability Positive development because: it aligns with Vision 2030 Businessman Marwan I a very old and rich man. He has many children. Lately, his children had many disputes over money. He is also concerned that after his death his sons will deny his daughters their fair share of his wealth. Marwan tells his story to Attorney Gada, the best attorney in town, and the following discussion takes place: Marwan: Before I die, I want all my kids to enter into a contract to be part owners of an entity that is registered by the government of Saudi Arabia and I want that entity to own all my assets. Attorney Gada: I see. If you do not die in the next few hours, I can establish what we professors of law call\_\_\_\_\_\_\_\_\_. It will be registered by the Saudi Ministry of Commerce and Investment and will be subject to the new Saudi Companies Law. Marwan: I am not done Attorney Gada. I want my entity that separates the person of the owners from the person of the entity. Attorney Gada: I see. In legalese, we professors of law talk about limitation of liability. You do not want to transfer liability of the entity to your kids as owners. That is easy. Saudi Companies Law gives you two choices\_\_\_\_\_\_\_\_\_\_\_\_\_\_ or \_\_\_\_\_\_\_\_\_\_\_\_\_. Marwan: I am not done attorney Gada. I want all of my kids to be able to sell their part ownership freely without providing notice and without being subject to anyone's objection. Attorney Gada: I see. In legalese, we professors of law call that tradable ownership interest. I can do that for you using the type of entity that is called \_\_\_\_\_\_\_\_\_\_\_\_\_. Marwan: I am not done Attorney Gada. I want all my kids, as owners, to meet once per year to decide distribution of profits and be briefed by management about the affairs of the company. Attorney Gada: I see. Yes, if you follow my advice as professor of law, the company I recommended earlier requires its shareholders to meet once a year to do what you asked for. This is called the ordinary **General** meeting. Marwan: I am not done Attorney Gada. I want none of my kids to manage the company. I want them to nominate a body of 3 to 11 members to manage the company. Each member of the body should be elected for three years only. Attorney Gada: I see. We can do that under the new Saudi Companies Law. This body is called the **Board of Directors**. As a professor of law I can tell you that we could not do that under the old Saudi Companies Law; however, the new Saudi Companies Law does not require ownership in the company to be a member in the managing body you are asking for. According to Goldman & Sigismond, a debit card: immediately deducts amount of a purchase from holder\'s bank account A limited liability company is: legal person In employment contracts a post-employment/post-termination \"covenant not to compete\" typically will be enforced if that covenant is: limited in geographic scope The normal measure of damages/financial loss in tort (non-contract) claims is: any loss which is foreseeable \"Intentional torts\" include: false arrest, battery, assault, arson, trespass Abdullah and Sultan and Sami formed a General partnership. They negotiated among themselves and agreed a well considered general partnership agreement. That agreement provided that each general partner would be personally responsible for one-third of the capital requirements and of all liabilities of the general partnership. The business of the general partnership sadly failed, and the general partnership was to be dissolved. At the time of its termination the general partnership owed a debtor SR300,000 in unpaid debt. Of that SR300,000 what was Sultan\'s personal maximum liability? SR300,000 In a corporate equity "acquisition" the following typically occurs: one corporation buys the stock of another Discuss four ways in which government can influence human behavior by imposing taxes on personal property and on real property, considering each separately. Personal property: tax on luxury items, lower tax for electric cars, higher tax on diesel-powered cars, lower tax on goods that can encourage investments Real property: lower tax for developing vacant land, lower tax for properties used for conservation, higher tax for unused land, lower tax for primary residences Tax on personal property: Discourage luxury purchases Promote secondhand markets Encourage public transport use Encourage downsizing Tax on real property: Preserve historic sites Discourage vacant properties Encourage downsizing Explain the basic difference between a \"crime\" and a \"tort": Crime: offence against goverment, ex: robery Tort: offence against fellow citizen, ex: negligence Identify and then differentiate among the various ways credit card issuers and online payment systems such as PayPal try to replicate the requirement that a negotiable instrument be signed in the context of online sales transactions (only). Analyze too whether these efforts to replicate a signature achieve a level of security equal to an original signature: Online PMT are signed by just clicking on an agree button, it doesn't have high level of security as the original signature making it riskier. However, security can be improved by using technologies such as fingerprint or face identification. What is the legal effect of \"notarizing\" a contract or other legal document? It authenticates the identities of the party or parties so notarized. A limited liability company is: Legal person Who, ultimately, owns a corporation? Its shareholders Seema was surprised when Nasser offered to establish peace among all countries of the world if Seema would pay Nasser SR50. Sultan and Ahmad, both adult male Muslims, witnessed the oral conversation between Seema and Nasser. The surprising offer Nasser made to Seema cannot be the basis of an enforceable contract because it is: Unenforceable because it is illusory A \"sales tax\" is different from a \"value added tax\" because: A sales tax is paid once, by a final consumer, at the point of retail sale, while a value added tax is paid at each stage of the manufacturing and distribution processes The legal basis of compensation for an insured loss is: Indemnification Governments authorize the creation of limited liability legal entities by citizens. Is this authorization a right or privilege? Privilege, because it is given by the government as a result of the act of incorporating or forming a legal entity. According to Goldman & Sigismond, a debit card immediately deducts the amount of your purchases from your bank account and adds that amount to the seller's bank account. Because the transaction takes place at the \"point of sale\" this is called a point of sale or a POS transaction. True Answer? If an offer is silent as to the period of time during which it is to remain open, the offer expires: a.upon rejection b\. upon indemnification c. upon subrogation d\. upon graduation e\. all the above f\. none of the above In contract law the normal measure of damages is: a\. Consequential damages, or damages arising indirectly from a breach b\. A foreseeable loss, whether arising directly from a contract or not c\. Pain and suffering d\. Expectation damages or the benefit of a bargain Rakan falsely claimed to be the sole owner of the Brooklyn Bridge, and he offered to sell the bridge to Neal. Neal was delighted at the chance to buy a major New York City landmark, and Neal readily agreed to pay the SR5,000,000. Rakan asked as his selling price. This transaction is most accurately described as: a.mistake. b.fraud c.joint & several liability. D.excellent deal e.holder is due course A form of tax intended to protect and to develop local manufacturing in some country is a.Customs duty b\. Severance tax c\. Transfer tax d\. Income tax e\. Duty of care A \"tortfeasor\" is a\. A party making a claim in tort b\. A party suffering some loss because of the tortious behavior of another party c\. A party at a local discotheque d\. A party against which a claim is made in tort Hayla, Nora and Leen formed a general partnership, and, as general partners, each partner had joint and several liability, The three partners agreed to share everything equally. The partnership\'s business sadly failed, and at the time of that failure of the business the partnership owed SR300,000 to Hayfaa. What is Nora\'s minimum share of that liability to Hayfaa? What is Nora\'s maximum share of that liability to Hayfaa?